Monday, March 19, 2012

Consigning neo-classical economics to the dustbin

Economics without a blind-spot on debt

Neo-classical economics has a blind spot when they deny that private debt has any real economic effect. Steve keen succinctly points out this fallicy. Private debt has very real economic effects due to the way money is created. It leads to asset bubbles and crashes thus explaining boom and bust. He concludes by pointing out that UK's aggregate private debt is greater than USA and Australia.

Posted by greenmind @ 09:31 AM (887 views)
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One thought on “Consigning neo-classical economics to the dustbin

  • I thought it was obvious that debt expansion causes booms. Debt is what allows prices to get out of step with value, the more debt the more out of step with ability to pay etc.

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