The Economic Black Hole

This interview is a little more difficult than most of the interviews I share here. We may be headed into a "debt trap" in the economy like the one that has plagued Japan for the last 20 years. A debt trap is "the situation in which the national debt continues to grow faster than national income so that more and more of the government’s budget has to be devoted to interest payments." Steve Keen's proposal of a debt jubilee is one of the more interesting solutions being advocated. 

Comments

[eric anderson]

I haven't watched this interview yet, though I've seen others with Keen. My understanding of his solution is a massive money-printing operation, where cash is helicopter-dropped to everyone. The indebted must use it to pay off debt, and the rest of us can use it to save or spend. I believe Mish pointed out the problems with this solution. A true Jubilee might be helpful. It would make those who foolishly loaned money to bad risks suffer badly. And justly. It would be deflationary, which would benefit those of us who were responsible savers. As President Bush said, Bring 'em on.

[[Positive Dennis]]

Eric, a true Jubilee would take every bond, every saving account, every checking account, every pension and eliminate them. Keen would not penalize savers as they would get money they could reinvest.