By Steve Keen: Credit Money: How it Works and Why it Fails

I need to get a small rant off my chest. I promised myself no finger-pointing on this site but I have to make an exception for Economists. With a total disregard for physical laws, the scientific method, and insufficient calculus skills to create a model that reflects reality, the embarrassing discipline of Economics makes it possible for anyone to prove anything. And they do. All the time. Not one economist in a hundred has a clue. And these people are the most important advisors to our governments. Perhaps it is the fact that economists can generate any answer to any question that makes them popular with politicians, who to get elected, must tell voters what they want to hear.

The only economist I listen to is Steve Keen. He has a lot of important things to say. What distinguishes him from the crowd, and you are really not going to believe this, is that he includes debt in his models. Do yah think debt might be important? Duh. He’s also well grounded in thermodynamics which is vital to understanding the economy.

Credit Money: How it Works and Why it Fails, Part 1

Credit Money: How it Works and Why it Fails, Part 2

Credit Money: How it Works and Why it Fails, Part 3

5 thoughts on “By Steve Keen: Credit Money: How it Works and Why it Fails”

Rob Mielcarski says:

May 16, 2017 at 11:43 pm

Breaking New Ground in Economic Theory

Professor Steve Keen may be the first mainstream economist to address a fatal flaw in economic theory: omitting or minimizing the role of energy. Keen has developed a production formula incorporating energy, not as one factor of production along with capital and labor, but as the indispensable flow activating both.

“Labor without energy is a corpse” says Keen; “Capital without energy is a sculpture.”

http://www.resilience.org/stories/2017-05-11/breaking-new-ground-economic-theory/

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Rob Mielcarski says:

May 16, 2017 at 11:47 pm

By Steve Keen: The Role of Energy In Production

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Trent says:

July 16, 2018 at 1:15 pm

Steve Keen is still pretty status quo. You may want to read Herman Daly, Frederick Soddy, Georgesu Roegan (spelling error?) and Margrit Kennedy.

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1. Rob Mielcarski says:
  
  July 16, 2018 at 1:17 pm
  
  Thanks, I’ve read some Daly but have not heard of the others.
  
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Rob Mielcarski says:

February 18, 2019 at 5:56 pm

They gave the idiot economist Nordhaus, who “proved” we don’t need to worry about limits to growth, the Nobel prize for linking economics with climate change. Skip ahead to the 50 minute mark for Steve Keen’s demolition of Nordhaus’ work. h/t GailZ

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For explaining why humans are odd
To Varki and Brower we applaud
A great mystery they solved
With denial we evolved
And created the Higgs, overshoot, and God

Denial not only makes us believe in god, it is god, because denial created us, and denial may destroy us.

The singular emergence of human intelligence, and its ability to write and read this paragraph, evolved in a gene controlled machine with an unusually powerful computer, that was created by an improbable simultaneous adaptation for an extended theory of mind with denial of reality, and whose complexity was enabled by the increased energy per gene provided by mitochondria, that resulted from an accidental endosymbiosis of two prokaryotes, powered by an unintuitive chemiosmotic proton pump, that originated in an alkaline hydrothermal vent, on 1 of 40 billion planets, in 1 of 100 billion galaxies, and that planet had an improbable store of photosynthetic and geothermal generated fossil energy, that the species leveraged to understand and appreciate, the peak of what may be possible in the universe, before it vanished, because it denied the consequences of its success.

The human brain, the God it believes in, and the overshoot it enabled and denies, all resulted from the same improbable genetic adaptation that occurred about 100,000 years ago.

Varki’s MORT theory explains much of the strange water we swim in every day, and also explains why most can’t see the water.

Denial is the reality that must be most aggressively denied to avoid collapsing the house of cards that keeps us functioning.

The most amazing thing about human overshoot is that we do not discuss it.

You know you are in trouble when reduced CO2 emissions from an economic collapse caused by low-cost oil depletion is not sufficient to prevent civilization collapse from climate change caused by previously emitted CO2.

Our only choices are do we want to fall from a higher elevation later, or climb down from a lower elevation sooner?

What we should do but won’t do will happen anyway, unfortunately too late.

Things that can’t continue usually stop too late.

Truth is like poetry and most people hate poetry.

All 8 billion of us owe our existence to a six-inch layer of topsoil and the fact it rains; 6 billion of us also owe our existence to nitrogen fertilizer created from natural gas by Haber-Bosch factories.

Each time history repeats itself, the price goes up.

Thermodynamics, expressed through genetics, creates beings incapable of not maximizing energy consumption.

Denial is evolution’s solution for permitting intelligence to coexist with our (Maximum Power Principle) subconscious decision makers.

While it digs its own grave, all the mind can do is entertain fantasies and create excuses.

When the only paying job in town is sawing off the branch which you are sitting on, you….saw away! You might refuse to saw and hang yourself from that branch, but the end is the same anyway, and that option is much less fun. — Cynic @Megacancer

Never underestimate the human capacity for denial. — Gail Zawacki

It is remarkable that a brain emerged from a cloud of hydrogen and figured out the laws of physics that governed, and possibly made inevitable, its own creation and destruction.

We have met the oblivious and they are us.

All 8 billion of us originated from one small tribe in Africa about 100,000 years ago that gave birth to a child with an improbable mutation for a more powerful brain that denied reality. The other tribes were soon toast and we took over the planet. We’re all close cousins. I love you all. Except the deniers.

Meaning comes from understanding why we can understand there is no meaning.

Way too many smart people with big reputations are wrong about everything that matters. Something’s gonna happen that gives them an excuse not to have to admit they were in denial.

The most precious and rare thing in the universe is the human brain. We have a cosmic obligation to use it.

Building a competition for maximum power on top of a finite energy source equals exponential build-out and collapse. — James @ MegaCancer.com

The fact that most believe in sustainable growth is proof that most are in denial.

Fire to cooking to intelligence to denial to god to plotting to capital punishment to self-domestication to Apollo 11 to 7 billion too many.

Nothing makes sense without the light of evolution and thermodynamics, and for one unique species that’s intelligent enough to understand both but chooses not to, you need to add denial to the list.

Lots of elephants in the room, but no adults.

A problem with a solution that does not require me to sacrifice anything does not require denial, unless the solution won’t work, like renewable energy.

And you, be you fruitful, and multiply; bring forth abundantly in the earth, and multiply therein. And you, so not to be distracted from my command, deny reality.

The masses have never thirsted after truth. Whoever can supply them with illusions is easily their master; whoever attempts to destroy their illusions is always their victim. — Gustave Le Bon

Labor without energy is a corpse. Capital without energy is a sculpture. — Steve Keen

Debt is a promise to produce more wealth in the future than we do today, so that we can consume more wealth today than we could without debt.

One way or the other, population will fall. One way is civil, the other is not.

There is hope, and there is delusion. Both are comforting, but only one is plausible. — Nehemiah

The Green Revolution has won a temporary success in man’s war against hunger and deprivation; it has given man a breathing space. If fully implemented, the revolution can provide sufficient food for sustenance during the next three decades. But the frightening power of human reproduction must also be curbed; otherwise, the success of the Green Revolution will be ephemeral only. Most people still fail to comprehend the magnitude and menace of the “Population Monster”. . . Since man is potentially a rational being, however, I am confident that within the next two decades he will recognize the self-destructive course he steers along the road of irresponsible population growth. — Norman Borlaug

Cells vote for whomever offers the best chance of fulfilling their dream of becoming two cells.

My brain is just “the Universe aware of itself – with consciousness along for the ride” and it’s perfectly satisfied with that. — AArgot

Energy is the economy. Money is a call on energy. Debt is a lien on future energy. — Art Berman

You can’t taper a Ponzi economy. — Max Keiser

If you do not understand energy, you understand nothing.

We couldn’t save the Arctic, the Amazon or the last piece of cheesecake so it looks like we won’t be able to save ourselves. The end. — James @ Megacancer.com

‘peak demand for oil’ is the economic equivalent of saying the reindeer on St. Matthew Island faced ‘peak demand for lichen’ — Nate Hagens

What keeps me going is that it’s just so damn interesting that 99% of 8 billion people selectively turn off their impressive intelligence when confronted with something unpleasant like overshoot, despite it being in-your-face obvious, including the recursive fact that denying overshoot makes the outcome even more unpleasant. It’s amazing!

MORT is required to explain why people who understands MPP cannot escape MPP.

We formulated the laws of thermodynamics at about the same time we decided they didn’t apply to humankind. — Norman Pagett

Facts are not repealed by refusal to face them. — William R. Catton

If an energy investment is producing net energy, it should not need a subsidy, not even the subsidy of going first. — Gail Tverberg

You can’t reason somebody out of a stance they weren’t reasoned into in the first place. — Robert Sapolsky

The behavior of economists differs from climate scientists in that idiocy explains the former and denial the latter.

The human species is a short circuit on the battery we call Earth.

There is no one driving the bus. — Nate Hagens

That we party of apes could do this much damage in a mere 200 years is quite an accomplishment. — Mandrake

The Neocortex lets us imagine our own mortality; the brain stem keeps us from believing it. — Dan Brooks

What’s worse than a vaccine that doesn’t work? A vaccine that only half works. — Will Thomson

Appetite grows with eating. — proverb

Funniest site tagline: “Previously dedicated to saving humanity from itself – but now it’s probably too late” — Lord Hugh R. Adumbass

The danger we face is in the denial of it. — Norman Pagett

Our standard of living (including food) is created by machines. Interest is the cost of buying machines, and energy is the cost of operating machines. As the cost of energy goes up due to depletion, the interest rate must go down for there to be enough profit to buy and operate machines, including the machines that extract energy. When the interest rate reaches zero, the machines will begin turning off.

Our growth constrained economy is like a bomb with a burning fuse and the only way to extend the fuse is to add more explosive (QE). Having evolved to deny unpleasant realities we can’t even discuss our energy constraints nor the implications of our response.

Totalitarianism is no worse than a democracy of idiots. — AJ

I apologize to a few of you for most of you. — God

How convenient that CO2 emissions will go to zero at about the same time there is no more fossil energy to burn. Net Zero 2050 will be the only climate change commitment we meet.

Idiots gonna idiot. Muppets gonna muppet. Rapacious primates gonna rapacious. — Kowalainen

Economists are confused about inflation, the thing they should understand better than anyone, because they do not distinguish between the price of stuff rising due to depletion vs. the price of stuff rising because the money supply is growing faster than stuff. When the stuff is energy needed to make other stuff they get really confused.

If incomes are insufficient to afford higher energy prices, because high energy prices are suppressing incomes, because low cost energy reserves are depleted, and debt is maxed out, then underinvestment in energy is not a choice. Planned degrowth vs. a chaotic collapse is a choice. But only if we first acknowledge our genetic tendency to deny unpleasant realities.

I frequently get wound up by the covid insanity sweeping the planet and then I step back and remember it’s nothing compared to our collective ignorance and/or denial about affordable fossil energy depletion and climate change which are serious, imminent, and real threats to everyone. We are not rational or wise about anything important. Why should covid be any different?

I used to believe we would build a sustainable equitable future by understanding ecology and biophysical limits, and by moving to organic farming. Now I’ll be pleased if my neighbors don’t eat me. — Jason Bradford

The best solution to climate change is to burn all of our remaining fossil energy as fast as possible mining Bitcoin because it’s a totally pointless activity that does not lead to growth. Then maybe the planet has a prayer. — Tim Garrett

If you look for truth, you may find comfort in the end; if you look for comfort you will not get either comfort or truth, only soft soap and wishful thinking to begin, and in the end, despair. — C.S. Lewis

I hate the phrase “vaccine hesitant”. I prefer “moron leader allergy”.

Fossil fuel humanity is not going to transition to gulag apartment dweller. It will burn brightly, then die. That goes for me and my partner as well. That’s just the way life is going to go, my friends. — notabilia

It is easier to fool people than it is to convince them that they have been fooled. — Mark Twain

Follow the covid money: 1) Politicians depend on pharma donations. 2) News & social media depend on pharma ads. 3) Scientists depend on pharma contracts. 4) Pharma CEOs depend on profit growth. 5) Regulators depend on pharma royalties.

The Ukraine conflict will accelerate the transition to renewables. Unfortunately most of the renewables will be trees that are close enough to homes to be chopped down with axes and transported with wheelbarrows.

People ask me if I think that there will be inflation, and I tell them that I don’t think that there will be anything to buy. That is a different kind of problem. — Gail Tverberg

Nobody ever hides good news. — Karl Denninger

Think of how stupid the average person is, and realize half of them are stupider than that. ― George Carlin

We’re shaking an unstable system that was already on the edge of collapse, and the monkeys in charge have stone age brains and nuclear weapons.

For a super intelligent species like humans to exist it must deny unpleasant realities so that an understanding of the meaning of life does not interfere with executing the meaning of life.

People can get Ph.D.s without knowing how the world really works. ― Gail Tverberg

Covid was an IQ test for 8 billion people. We failed.

One mistake by one emotional monkey and it’s all over.

We’re in a severe state of overshoot.
Abortions are safe and effective.
Make them mandatory after 1 child.
It’s the wise and humane thing to do.

Energy depletion is unsafe and effective at curing overshoot.

Adding money from politicians to science just creates political science. ― el gato malo

The human brain can’t comprehend a reality with no happy ending and a best case outcome of a less bad future.

Having many thousands of nuclear weapons and pretending we’ll never use them when food becomes scarce due to energy depletion and/or climate change is another example of genetic reality denial.

God makes dissipatives blind to the facts so they’ll finish their task. ― James @ Megacancer.com

Man’s most valuable trait is a judicious sense of what not to believe. ― Euripides

There’s no substitute for fewer and/or poorer people except denial.

How enjoyable is a fireworks show to a firework? ― Tom Murphy

I love the story that Peter Ward, Nick Lane and Ajit Varki tell about the improbable miracle of our existence as a uniquely intelligent reality denying religious fire ape with an extended theory of mind built from improbable eukaryotic cells on a rare planet with abundant improbable fossil energy alive to experience a scant 10 out of 13.7 billion years of what may be the peak complexity that is possible in the universe. Where else would you want to be?

Becker’s TMT is to Varki’s MORT as Newtonian physics is to Einstein’s General Relativity. Both do an excellent job of making predictions however the latter supersedes the former and provides a much more comprehensive and illuminating model of reality.

The object of life is not to be on the side of the majority, but to escape finding oneself in the ranks of the insane. — Marcus Aurelius

Wise leaders would have cancelled COP27 and convened POP1, a new conference on population reduction to address climate change PLUS the dozens of other overshoot calamities we face. Unwise leaders default to nuclear war to reduce the population.

MORT is a classic Catch-22 because MORT predicts that MORT will be denied and therefore if MORT is correct then MORT will never be acknowledged. I still value MORT because it keeps me sane by explaining why so many intelligent people are so blind to so much that is so obvious and so important.

Democracy is the pathetic belief in the collective wisdom of individual ignorance. — H.L. Mencken

Two back-to-back global events in which our leaders lied about everything and implemented policies that made no sense can be understood when viewed through the lens of imminent overshoot collapse. Covid was an attempt to prepare for the possibility of not securing the resources needed to resume growth, and Ukraine is an attempt to get the resources.

Peak oil isn’t the problem. Peak usage is the problem. If we can’t afford fossil fuels (i.e. insufficient net surplus) then fossil fuels will stay in the ground, no matter how much there is. — Norman Pagett

The woke smartest people in the room who will only eat non-GMO kale are waking up to the fact they GMO’d themselves, and are not only victims of a fraud that harmed themselves, but were duped into promoting harm onto others, including their own children. — David E. Martin

Meet Steven Pinker, whose denial of limits increases the likelihood of his worst fear: the end of the Enlightenment. — Jason Bradford

It used to be “turtles all the way down”, nowadays it’s “clown shows all the way up”. — hillcountry

Cheap surplus energy allowed us to have technology. Technology will not allow us to have cheap surplus energy. — Norman Pagett

Life after fossil fuels will closely resemble life before fossil fuels, except we used fossil fuels to damage the earth’s carrying capacity, so we can expect at most a few hundred million people. — William Rees & Megan Seibert (paraphrased)

Our society is so dumbed down and indoctrinated that anyone who’s a critical thinker is perceived as a Conspiracy Theorist.

An exchange between Nate Hagens and Kevin Anderson highlights why population reduction must be our focus: Hagens: “We’ll have 50% less oil by 2050 which means we’re screwed.” Anderson: “We need to use zero oil before 2050 or we’re screwed.”

Humans are: a biological species; one of millions; relatively new to the planet; needed by few but needing many; part of nature; belonging to Earth and no other place. Moreover, many humans on the planet are: only very recently experimenting with modernity; operating without explicit regard for ecological consequences; rapidly spending a material inheritance; boasting a population temporarily swollen on the fruits of that inheritance; carrying out enormous ecological damage as a thoughtless by-product of energy and material expenditures; running a system predicated on something as obviously and inherently unsustainable as growth; purposefully decontextualizing our lives by separating further from nature; powerful enough to have initiated a sixth mass extinction; collectively arrogant enough to think we’re getting away with it; short-lived enough to not appreciate the magnitude of the insanity; unaccustomed to thinking about context, as lives are increasingly structured around narrow concerns. — Tom Murphy

We know now, they knew then. — Jim Scott’s “The Crime”

Nothing is obvious to scared people. — el gato malo

You can’t be that incompetent, so malice must be assumed. — marromai

Awareness of covid crimes is probably a similar feeling to being a devout catholic and finding out your long trusted priest abuses little boys, and then learning that your fellow parishioners don’t want to hear about it.

CONCLUSION ABOUT COVID: The entire covid campaign, from CIA-military planning, to initial Wuhan false flag, to WHO declaration of a “pandemic”, to medical institutional responses, to general lockdowns and impositions on personal behaviour, to unprecedented censorship and media alignment, to mandatory vaccination accompanied by dismissals from workplaces, to delicensing medical and legal professionals, to completely biased court rulings, to covering up vaccine harm and deaths, to egregious isolation and mistreatment of vulnerable populations, to shredding of constitutional protections, to criminalizing dissent and demonstrations, to locking away political prisoners, and on and on, in a total blanket of actual totalitarianism in Canada and many countries, has been an outright unjustified vicious assault against people. — Dr. Denis Rancourt

We don’t do accountability in America. — Colonel Lawrence Wilkerson

Science is a narrow tool: powerful and tenacious like a pit bull, but having no intrinsic wisdom or context. It concerns itself with what we can do, not what we should do. — Dr. Tom Murphy

The only thing worse than the failure of the green energy transition would be the success of the green energy transition. — William Rees

Will AI fix peak oil? No, because the AI will tell us to use less oil and we don’t want to do that. — Arthur Berman

By solving their mystery you accept their monsters. — J.J. Couey

Mistakes were not made. Don’t let them get away with it. — Margaret Anna Alice

A complex civilisation is like a soufflé. It is either growing or collapsing. There is no steady state. — Tim Watkins

Transfection via mRNA is like peak oil. The evidence is overwhelming and yet we do nothing intelligent in response.

The further a society drifts from the truth, the more it will hate those that speak it. — Thomas Binder

We are plenty smart enough to know what to do if we could see our overshoot predicament.

The universe’s peak intelligence has hit peak everything and it’s all downhill from here.

All taxes are carbon taxes. — Hamish McGregor

Forests precede civilizations and deserts follow them. — François-René de Chateaubriand

Evolution is cleverer than you are. — Leslie Orgel

Those empowered to do what little can be done, the world’s aristocrats, do what they have always done: surf the crest of power and wealth with their dicks pointed into the sunset of their civilization and their heads up their asses. — Joe Bageant

Gain less to live better. — Charles

“Green energy” merely delays the comprehension of the fact that modernity is wholly incompatible with both climate goals and the finite nature of coal oil and gas. — B

Denial, it seems, is the only economic resource which is still growing exponentially. — Tim Watkins

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