Debunking Economics - the podcast

There’s a common myth around banks. That banks are the intermediaries who collect deposits from customers, keep a bit in reserve, then lend out the rest at a higher interest rate. That argument then extends to a multiplier effect, where the money loaned out is deposited in banks, freeing up more money for further loans. The multiplier is how textbooks argue that banks create new money for the economy. This week Steve argues that the multiplier doesn’t exist. Not in that way anyway. And banks create money, not by lending out deposits, but by creating new money to lend out, which appears as deposits in the bank’s balance sheet. This week Phil brings the textbook arguments to the table for Steve to shout them down. Hosted on Acast. See acast.com/privacy for more information.

Does government debt expand the supply of money? According to Modern Monetary theory, yes it does. It’s all down to simple double-entry book-keeping and an understanding of the role of financial equity.   As Steve explains, in this step-by-step guide, for the private sector to experience positive equity, the government sector has to have negative equity. In other words, without the government sector spending more than it’s earning, there’s no new money being added to the private sector. As Stephanie Kelton puts it, their red ink is our black ink. This is one episode to share with your friends. Hosted on Acast. See acast.com/privacy for more information.

The discussion centers around Mario Draghi's call for increased investment in Europe to combat economic stagnation. It highlights the need for innovation, particularly in AI and renewable energy, as paths to reclaiming competitiveness. The challenges posed by Europe's parliamentary system and regulatory constraints are examined, alongside the potential advantages of a more unified approach. The conversation also touches on how U.S. spending cuts could create opportunities for Europe, emphasizing the importance of collaboration and strategic investment in technology.

The discussion kicks off with the implications of tariffs and their potential to boost domestic manufacturing while risking inflation. Analysts dive into Trump’s proposed tariff plan, particularly its effects on trade with China and Mexico. They explore the complexities of relocating manufacturing to the U.S. amid a skills gap and wage differences. The talk shifts to navigating economic challenges, including the workforce's adaptation to new realities. Finally, they touch on the broader ramifications for global investment trends and predictions about future economic policies.

The discussion kicks off with the implications of a new inheritance tax on family farms in the UK. Concerns about land as a familial legacy collide with issues of wealth inequality. The hosts critique existing economic theories and highlight pressures on younger generations. They advocate for a more equitable approach to inheritance tax, contrasting it with systems in countries like Australia. The potential imposition of land taxes on farming practices is explored, questioning how taxes influence property speculation and agricultural productivity.

The podcast dives into the clash between capitalism and individual freedom, questioning Milton Friedman’s views on self-interest. It highlights tragic consequences of economic irresponsibility, like a man losing power due to his inability to pay bills. The discussion shifts to humanity's future beyond Earth and the challenges it poses. It also critiques wealth dynamics, arguing for a redefined freedom that aligns personal rights with community well-being. Overall, there’s a strong call for systemic change to support society's most vulnerable.

The podcast dives into Britain’s capital expenditure crisis, revealing how underinvestment is fueling potholes and train breakdowns. It contrasts the UK’s 6% of GDP in capex with much higher rates in the US and China. The hosts discuss the shortage of engineers and the pressing need for STEM education. They suggest freeing capex funds from budget constraints to prioritize long-term infrastructure projects. Additionally, the conversation critiques traditional cost-benefit analyses and explores the transformative potential of strategic public-private partnerships.

Explore how cooperatives could reshape capitalism by aligning worker interests with profit motives. Discover the cyclical nature of debt in financial systems, especially the shift to household lending. Hear real-world success stories from companies like Mondragon and John Lewis, showcasing the motivational power of employee ownership. Delve into the democratic principles of cooperatives and their community focus. Learn how cooperative banking supports local economies, promoting equity over profit while also discussing workforce representation in corporate governance.

What drives economies into decline? Explore the debate between external shocks and the internal struggles tied to resources and wages. Is inflation the true enemy of growth? Discover Karl Marx's perspectives on profit and investment strains. Learn about the factors that pull economies out of recessions, including the power of consumer confidence and the role of government intervention. Plus, uncover how companies strategically thrive during downturns and the potential of universal basic income to support those affected by economic cycles.

It’s a sad fact that war can pay. The US arms industry is one major beneficiary. The UK is a long way behind, but it also a big supplier of armaments to the world. If governments of the world upped their defence pending to 3 percent of GDP that would see a massive increase in demand for weaponry. In Britian’s case it could re-engage the manufacturing sector and maybe even lead Britain back to a trade surplus. Phil asks Steve why we seem happy to see government spending on defence, supporting growth in the private sector. What a shame we don’t apply the same logic to helping other sectors grow – sectors that don’t involve killing people.  Hosted on Acast. See acast.com/privacy for more information.