The Only Aussie Economist To Predict The GFC Shows Treasury Department How The Economy Really Works

26 Apr

This past Friday, Professor Steve Keen – the only Australian economist to predict the GFC and give cogent reasons why, and thus one of very few economists in the world who is not a danger to the public – gave this superb, by-invitation (!?!) presentation to staff at the Australian Treasury department.

If you want to gain a better understanding of how the economy actually works – as opposed to how all the people who run the country ass-ume it works – I highly recommend making time to watch the whole thing.

One of many highlights for me came in the question time following Steve’s presentation (1:09:20):

“One of my students put a beautiful question to me once saying, ‘Is the finance sector a Profit centre, or a Cost centre to be minimised?’ It is the latter.”

Logical inference: We must minimise the size (and power) of the finance sector.

The excesses of the finance sector are built, primarily, on the Twin Pillars of currency exclusivity (legal tender laws) … and the power of usury.

Breaking those twin pillars is where any realistic long term “solution” must begin. For those interested, this is my idea for how to begin doing that.

Enjoy this brilliant presentation by Steve Keen, and follow him on Twitter @ProfSteveKeen

* Please help educate others, by sharing this video.

4 Responses to “The Only Aussie Economist To Predict The GFC Shows Treasury Department How The Economy Really Works”

  1. Geoff Collet April 26, 2013 at 12:01 pm #

    An interesting video which puts into detail what every successful business person is subconciously aware of. From the successful odd jobs person to the management of the largest successful business. This emphacises the need for successful business people who have run a business where the profit or loss has a large affect on their personal income, to be a majority in government. As I see it this is the last thing existing in the present Australian Government.
    A successful business has to minimise costs, maximise income and satisfy it’s customers and suppliers. A vital balancing act.
    Government is the largest business in Australia. A great pity it does not contain business people whose salary is affected by performance.
    A good video but far too detailed for the average citizen.
    Pass it on to Readers Digest book condensing team

  2. graphite April 26, 2013 at 3:57 pm #

    Professor Keen is, indeed, one of Australia’s great economic thinkers. In other posts elsewhere on the web, he explains how our money supply is largely created by privately owned banks in the form of interest bearing loans. Only a tiny fraction is created by the Australian Government in the form of cash.

    This should be regarded as an outrage by all thinking Australians. It involves the privatisation of the profit associated with issuing our national currency (or seigniorage) into the hands of private banks and their shareholders. Aside from costing the Australian government billions in lost revenue, this is surely the greatest example of corporate welfare ever devised. I’m sure that Australian farmers and manufacturers would love to be able to create their own currency – out of nothing – and loan it out at interest, but sadly this privilege is reserved for the finance sector.

    With reference to an earlier comment about Government being a business, I disagree. The NSW Right faction of the ALP is a sad example of what happens when we have people who are driven by the profit motive running the show. To my mind, we need more pollies and public servants motivated by the National Interest, rather than the sort of grubby self-interest that’s better suited to Parramatta Rd car yards.

    With ANZAC day just gone it’s timely to think about the kind of people who volunteered to serve their communities – at the risk of their own lives – not for personal profit, but for the good of their families and their nation. If those blokes were running the show today, would they tolerate the current money-creation system in Australia?

    I think that Henry Ford’s quote (which referred to the US, but is possibly even more relevant to Australia today) is relevant;
    “It is well enough that people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning”


  3. Ross Johnson April 27, 2013 at 10:53 am #

    The function of money has been perverted by our finance system.Money is only a medium of exchange.It has no intrinsic worth and costs nothing to produce.

    It is also a means of saving our productivity that is in excess of pure survival needs. Money has been turned into a commodity that trades in human worth and thus no longer caters for human needs.This is why there is so much poverty and income inequality.

    Notice that our growth rate of 3% is nearly always equaled by an inflation rate of 3%.If we don’t have infaltionary money, our economy gets starved of liquidity because our productivty of 3% gets expressed as debt .Hence we are on the treadmill of ever expanding debt unless we sell off huge amounts of resources.

    China still produces 80% of its new money via Govt Banks.This is another reason why they can have growth rates up to 12% pa. They are not dominated by the Central Banks of Europe and the USA.

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