Steve Keen, an economist, writes about debt, money creation, Minsky's financial instability theory, and economic modeling.
HN commenters recommend it as a dose of reality on debt and money creation, and point to his work expanding on Minsky.
Letting the banks fail doesn't entail doing nothing and letting people suffer. Hank Paulson's bank bailout proposal got rammed through Congress by the Bush Administration without much consideration of any alternatives. Paulson's plan helped banks and bankers at the expense of everybody else. There were lots of other proposals that got ignored by the press. Here's three different approaches. While I personally favor the third approach, I think its very important to dispel the idea that we didn't have any choice but to bailout the banks, so I want to illustrate a variety of approaches:
(1) Steve Keen suggested a debt Jubilee: "monetary injections by the Federal Reserve not into the reserve accounts of banks, but into the bank accounts of the public--but on condition that its first function must be to pay debts down. This would reduce debt directly, but not advantage debtors over savers, and would reduce the profitability of the financial sector while not affecting its solvency" quoted from http://www.debtdeflation.com/blogs/2012/07/22/the-crisis-in-1000-words-or-less/
(2) Mortgage assistance: put a moratorium on foreclosures; freeze rate hikes in adjustable rate mortgages; help homeowners refinance their mortgages; or replace home borrowing with renting.
(3) Ron Paul proposed we abolish the Fed. While the Fed's profits belong to the federal government, the Fed itself is owned by the nationally chartered banks. Therefore, it's power to create money is used to benefit the…
The role of energy and technology in economics has been grossly misunderstood and/or misstated for decades -- it's largely a product of post-WWII economics, though there are of course older precursors.
A contemporary economist who's demostrated the role of energy in economic production, and whose work would (and IMO should) revolutionise the study, is Steve Keen. His 25 minute presentation "The Role of Energy in Production" adds an additional term, energy, to the standard Cobb-Douglas function, and explains virtually all of the residual.
https://invidio.us/watch?v=BAjN6bG7XzM
Audio quality is poor, but I cannot recommend this video highly enough.
For those who prefer text, much of the material is in this post:
http://www.debtdeflation.com/blogs/2016/08/19/incorporating-energy-into-production-functions/
The idea that "technology" is responsible for "efficiency gains" comes from the work of Robert Solow, and is called the "Solow Residual". It is quite literally a mathematical (or statistical) artefact: if you study the behaviour of a dependent variable on the basis of one or more independent (or explanatory) variables, whatever change is not explained is the "residual", or residual variance.
The residual is real. Its attribution to "technology" is wholly arbitrary. Solow's independent variables were Capital and Labour, using what's called the Cobb-Douglas production function. They collectively explain only about TK% of all increase in net productivity.
Solow…
This is always a contested subject because economics has so many competing branches, many of them with more or less overt ideological overtones.
IMHO, you should listen to economists that (a) emphasize looking at the operational realities of what actually happens in the monetary system, and (b) tell you that banks matter for what happens in the economy.
(If you find it hard to believe that a majority of economists ignore banks in their models of the economy, good for you and your common sense!)
This means you should read what Steve Keen writes and listen to what he says (he blogs at http://www.debtdeflation.com/blogs/), and what the Modern Monetary Theory crowd write, as they explain such basic things as what role reserves and bonds play, from first principles (start here: http://neweconomicperspectives.org/p/modern-monetary-theory-primer.html).
More generally, "endogenous money" is an important keyword to look out for, because our monetary systems are endogenous in the sense that money is mostly created by banks, not by the government.
If you venture into online economics resources, you will run into a lot of (economic) Austrians. I believe this is mostly because of the Mises institute, which is well funded by people with an ideological ax to grind. It's good to reflect on their messages occasionally, but they should be taken with a grain of salt. (And since they are hardcore gold bugs, they don't get endogenous money, which means that much of what they say simply…
From one of the linked papers, by Mike Cole, the guy who seems to be cited the most:
>> My argument is not that capitalism cannot in theory be made more democratic or humane.
This is an incredibly revealing statement.
I'm a big fan of Steve Keen, an Australian economist who won some award for predicting the GFC (http://www.debtdeflation.com/blogs/). He's a huge critic of mainstream neo-liberal economists, claiming they use bad mathematics to prove theorems that don't work in theory (once you correct the mathematical errors) or practice (if you look at the data). He also has a chapter in his book on why Marx was wrong, but I'm not up to it yet.
While agree with some of the points of Transmodernism, it seems to be more of a destination than a way of travelling. The only concrete methodology seems to be a deep suspicion against The Man (or neo-liberal agenda, as it's called now).
The IMF, World Bank, Federal Reserve, and so on aren't bad because they want to be. They are bad because they are following theoretically and empirically flawed theories. They aren't propped up by governments because doing so helps keep the elite in power, governments actually believe that there's no real alternative. The problem is, academic economists (and worse, government onces) like to be safe and conservative. Non-mainstream economists are simply frozen out of the dialogue, like positivists are in post-modern academic societies. Which is quite a problem, when economists are dealing with…
"The variable delta between rent and purchase price/mortgage cost doesn't break the premise that purchasing a house is a hedge against future requirements."
But it does break the premise "but so does the cost of shelter." There is an advantage to sell while it's a seller's market and rent, while doing the opposite while it's a buyer's market. That's leverage that breaks this premise.
"You might do better renting but you don't have the future right to occupy that house at any cost."
This thinking is one of the key reasons why it's possible to systematically make money off of real estate. It's pervasive crowd-think, at least in the more impacted markets. It seems sound and logical, but it's fear based and irrational. There is clearly an upwards trend in real estate, yes that is true. But there are peaks and valleys along that mean.
"Steve Keen (http://www.debtdeflation.com/blogs/) describes investment in assets where the profit won't cover the interest as 'Ponzi' investment as you are hoping to pay it off from rising asset prices and points out that these are unsustainable in the long term, someone is going to get caught out. "
Yes, that's speculative action at work - as I mentioned in my original post with actual examples toward the end with my theory of how to detect the switchover. It's fun to talk about and how to solve it but it doesn't change that it actually occurs. The recent housing bubble exacerbated it but it is a phenomena of active markets during…
A lot of people on the right (libertarians) seem to think that the government is somehow responsible for money creation, and therefore, one needs to go to gold standard or limit the government's ability to print money in some other way. These are pretty much exogenous theories of money creation.
But I believe in endogenous theories of money creation (e.g. chartalism), which claim that money are created as IOUs, basically bonds that can be further traded. And conversely, any bond that can be further traded behaves, in effect, as money, and there is no "hard" definition of what money is. Which means money are really created by lots of different actors in the economic system, not necessarily just government, and to control money creation, you need to regulate the system in many different places (for example, you would have to limit what kind of deals can citizens make with each other, which goes against the libertarian ideology).
In some sense, exogenous theories give their supporters an illusion of control, that the government somehow controls money creation, and so it can and should deal with the problem. But it probably does not, the Central Banks go at lengths to control it, but in lot of cases (like asset price inflation fueling itself) the system can effectively create money on its own and unbalance itself. (I really recommend great post from Steve Keen: https://www.debtdeflation.com/blogs/2009/01/31/therovingcavaliersofcredit/)