AMI Talks in FLV format

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I made the mistake of posting the talks from the AMI conference in SWF rather than Flash Video format; I’ll amend that post shortly, but in the meantime here are the talk by myself and Michael Hudson, and the panel discussion.

Keen Talk: Why Credit Money Crashes

Steve Keen's Debtwatch Podcast 

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Hudson Talk

Steve Keen's Debtwatch Podcast 

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Hudson Discussion

Steve Keen's Debtwatch Podcast 

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AMI Panel Discussion

Steve Keen's Debtwatch Podcast 

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About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
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111 Responses to AMI Talks in FLV format

  1. elliottwave says:


    Gold is not in a bubble, it is in the early stages of a secular bull market that will continue for a long time to come, as gold will re enter the financial system as part of a currency and that will mean that it does not fall like it did in 1980.

    Please do not believe everything you hear from the same talking heads you see on CNBS, Bullberg and our own SKY CRIMINAL BUSINESS CHANNEL that are dragged out frequently, as these people have their own agendas they push.

    Stick with the guy who is never in the public eye and has always been right and an unblemished record for being correct in not only their area of expertise but also in other markets.


  2. Jason Murphy says:

    Thanks for the leads steve.

    elliottwave, I am interested in modelling economic items as having a monetary and non monetary value.

    To get to that objective currently I am contemplating what I would need to describe and define the monetary and non monetary value of 3 seperate economic items defined as ounces of gold, houses, and fiat money, if we could magically flick a switch and make it so each of them in turn was the only legal tender.

    [Obviously fiat money is the current legal tender].
    [Government having to build houses and distribute them as legal tender will be an interesting one sure to illuminate much].

    [When I say monetary and non monetary value I mean for example that gold has some value in being incorporated in products, but it also has some value over and above that as a store of value.]

    [Monetary Value, Non Monetary Value, and Economic Items are terms I made up – I am not focussing on the standard economic lingo just yet].

    SO: In terms of what I am asking you for, when it comes to the topic of gold and it’s value just whatever comes into your mind in whatever way you want to express it.

    To give it a structure perhaps answer these two questions:

    Do you buy physical ounces or securities associated with gold, and if so how do you buy?

    When you think of gold and it’s value how what are you contemplating, and where are you getting those things that come into your contemplation from?

    To give you an idea so far from your contributions I have:

    – Perception of long term set of affairs [“not be ending anytime soon”]
    – Experience of information [“you see negative comments”]
    – Simple numerical story [“18 months ago when gold was at $900 and you are wrong again at gold $1370”]
    – A story through time
    – Comparison [“usdollar is a right off”]
    – Communication of story [“rational when talking”]
    – Fear and Glory [“abandoning”, “pain felt will scar”, “go even higher”]

    I will take anyones thoughts and views on the topic if anyone else wants to chip in as well … if not no problem.

  3. elliottwave says:

    Jason Murphy,

    Are you serious or is this a joke?

    If you are serious then your talents would be better put to use as a derivative trader or as a quant.

    The pay is fantastic and at least your hard work will be put to use in one form or another.

    Economic modelling like Dr Keen will never be used in reality but i suppose it makes interesting dinner conversation between the “intellectuals” and would make them feel good about themselves.


  4. mahaish says:

    prior to the early 70’s the world operated under either a gold standard or gold exchange standard,

    after bretton woods, it enjoyed a duopoly with the US dollar as reserve currency,

    gold still holds some vestiges of that past today

    i think these reasons alone would skew the data in terms of the amount of gold the financial system held prior to the early 70’s, and wasnt fully worked through, until the end of the stagflationary oil shock through to the early 80’s

    the current trend in the gold price is very much a reflection on the US dollar.

    faulty economic thinking rears its ugly head, in that people seems to think qe(quantitative easing mark1 and now mark2 will have dire inflationary consequences, or pose some sort of quasi default risk

    and hence shorting the dollar,

    well, they may be wrong

    with 10% unemployment, unless large chunks of that qe money miraculously finds its way into the balance sheets of the idebted non bank private sector , the future on the balance of probabilities is still deflationary.

    so if you have non US dollar financial assetts, think long and hard about putting it into gold.

    gold is very much a long run as oppossed to a short run scenario for non US dollar investors, since the long term fundamentals for gold are sound

    but who knows , i could be wrong

  5. elliottwave says:


    As the esteemed Professor Keen keeps using as an excuse to why he was wrong ” i underestimated the size of the government reaction and stimulus”.

    Please do not make the same mistake and underestimate what Bernanke will be FORCED to do as to ” deflation making sure it doesn’t happen here”.

    The US will never default on its loans, never ever, they will default on their loans in a way that the sheeple will not realize is even happening.That is the sad thing, they will get away with it and the poor sheeple public will just be complaining about the price of beer, cigarettes, food and electricity rising and having no idea why or what is causing it.

    Gold is the answer to the problem.


  6. 707338 says:

    Mahaish: ” … faulty economic thinking rears its ugly head, in that people seem to think QE(quantitative easing mark1 and now mark2 will have dire inflationary consequences, or pose some sort of quasi default risk

    and hence shorting the dollar,

    well, they may be wrong”

    Mahaish, I think you have a valid point. On hyperinflation you could rightly point to QE1 and say, if that didn’t reflate the US economy how will a second round of QE be hyperinflationary?

    By the textbook, all that extra money SHOULD be inflationary but hasn’t it been described as “pushing on a string” in terms of its actual effect at the grass roots?

    Mahaish: “so if you have non US dollar financial assets, think long and hard about putting it into gold.

    gold is very much a long run as oppossed to a short run scenario for non US dollar investors.”

    Hmmm, tell me about it! I am still waiting for my July gold investment to break-even in AUD despite the price of gold soaring by $170/oz from $1,200USD to $1,370USD over the last 3 months.

    Elliotwave: “… you will be kicking yourself for not buying when you were told to buy.

    It is too late to buy anymore you have lost, so give up.

    My new sign off is no longer BUY GOLD it is now


    How so mate? I can still buy gold cheaper today (in AUD) than I could three months ago!

    I agree with you though about the advantage of holding gold over those coloured coupons the “dollar bugs” hold dear.

    When the foreclosure mess currently unfolding in the US combines with the sovereign debt crisis to cripple the credit markets and bring down the global banking system, watch the price of gold soar during the subsequent flight to safety.

    EVERYONE should read this (could the “shit hit the fan” in the next few weeks?):-

  7. Derek says:


    If I understand you correctly, you are thinking of including two types of money within your model, gold and “fiat money”. However I believe that you may want to try modelling using three types. The three types are commodity money (such as gold or silver based currencies which have some intrinsic value), credit money (which is issued by banks and which Prof Keen uses in his own modelling), and fiat money (which is issued by governments and gains its value from the amount of it required to pay taxes).

    Steve Keen’s website has an excellent discussion of credit money in various articles. But for a discussion of fiat money I would read the articles on one of the Chartalist websites such as Warren Mosler’s or Bill Mitchell’s one. Then put it all together to get the full picture of what money is.

    To summarise the Chartalist position, the basic thing that gives fiat money its value is that the government issues it then demands it back in the form of taxes on pain of punishment for non-payment. So if you don’t have it you must must buy it by trading goods, services, commodity money or credit money with someone who has more than they need. If the government issues some of its “worthless” tokens only to the unemployed and then only taxes land-owners, you can see how it would cause economic activity as the landowners scrambled to provide goods and services to the unemployed in order to get the tokens required.

    In modern economies the difference between credit and fiat currencies is not immediately apparent since either they are only figures on a ledger or the same paper notes are used to denominate both. However there are exceptions. The Scottish banks issue their own notes which are different in design from the UK banknotes, but of the same value. Of course that is just a small part of the credit money in the UK. Most of it is inside bank accounts and it vastly outnumbers the commodity money or fiat money in the economy. But as credit money and fiat money are freely interchangeable in most modern economies the difference between them isn’t immediately obvious. Still it’s worth thinking about if you’re looking at modelling.

  8. elliottwave says:


    I would like to take you task on your statement below,

    “On hyperinflation you could rightly point to QE1 and say, if that didn’t reflate the US economy how will a second round of QE be hyperinflationary?”

    If you really did pay attention to what is happening in the world you would have seen that since QE1, pork is up 70%, coffee 40%, sugar 25%, salmon 30%, oranges 35%, barley 35%, beef 25%, DJIA up 70% and GOLD IS UP 100%, Oil up %100. Yet Unemployment is also up %50? WHY?

    You do not know that hyperinflation is the loss of confidence in a currency and can only become reality in the most depressed of business conditions.

    You are witnessing the early stages of hyperinflation and it will surprise everyone except the ones holding gold.


  9. mahaish says:

    hi 707338,

    no argument with you ,

    i was merely trying to point out that the strength in gold was a reflection of a weakness in the greenback.

    and your illustration points that out, since against our currency it hasnt done much, which is precisely what i was implying by the statement ” non US dollar financial assett holders” need to take care.

    i think you miss interpret my statement.

  10. slaphappy says:

    #76 elliottwave

    ” as gold will re-enter the financial system as part of a currency ”

    Do you mean like the former gold standard – the promise that a $US was redeemable in a set weight of gold – the promise that Nixon broke in 1973 and left its debtors holding paper.

    In reality it was a gold standard in name only.

    I sold out of my gold stocks in 2006 after reaching the conclusion that the gold price in rigged by the Fed and US Treasury.

    After all they own all the physical gold and they are not likely to sit back and watch capital flow into an unproductive asset.

    I hope you work this out before its too late.

  11. Pingback: AMI Talks in FLV format | Economics for People

  12. elliottwave says:


    Gold has been for centuries a store of value and a standard in a standardless society.

    Paper that has numbers written on it backed by nothing except the faith of the sheeple is the unproductive asset.

    Go back and read Greenspans comments on gold before he was the reserve chairman and then tell me if you still believe that the fed is rigging the gold price.

    Gold has risen from $255 to $1380 so where is the rigged market that you are talking about?

    I bet that you are sorry that you sold out of your gold position but that his how a bull market works it will throw off all the sheeple and weak hands who should not have been in gold in the first place.

    Be right and sit tight, thats how you make the serious wealth as an investor, not as a speculator and gambler like yourself.
    Play the pokies that seems to suit your speculating needs.


  13. slaphappy says:


    Gold has only risen in line with the other base metals and you always run the risk of a central bank somewhere dumping a couple of hundred tonnes on the market.

    If you believe the inflation story then the $US denominated in nickels ( 5 cents) appears a far safer bet.

    US$40 worth of nickels yields 3kg of copper and 1kg of nickel.

    That’s US$50 of base metal.

  14. Frank says:


    I wonder if your models could be reworked into simulations of discrete events. I wonder if some unexpected differences in results could arise out of representing the discrete event nature of transactions.

  15. Jason Murphy says:

    We talking fishing stories boys.

    The best return I ever had was a company called Paladin which I picked up at an average cost of about 10c in about 2000 and cashed out at just over $7 in 2006. [They went on to over $10 3 months later].

    To give a comparison, say gold was $600 6 years ago that would mean gold would need to be $42,000 today!!!

  16. Jason Murphy says:

    re: elliottwave @78

    I’m serious not joking. I do it for the fun, for mental excercise! Having said that though dynamic models seem to be the way to go to me – Dr Keen seems to be a firm believer.

    You arguing with that?

  17. 707338 says:

    Mahaish, I didn’t misinterpret your statement – I was agreeing with it and providing an example (my own experience).

    Elliotwave, fair point! … but I presume those commodity increases are all in USD?

    As gold is denominated in USD it protects AMERICANS against the debasement of THEIR currency and IMHO should be held by all Americans for the very reason you state – to preserve their wealth as the FED intentionally destroys the value of the USD.

    The point Mahaish was making (and I was agreeing with) is that “gold is very much a long run as oppossed to a short run scenario for non US dollar investors”.

    I’m still with you on gold but more for safety if/when the credit markets freeze and trigger the collapse of the ponzi scheme known as the Australian housing market.

  18. Jason Murphy says:

    re @82

    Thanks for that Derek.

  19. Steve Keen says:

    Each economic transaction is a discrete event Frank, but they occur asynchronously–like births do in a human population. The appropriate way to model such a process is via continuous time, differential equations.

    Difference or discrete equations suit processes that occur synchronously–like births in the population of coral larvae.

    You can only use discrete time simulations for processes like those in the financial system if you model at the individual agent level and aggregate–a multi-agent simulation.

  20. mahaish says:

    re QE 707338,

    QE is based on the mistaken belief, that banks need reserves to lend, and that the central bank can make a market at the desired price for that lending to take place.

    QE is basically an assett swap for the banking system, swapping bank assetts for reserve balances through treasury and central bank complicity, which increases the liqiudity of the banking system and reduces the price of money,

    but precious little else,

    no positive impact on non bank balance sheets,

    whether the money gets loaned out or not,

    and as you say its like pushing on a string,

    because banks dont need reserves to lend, they need credit worthy customers.

    no, congress and treasury need to get off their arse, and do what that well know economist, and would be sometime actor russell crowe sugested, and give every body a million bucks straight into their bank accounts.

    well may be not a million bucks, but the direction of his arguement is correct.

    it would make a hell of a lot more sense than QE.

  21. Frank says:

    Steve @ #94

    Thanks. That’s what I was wondering: if there could be any hidden difference or unexpected difference between the results of the continuous models and some aggregated result of discrete events in a massive multi-agent model.

  22. soho44 says:

    A economic/political post.

    Just caught up on some You Tube clips from the governor’s race (Meg Whitman, the ex-CEO of EBay and Jerry Brown). Much of it is the usual pre-programmed two-party only format. Yet, there are troubling signs on both sides:

    Nobody talks about personal debt.
    Nobody talks about forcing the state banks to reveal all of their toxic debt. If they didn’t, can the state step in and take control of the banks? Or, is it the federal govt? Not sure.
    Write off the debt and let everyone who needs to go bankrupt go bankrupt. Is anyone going to bailout Blockbuster? Probably not.
    Bill Clinton endorses Brown. Many people see Clinton as a war criminal (for his role in overthrowing Aristede, etc.). Do you really want that attached to your campaign? Bad move, Jerry.
    Arnie ran state govt. as a business. Nothing happened. Now, Whitman wants to continue the same process.
    Despite all of the “change” that Obama’s never done, not once did Brown ever criticize him.

    In short, Brown can get some mileage from his environmental policies. But as for the rest of it, nothing will change (regardless of who wins). Nobody will drop Prop. 13 (which essentially freezes property tax rates).

    This probably means that even more will be privatized. Do you really want to live in a city where many key services are outsourced? If you do that, that means possibly stronger unions and more fights between them and the city.

    Brown puts out some mean soundbites. But in reality, I’m thinking that Gavin Newsome (currently mayor of SF) would actually do a better job.

  23. soho44 says:

    One last point. Many of the rich and powerful here in the States are “privately” saying that the States will default on their debt within the next two years.

    Tell me that some hedge fund isn’t shorting the national debt. At this point, nothing seems to shock anybody.

  24. myopia says:

    @sirius #69 just wanted to watch it on my phone – I’ll look a download/convert of FLV. Cheers.

  25. Steve Keen says:

    There is a difference between a continuous time and a discrete time model of a process like population growth, which matters when the actual phenomenon is discrete at the macro level–like the difference between animal populations where births occur at all times of the year, and those where they all occur at one specific point in time. The former will have “smooth” dynamics, the latter can be chaotic if the rate of growth of population is high and the population is near the carrying capacity of the environment. This gives rise to the “logistic chaos” map.

    But in the area we’re working in, continuous time is the apt framework. A multi-agent model could generate similar results–and I have a PhD student who is embarking on that topic–but the difficulty lies in specifying agent-level behaviour (which we can’t observe in economic stats) in such a way that it generates the macro level behaviour that we actually do see.

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