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#303 – Steve Keen: Marxism, Capitalism, and Economics
Lex Fridman Podcast
Debt deflation and capitalism
The danger in capitalism lies in debt deflation, which is more hazardous than inflation. When attempting to pay off debts, individuals end up owing more due to a decrease in price levels. This paradox, termed Fisher's paradox, occurs as liquidation to settle debts results in lower monetary debt but higher debt levels once deflated using price levels. The primary cause of debt deflation is excessive bank lending and private money creation, leading to increased debts during periods of deflation.
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