Steve Keen

Ben Bernanke, I mean, three weeks before the crisis began, Ben Bernanke made his report to Congress and said what a great year 2008 was going to be.

He predicted 2.5% economic growth was actually minus 2.5% the year after, okay?

Doesn't lose his job, okay?

Can make the biggest mistake in the history of prediction and not suffer as a consequence of it and gets the bloody Nobel Prize for work that still pretends that banks are intermediaries.

And the volatility of private debt, that's what caused the 2007-8 crisis, the global financial crisis.

That's what caused the Great Depression.

And these idiots, and I'm afraid I'm getting, the older I get, the less patience I have with people who can't take the blinkers off their eyes for neoclassical theory.

But these educated idiots just don't even look at the data because it's not in their mindset to believe that credit can have any impact on the economy.

So what I was looking at that the mainstream ignored is the level of private debt and its rate of change.

Yeah, Peter and I have had a couple of conversations.

Well, it starts right back when I was first learning economics as an undergraduate student at Sydney University and literally in first year.

And this is in 1971.

So we're talking, you know, well over 50 years now.

And one of my lecturers said,

You exposed a flaw in the conventional theory that you don't normally learn at all such time.

You're so inculcated with the conventional theory that you treat it as an interesting quirk, but you don't really worry about it.

And this is what's called the theory of the second best.

And this won a Nobel Prize for the people who developed it.

But what they argued was that if you're two steps from what economists describe as nirvana, so equilibrium of supply and demand, yada, yada, yada, that's nirvana for neoclassical economists.

If you're two steps away from what gives you that nirvana, then moving one step closer to it will make social welfare worse.