those satellites could become new miniaturized nuclear weapons orbiting the world and we and then on command they could be detonated anywhere and that is what i meant crazy nuts that is why some of us think that they're really angling at to have that capability i mean this is it's typical of what a poor less defensive country can do against a much larger and capable i mean the david goliath type of scenario and the problem is that if they were to explode this missile or this nuclear warhead satellite at three hundred miles we have no defense against that and we create a massive e.m.p. electromagnetic pulse that could knock out vulnerable electronics on the ground given our given our our dependency on technology today that would be catastrophic michael maloof former pentagon official thank you so much for being here is your.

goal for quick break but stay with us because when we return author and economist steve keen joins us to answer the question can we avoid another financial crisis we'll be right back. twenty eight team coverage we've signed one of the greatest goalkeepers available to us but there was one more question and by the way it's going to be our coach. guys i know you on the us he's a huge star among us and the huge amount of pressure you have to the center of the problem here with you and the great. you are the rock at the back nobody gets past you we need you to get let's go. alone. and i'm really happy to join the team for the two thousand and ten world cup in russia. the special one come on so it's

a cliche needs to just say to redo the team's latest addition make the episode to go. look at. the far right didn't britain isn't just on the march it's taking violent mothers action light nation. against you know again i see things will deny as they should which will usually split into which we take different names how do you view that. a. complex way of butchers.

welcome back lego's new c.e.o. is trying to steer the company through a fall in north american and european sales the danish maker of construction toys suffered a seven point seven percent decline on sales for last year their first in thirteen years and a seventeen percent drop in operating profits c.e.o. mills christiansen who took over in october warned that there is no quick fix to lego's problems the company still managed to outperform competitors mattel and hasbro in overall annual say sales to take the top title of global oil seller but mattel and hasbro have also suffered from falling revenues and sales drops leaving lego as the biggest fish in the small pond lego's troubles also come as a toy maker has raised its profile in recent years with lego movies and more licensed toys from brands including star wars.

and with all of the efforts by the trumpet ministration to relax and strip away some of the dodd frank financial reform and consumer protection laws from back in two thousand and ten it's a good time to ask can we avoid another financial crisis and we're fortunate to have with us the author of that book steve cain can we avoid another financial crisis see if thanks for joining us again so is it possible can we avoid another financial crisis. well we were avoiding this financial crisis in the same way a lot of void breaking your leg after jumping off a cliff because you've already come down a substantial hot from a excessive level of profit and climbing back up again to have another in the fall off that same cliff is a bit harder when you've got a pair of broken legs and that's really the way i'll paraphrase america's situation it had a financial crisis because of a debt bubble private debt bubble that's fallen a bit off of the crossest but you still have

a historically high level of private debt and you want have another cross' in terms of a precipitous decline like a cut back in two thousand and seven two thousand and eight you never going to get much of a. wind behind your back any anymore either so in that sense america and the u.k. if avoided across this by having one and not having properly recovered from it but the rest of the world places like china australia canada belgium norway sweden i think they're in for the run version very shortly you know steve you mention in your book and when folks look look at qana missed like minsky you know they they contend that we will revert to forgetting the lessons of the past and and given what we are seeing in the u.s. and hopefully not too much in other places where they're trying to pull back on some of the responsibilities that were placed upon financial regulators do you think we're headed for what he said that we're going to go bright back to some of these problems again. well we haven't learned the lessons from the process that's

certainly true and if you look back to the great depression we could have learned from that process about what to do what to do and how to avoid another one to really avoid letting huge amounts of private data came in like one small but with completely failed to learn the lesson every time and of course the regulators when i start to think everything is ok again from the neo classical mainstream economic perspective they have they start stripping a lie all the all the missions we put in there to prevent that same sort of behavior happening one small so the behavior will recover and we're certainly saying that right now the same sense of euphoria will come back in again but as i said it's a bit like having had a cross already and not having reduce the debt by anywhere near as much as it fell after the great depression the headroom for another boom isn't quite there so i think what's going to happen instead is the regulators will as well as relaxing the rules a little so i think oh we can put interest rights up again we can stop cutting government

spending and they'll retreat shrink some of the day leverage ing that gave us the process in the first place exactly well i want to go back to what there is this thing i know you're aware of it but for viewers it was the financial crisis inquiry commission the f c i c and they came out with a report they were authorized by congress i think it was two thousand and eleven and they talked about two primary culprit is now these are different than what you talk about but i used to do this little poem steve about thing one and thing two in the first thing was. the regulators and lawmakers were a problem because they lessened regulations the last time i went through the thing you're talking about and the second thing was that the captains of wall street took advantage of it so i'll give you my little quick poem light markets dark markets big markets small red green and black markets they traded the malls they were burning up the fiber there was fire on the phones and then what they did they traded bundles of toxic mortgage loans and the risk was so. portable it was so easy

to use that sometimes they wondered just whose risk they might lose and they traded and traded it's what kept them alive and they did so this trading twenty four seven three sixty five thing one and thing two what could possibly go wrong now so f c i see talked about those two things but you're really focusing on debt and why why is it explained that how death debt is different and why that gets us back into the same old same old structure where we lose sight of the lessons and fall into the trap again steve. well the fundamental reason it matters is that when you borrow money if you're in an individual purpose if you let's say have an income of one hundred thousand u.s. dollars a year and you you you're maxing out a credit card every year by ten thousand dollars your totals ending is one hundred ten thousand and you are the most popular person on main street of course then you get to the side you've maxed out three credit cards you are thirty thousand dollars

and you think oh i've got to stop paying my debt back so rather than spending one hundred ten thousand you spend ninety thousand and ten thousand off a credit cottage a cheer that manger all spending falls by almost twenty percent now that is the laws at the individual level and conventional economics says all well you know when bill spends he borrows off stave so bill can spend more steve less than the when bill replies he's got less and staves got mole and it all balances out in the wash that is wrong completely categorically wrong because when one person lends to another there's no money created but when a bank creates a loan it also creates a matching amount of money which the recipient then spends so bank that boosts the money supply and it boost demand at the same time so a rising period of deadlock you had a private deadlock you had from about ninety two through to two thousand and seven gives you apparently prosperous economy but as soon as people find they have to

stop paying the debt down all the banks start wanting to extend that dead the right to growth of credit credit right across the debt stops credit disappears it can go from positive to negative and that's what happened in two thousand and seven so you went from having credit being equivalent to fifteen percent of j.j. paid him on a six percent now the economics the discipline says that doesn't matter because it's the see saw they completely wrong the central banks are telling that these now the bank of england than the bundesbank and you have a twenty percent fall in aggregate demand which is the by anybody's definition across us that's what matters but it's still ignore it by mentioning economists like paul krugman larry summers and all that crowd. now steve when you look at some of the numbers coming out some of the figure is in the u.s. and about debt that is accumulating and people failing to pay their mortgages on time more than they have and i don't know if it's six or seven years do you think we're beginning to see some of the indications that we are headed down this rough

road yet again. partially i mean you if you look at the peak level of private debt than america accumulated during the bubble it was about one hundred seventy percent of jay-jay pay through the daily verging off to the process of people going bankrupt a debt ridden written off and so on it fell by about twenty percent of g.d.p. to want one point five times a day pay it's now rising again it's rising in the right of about seven percent of g.d.p. every year now what i think is going to happen is that as that starts to occur and you have the federal reserve believing everything's fine again because they completely ignore this issue they'll stop putting interest rates up trying to head towards that right of at least say three percent they used to get four percent as their right of interest in the gold saga three percent this time and the b. publications in in the congress may not they might go with trump on the infrastructure spending which will boost the economy through the government spending more than it takes back in taxes but in the poll rons of the world have

their way they'll stop cutting government spending and get spending on the poor of course and continuing spending on the rich and what that will most likely do the rising cost of debt and the dog michigan out of money being created by the government will trigger what happened back in not in thirty seven and that is a private sector will go back into reducing its debt levels again now that was called the roosevelt recession when it happened because unemployment which had fallen radically from twenty five percent of the population in thirty two down to eleven percent by thirty six rose again to twenty percent everyone see the same ra's but i think what you're going to see is a bit of a boom the regular the policymakers will get comfortable thinking everything's back to normal again put the rights up reduce government spending and bang the private sector will start cutting its spending once more to pay back that debt and will go back into another slump and that's really a wash and repeat that japan has been doing now for twenty five years. yeah well it looks to me like a lot that you say may happen is going to start happening i don't know pretty

pretty soon here i mean the the us federal reserve looks like they're going to go ahead and boost interest rates not just now and in march but in the next several months and the e.c.b. looks like sometime later this year so we could be well down that path hey steve anybody wants to read your book can we avoid another financial crisis they should do so it's very interesting but you've also written a comic book about economics as well tell us about that a little bit all that that's what he said on the senate and more and less is not a little. taking the calling out of economics and in a funny sort of way i was had to fly out to give a conference speech and in kent kind of a couple of years ago and i was reading larry summers that's larry on the cover there and he invented this concert be called the feria which stands for the full employment real interest right and this has never been in uses

a term in economics have a patrol and this one paper it was there twenty one times and i was reading this thing in thinking a lot of bollix it was frankly and thinking it's almost like some particular excel abida or quantum physicists discovered some new fundamental particle and i realize that was a great line to send up the whole idea so i write a satire on that basis and then that's what's been illustrated by a fabulous cartoonist and then going across to a similar conference in france i was reading about these two french economists called council can. who write a book talking about non-orthodox economists being what they called economic the nihilists now in france to novelists is pretty much accusing of being a holocaust denier. and i thought well but frankly populous and i wrote a satire about them as well saying they were part of the. warning about the outbreak of a dangerous new virus called reality which was a take on economists in the in the midwest of america and the only way to avoid the

virus was to complete avoidance of reality was the only technique that it worked to keep you as a mainstream economists and i finished up with a rich satire on david ricardo who though we know him as the father of the author of comparative advantage he was also a swindler and this is actually historically true and i had a fair bit of fun blending his actual role swindling he's felt a stockbroker's over who won the battle of waterloo with swindling the world over the idea of comparative advantage and this is all basically to take the take the mickey out of economics because the desperately deserves to be taken less seriously take the mickey in the pill not in the mickey mouse because it is still a cartoon but anyway we look forward to reading it we thank you for your contribution to the dialogue and particularly in your contribution to boom bust steve came the author of can we avoid another financial crisis thanks for being with us.