in the, in the moon the hi, i'm ash kaiser. this is cause a report special summer solutions edition with mac and stacy. and today we welcome home professor steve again is the author of debunking economics and the author of a brand new instance classic available for pre order right now the new economics and manifesto, you know, one of the very 1st episode ever of cars report back in 2009 was with you, you were one of our 1st guests that was in the midst of the worst part of the

global financial crisis of 2008 through 2009 or 10. you were debunking neo classical economics. at that time, nobody listened to their backs and listening to neo classical economics. so tell us like, what is exactly neo classical economics and why do you have such a problem with that? it's one of 2 ways of looking at how the economy operates, which is to say, it's all about the objective value of things or the amount of time it takes something to them as its value, etc, etc. versus then they across courses. now it's actually the subjective satisfaction, utility one gets out of something that gives them value. so the previous attitude was from the classical school of economics and the fizzy approach before them. and fundamentally they would say the use value of this chair is the fact that i can sit no. whereas the near classical site, the utility, this cares how complex makes me feel. now, when you're working on terms of the objective number,

i can say how many hours alive, how many ounces of steel went into making this thing, etc, etc. they're all non measurable quantities. when i talk about the utility and it's subjective, i might find this chair more comfortable, new nod stacy and, and there's no way to compare satisfaction to get out of them. now, if you think i might give you a bit of a problem doing mathematics, it does, and that's what's actually happened and they are classically can excite the time they started might look like a sensible foundation of saying, you know, the supply and demand. this is as of the supply and demand, codes them and process quantity. and they then tried to build backwards from that the mathematical foundations while going forward in terms of how they model the economy. and unfortunately, the backward work filed every last important mathematical principle. they needed to apply, did not apply that were wrong, but they've built this huge edifices like john juggernaut of intellect. that has taken over people think about capitalism. and that's what they've rolled forward. and it's no damn wonder,

it didn't say go on actual classes coming because it doesn't leave on this planet. it can happen here. so that's in a very, very broad choice. that's, that's the problem with they are classical economics. it's a fantasy model of economic stress up and what i call mr. maddox and i think as mathematics, let's take a look at the contrast between classical economics and neo classical economics. classically comics would include adam smith, who is part of the enlightment who coined the phrase, the invisible hand, which would indicate that prices are derived through market action. and that no, in fact that doesn't max. so let me, let me, let me, let me, let me, let me finish my question. yeah. and then neo classical economics, which would include canes then that group bully learn tries and so on. yeah, leave more in the pricing to be set by a central authority, a committee, a group of people, a group of academic,

a group of mathematicians, funnily enough that ended up in that situation, that literally had to pretend there's a benevolence central authority who distributes income before we all spend and i need to make that assumptions of that. i can explain the downward sloping market man curse. i wish i was joking, but i'm not so that i actually started up with the model of the pure free market economy and to make the model work mathematically, you are going to assume there's a benevolent dictator who we allocates income before we go shopping and everybody is happy with your allocation that with the dictator brings about, that's called the social mental birthday, or the benevolent dictator being the absence of a market function. right? so your, so for example, in the soviet union, there was a benevolent market maker dictator, a guy who said this is the price of tractors. and the company in the country collapsed under adam smith. they said, well, let's let the market decide prices and there was party enlightenment which gave us

the united states. right now. it's a difference between having a market price discovery and having a benevolent dictator. market discovery, right is not the fundamental difference between classical economics and neo classical economics. it's the difference between classical economics and being there classically comics in reality. because the, obviously the market system says the prices here. and obviously the market reflects the distribution of income and wealth and power. and i don't like that. they want to argue that they have everything wisdom. it says in a very fair way, what they call the marginal productivity theory of income distribution. so the only way they could get that resolved ends up by assuming exactly the same effect as having an benevolent dictator. max, if you've got to rate this something to how crazy it is. and unfortunately, that's been one of my sites and lots i think the rate is originally a classical texts. and they have gone so far up the rabbit hall of thinking that this is an accurate and mathematical model of the economy that they've made,

various twists and bends along the way. which societally absurd. like, for example, assuming that there's a benevolent dictator, allocating income before tried tech's life, that was poll samuel's them in non change, 56. okay. so they've gotten cells coordinate large of conundrums. now why out of it is the end of the entire analysis of capitalism, which is what i want to bring back, which is the dynamic and non equilibrium monetary system. we actually live in. and the, the, the macos are someplace on the metal role. and, but it behaves in a completely different fashion than the supply and demand. now the system, they are classical single. so you mentioned the, you know, reading the texts of the neo classical economists. you do provide a lot of quotes in your book. i've read the 1st chapters, so yeah, wrap your head around that. but i want to read one of your quote, sir, because you mentioned librium and how they're mathematical models. basically say that it's always in equilibrium, right?

that, that their focus exclusively on equilibrium. so i want to bring up a good point here, especially when we are looking at all these interventions by the fed. in order to make, you know, creditors whole in order to keep markets stock markets climbing in order to keep house prices climbing. so euro quote, the obsession with equal librium as a mathematical state of the economy has led to exalting it as desirable as well. certainly, as i explained in the next chapter, the financial instability of capitalism is a serious weakness. but as shown during argued almost a century ago in 1928. instability is one of the strength of industrial capitalism, not a weakness. it leads to the innovation and change that is the essential strength of capitalism compared to other systems. the fact that the system is out of equilibrium all the time is partly because of and partly the motivation for

entrepreneurial activity. so this whole notion of zombie banks, zombie corporation, zombie, everything that seems to arrive out of the fact that so you're saying that they have to stick to this model. that all is in equilibrium. yeah, they do. and to do what they actually leave out the existence of money. actually, as you've been fun, i see search on you on, on you, on google for poll proudman master class, and you'll see a little $47.00 per 2nd promotion where curriculum sells the course. he's getting in that master class series. and as part of it, he says, you know, watch it all about. you said it's about people. it's not about money, right? that's their analysis of capitalism without money. and that's, you know, that's like bodies without blood capital and it's crazy. that's what they've done by capitalism without capital. but yeah, so let's look at something here. i'll give it an analogy. it's a see saw. and on one end of the see saw is a $500.00 pound man. and at the other end of the see saw is

a $100.00 pound man. and the $500.00 pound man is sitting on 99 percent of all the wealth. the $100.00 pound man, as one percent of the wealth is obviously not an equal system. however, the neo classical economists will find that point on the see saw data achieves equilibrium. and now therefore they'll say the system is sound. so it's almost like a post hoc rationalization of the system, they'll say, in other words, the system is broken, but the neo liberal economists, neo classical economists come in and say, well, we'll find that point on this unequal see, saw where there is equilibrium. and claim that this is somehow rational, right? so it's just, it's a, it's coming after the fact they're not, they're not actually describing our economies work. they're describing how to rationalize the broken economy. absolutely. i mean, it's actually me of you, you've been elegy given is a, is

a brilliant one. next what's called the price are optimal situation. and as well as to finding like an overall, i think, optimal situation. but all of society say where we are to get from where we are to somewhere else, the best place we can get to is where nobody can be made better off without making somebody else worse off. i'm sorry, that defined that situation. you've just given a beautiful analogy for a way, you know, the, this a source know 20 percent. the fact i'm id, present the thing to balance out the imbalance in there. well for 99 and one in the real world. and also that's right of optimal. sorry. because how about the, the, the 90, not the same to a poor, because we'll have to make somebody in the one percenters rich, less wealthy. that's price optimal, isn't that nice? so then we're not talking about economics. you're talking about propaganda. fundamental as what they've turned into, the not even aware of that, and this is what i also discuss in the book out of the it's easy enough to explain why the wealthy mortlock near classical economics is a defensive a balanced system as well. you've given that analogy for,

but it's why economists themselves and live are that most of them are not service. this is from meeting thousands of economists of my life. most of them actually believe they're doing good and i want to do good. and they think they doing good by making a real world look more like eric and i'm a textbooks they don't realize they're behaving large zealots. and i have a false vision of how the economy operates by the loss of those bits because the overall picture, so beautiful to them. but the trouble is, it's like one of those diamonds where if you, if you tap it on a particular point, the whole diamond shadows an aircraft like alex is full of those more points. so any, any particular thing as acknowledge, like for example, that money matters. so soon as you acknowledge that the rest of the schools, aga, if you acknowledged that income, the incarceration of tex, i go good demand, it falls over. so there's so many why is that that for job what he combined with the, what they say is the beauty of the dom. and before you shattered,

that's what they hang onto. and they're basically religious zealots. while we're going to take a break, then when we come back part to interview with steve kane author of a new book, the new economics, a manifesto, don't go away. the me the whatever.

ah today industry prefers millions of you know, the regulations will be all about making money isn't focused, it's about big international markets or do you imagine the number of the diseases are in every family today? it's, you know, due to new viruses or new microbes, it's not true. so it is due to environment. let's say that not going to take either the momentum, much time with the tech you've got on the come in today. mostly they don't allow us, the food industry is create more jobs, it will create more value added, it will create more. so i don't see why we shouldn't also fight for the interest

something into that we have regulation, we want regulation as the industry. and if we don't have any specialty, that's fine, ah ah, i use the me welcome back to the guys a report time to continue our conversation with professor steve cain. it's got

a new book coming out. you can pre order it. it's called the new economics manifest . we are talking about classical economics versus near possible economics. and neo classical economics gets taken to the wood shed. i would say by steve came. the fact is that they tried to explain all the inequality and nonsense that we have in our current system after the fact. and as you point out, none of their studies include money. now i want to give another analogy here. you know, when i was a kid, a christmas tree under the christmas tree would be a cool toy. and i would rip open the package and i'm like, oh wow, this is a cool joy. and then i looked at the package and it says, batteries not included. and i'm like, oh man, i need a battery now in this kind of similar because here's a model. let the neo classical economists give us. it looks really pretty. but

money's not included, batteries, not included, it doesn't run state game. absolutely. like when the model, like everything else is a pair of intersecting curves, supply and demand. they tend to draw the money, supplies a vertical line and say that's under the control of the government. so the government sets a certain quantity of money and you'll see this in man, food textbook for example. and then there's a demand for money which lives down are going to go the reverse way to show on your camera. i think the damage, let me demand ha, the interest rate, the lower the demand. and they said, well, the government moves the supply by the central bank, but the demand could includes the demand from the government sector. so the government check the demands more money by borrowing money to cover cover a deficit that drives up the interest drive. and that harm to the right reduces the amount of private sector borrowing and that causes or decline and investment therefore recession. that's the model about the effect of the government running a deficit. and you'll see this. and then they say the borrowing government has to

borrow off the private sector to finance it's spending, and that's the big debt, puts an unconscionable burden on future generations. again, that's quoting man, care you look at the real world and government spending. as a deficit puts money in your bank account of the government spends more, spins more and you than a tax is you. you've got more money in your bank account. so deficit creates money, it doesn't that just the demand that's of the supply of money. and then to finance that, when you look at the bank and says of assets, liabilities and equity. when the government puts money, people's deposit accounts and civil chinese slate, which identical number them out of reserves in the banks, assets. and then it offers the treasury bonds on reserves. i go to an interest on treasury bonds. i do like contract reserves. i can try treasury's, they buy them, and that is, it's like it's not financing at all. and as you and already barring off a bank, it's simply letting the banks make money out of the reserves. they've got by turning them into bonds. so that's the vision completely inverts with an aircraft

still think is the right around a government. so let's look at the real world that what happened in the past year, especially in the united states, trillions and trillions of dollars were printed by the government. this is the 1st we've seen since the financial crisis of 2008, whereby, you know, it's been the central bank that has been, you know, taking bad assets and putting it on their balance sheet and whatever, you know, games with wall street. but this was the 1st time we've seen during the locked down where the actual us government issued treasury bonds, trillions of them and sent them out. the result has been, according to the fed, reserved data that they released every quarter about household wealth. you see the parabolic increase and wealth from the top one percent. now the bottom, 50 percent, their wealth increased by $10000.00, household wealth from $4000.00 before it. but the likes of say jeff bezos, his wealth, increased by 88000000000 last year. also, eli mosque,

similar amount of money and wealth increase. so you know, the deficits don't matter. they say call drug with says debt is just we money we owe to ourselves. but speaking of deceit, disequilibrium, and instability. it seems like this sort of explosion of wealth gap. it seems like that money that they say doesn't exist. it all finals always to the elite 1st. and then it never trickles down, especially in economy like the u. s, which is just purely financial life. there's no manufacturing, there's no wealth creation, there are no real jobs except for like service sector. so like, it seems like that system is totally broken and all your models are destroyed. yeah . and the funny thing is that the central banks and governments economists who used to argue that we shouldn't have here on the market. the main role these days is making sure asset, market stone full. so i was that was when, when,

when they signed, when they, when i started doing q a back into 1009 or 10, i come into the chart. this is like signing, signing and likewise, mess estoppel is once you sign on the dotted line, you can pull out of the contract. and what that meant is that literally got involved in driving a bastard process, and on the message to elise point when they began to weigh, you should probably remember the value of the s and p even in 500 index was 666. so they drive it up in the mark of the devil drive and 3000, those fell into the into housing markets and a lot of the markets as well. massively as a delegate assets. so they've got what's actually going on as they have it in incredible capacity to create money. the treasury has that the risks, the central bank in christ reserves for the banking sector, and thereby drive up share prices in around about why they've doing this all the time. and actually amplifying the underlying and equality of capitalism was bad enough without the right of engine that night. it was near

a criticism of neo classical economics and you've got a new book out. the new economics, a manifesto, boils down to the intellectual and academic dishonesty. that's masking a system that's just printing too much money and distributing it in a corrupt fashion. the money should be going to the working class in the middle class, being distributed in a correct fashion under the cover or mask of neo classical economics. under like pop treatment, for example, the new york times is constantly writing pieces to, to propagandized what is essentially a broken system. so my question is that you've got 3 choices now to rectify the situation. as i see it and tommy, or i'm wrong, if i'm wrong, the 3 choices would be allow for debt. the false number 2 would be to raise rates. and number 3 would be to revisit exactly what is money you know,

use for example, of gold standard. come back. those seem to be the 3 choices right now are, or is there a 4th choice? you know, the full choices you understand money properly to begin with, and then say, what if we have, we've done that, we have to why should create money in a market economy, they start the government, come on a deficit and sell bonds to the banks. if the banks sell bonds to the public that reduces the amount of money, but that's one way of creating money. and the other is banks lending. i'm will not get back and retirements, so there's government for your money and credit money and career fair to say it money is actually less dangerous for the public than credit money. because of you know, government putting money in your bank account, it's the government is carrying the parent debt impact of that, not you. but if you get a $100.00 from the bank, you are the bank $100.00 and it's you can produce your own money, whereas the government can to service its financial commitments. so for all these

reasons, it's dangerous to have too much credit those money. but what we have let happened in the last 40 years and they are classical economists because they don't understand it actually encourage the growth of private debt. that means the far too much about money is credit based and thought a little is they advised and will also lead banks decide who is into and why. rather than saying the power to create money as a social license, you're granted by the government. you should use that for responsible purposes. don't finance assets, speculation, finance, entrepreneurship, finance, working capital corporations. so all that stuff, spend less facade. now, money in that sense has always been a promise. okay. a promise of a 3rd party. and it's just like the, the 3rd party promised to do garbage with that power, rather than promised to do socially responsible things like fund entrepreneurs on business funds from consumers and says it been funding speculators. and now we have this crisis situation there, and it shows what happens when you have people who don't understand the system

trying to reform it. on top of this, we have global monetary system, which is the us dollar rails system. we have that terrific dilemma problem of basically the u. s. needs to run these massive deficits. so here we have the governments and stimulus checks. thousands and thousands of dollars. us income went up by 20 percent for that bottom, 50 percent because of all this money. however, it went from their bank to china because china is manufacturers everything. so you have the bottom leaking out that way to china, where the top it accumulates in these asset prices. house prices where 25 percent year on year in the united states. obviously at the bottom, 50 percent got $10000.00 in household wealth. now because of the stimulus checks, house prices actually went up 100001 average. so it just seems like the u. s. dollar itself is also part of the problem. like there's some sort of like, how do you even fix this if, if there's always that basic underlying dis,

equal librium and global trade on a middle course that was america insisting on being there was a currency after world war 2 and bretton woods. that was harry dexter was the american representative. i have a ruling kind of saying rather than having a specific currency created for national tried called the bank. cool. which is what kinds want to use the american dollar. now that's, you know, that's where the big guys way, basically big there are, there, there the that the germans way should be the result of country rather than a british pound. and that's how the americans sort can store it as a catastrophe. because what i meant was, you're using a domestic currency, french national tribe. now what that meant was, you necessarily have a demand for that countries, money. i run above the demand for its goods. so consequently, you actually know the american dollars for tried. you're going to be want to, you're going to be driving up the process of american dollars and making it hard for american explorers. and that's what's happened at the time. i think you last

had to tried surplus back in 1980. and there's been dramatic relocation of production as well by american corporations, china, to take advantage of low wages. now the chinese have turned that into making china and industrial power house and building its own major manufacturing corporation. so america has created its life, his rival, as usual, rather than being enemy this time with one of the gun bomb. it's an economy which can out can pay them, and that's the price america is paying for its bravado. at the end of the 2nd world war wanting to be the reserve currency. we talk about the money printing and how pass up asset prices with rewards. the top 110th of one percent. and part of that asset price appreciation has to do with the central bank buying into the bond market. so they buy the bonds off wall street banks, junk bonds, particularly. and this has the effect of driving interest rates lower. so my question is, as the summer solutions, what if there were

a parameters that would make it impossible for any of these moratti's disease, swashbuckling robber barons to borrow money for less than 4 percent? in other words, it's when i call interest rate apartheid they the, they manipulate interest rates to make it so that if you're a friend of goldman sachs, like for example of louis baton in france, bought tiffany's. and they borrowed money from the airplane central bank at 0. right. i can't do that. i can't buy a company at 0 percent interest rate. so that's, and it's all political, those body cannot. there's no economics involved there whatsoever. it's a pure political favortism, right? so what about saying, you know, interest rates, half that we can allow anyone to borrow money for free, essentially, but that's allowing someone to collect a chronically own, the entire productive base of the economy for nothing. there should be

a positive interest rates for private borrowers. definitely, but the trouble is by letting the see much bought profit our entire lives. you've now got the level of debt that if you brought in the 4 percent right, you'd bankrupt most of american industry. it's carrying 5 times the level of debt. it was back in 1945 when rights for similar to now. so the only way out is to write the debt off, and that's why i'm in favor of what i call a modern debt you believe, which is one of the things i detail in the book. so you pick the door number one to reduce debt with a modern debt jubilee. congratulations, steve came you in a copy to the new economics. i'm out of festa by professor steve. came. thanks to bring i shouldn't. you shouldn't have max. well, i was going to do it for this edition of kaiser report with may max guys are his days here, but want to thank our gas professor. steve came into next time via the me. ah,

the british and american governments have often been accused of destroying lives in their own interest. while you see in this, these techniques is the state devising methods to essentially destroy personality of an individual. by scientific means. this is how one doctor's theories were allegedly used in psychological warfare against prisoners deemed a danger to the state. that was the foundation for the method of psychological interrogation, psychological torture, disseminated within the us intelligence community, and worldwide among allies for the next 30 years. and the victim say they still with the consequences today the, the news

the headlines and i see force jones, my plans scrap all my student restrictions in england, claiming his vaccination policy has worked. although the number of infections still rising, the wall and the front line workers passing that the case celebrated 73rd anniversary, but without too much anticipated pay rise. although they did get an idol from the queen, i think that is a real face. i want to make sure that i knew you these kind of been i do that dr. lee in the serving scenes is so in belgium, this microscope screens and that's fine for silence with their insist that they was the black ah.