… Money is not controlled by the central bank. Money is something that is created by the private banking sector and there are really no effective constrains on the rate at which they can increase that. There are constraint how fast they can do it, but they can’t be stopped from creating money. What it require of course is a willing borrower on the other side. Of course when you get to the point that the willing borrowers disappear then that capacity to create the constraint that we are seeing now, falling down. But when they could persuade us that it is really smart to be in debt, then as that bubble goes that actually causes the rising asset prices which encourages more people in. It sets off the entire bubble. That is what gets us in… (Steve Keen)
Paul Mason speaks to Steve Keen on the weaknesses of mainstream economic theory, and on the need for a debt writedown. Posted for educational use, originaly broadcast on BBC Radio four.