Rebel Economist Says Everything You Know About Economics Is Wrong | #NovaraLIVE

Welcome to Navara Live. I have another special episode for you today on the state of the UK economy ahead of Rachel Reeves budget of course. Um a couple of weeks ago I did an hourong interview with Martin Wolf. Very much someone who speaks from within um the economics establishment even if he's somewhat critical of it.

Um I think it was a very interesting conversation, lots of views. Um, however, lots of you were asking for someone who was outside of the economics establishment for my second interview, someone who was a bit more of a rebel, and I have exceeded to your demand. Um, Professor Steve Keen is an economist who has spent his entire career calling out what he sees as the fatal flaws in mainstream economic thinking. Um, and he [snorts] has a popular YouTube channel where he regularly makes those arguments.

Um, I know a few of you already subscribed to that YouTube channel because we've had a number of requests for Steve Keane. Um, one thing Steve Keane thinks economists get wrong is the nature of banks and money. So, he thinks economists have systematically underestimated the importance of banks in the financial system and how too much private debt creates financial crisis. Um, as you'll hear in the first part of this interview, I'm totally persuaded by Steve on this point.

he deserves a lot of credit for predicting the 2008 financial crisis when other economists didn't. Um what I think are his more controversial arguments um concern his beliefs that governments don't really need to worry about deficits. Um this comes from sort of Steve's alignment with modern monetary theory. Something that comes up a lot again in comments um and sort of really divides the left actually MMT.

Um and it's a debate that's especially relevant today. That's because um Rachel Reeves's decision not to raise income tax has spooked the markets who are now selling off government bonds. Um Steve Keane thinks government shouldn't be scared of the bond markets. I'm slightly less sure um in terms of the interview for the first half and we talk about money, what it is, how it's created, private debt and financial crisis.

Um at times it's quite technical but I think it's really valuable to understand and also explains why house prices are so high. Um in the second half we ...