Keen answers Krugman

29 Mar, 2012 at 11:42 | Posted in Economics | 4 Comments

Steve Keen has answered Krugman.
To the point.
Read it!


  1. I’m not sure how the system works so I’m not sure if you notice comments on older posts, but I wanted to make you aware (if you aren’t already) of the continued “discussion” between the two. First Krugman wrote another post (link below) on the issue of banks ability (or lack thereof, as he claims) of “creating money out of thin air”. And Keen has responded in turn.

    I also wanted to ask you how relevant this is for how it works here in Sweden. Is it the same here (I’m assuming here that you agree with Keen on this issue) in Sweden; that is, does banks reserves limit their lending?

    Krugman post- Banking Mysticism Continued:

    Keen post –


    A completely unrelated question just came to my mind, I was wondering if you’re familiar with anthropologist David Graebers book Debt: The first 5000 years? I’m not sure if the issues interest you at all, but if so, and if your not familiar with the views, I wanted to bring the book and some ideas expressed therein to your attention. Although it’s not the primary topics of the books (It’s primarily a history of debt, as the title suggests), it brings up and attempts to refute a few (apparently) common notions among economists: That money emerged “naturally” out of barter as a way to ease the exchange of goods by eliminating the double coincidence of wants. That barter (ie spot trade – I give you X and you give me Y, and we walk away) is the common way of acquiring goods in communities that don’t use money. That markets are a “natural accurance”. In fact, Graeber says, markets are state and government inventions. They were originally primarily created by states to feed their large armies, and that’s also the way coins got wide spread use too. The king had a problem feeding his huge army and so he decided that the people had to give him coins regularly (taxes). And now he created and gave his soldiers all these coins that people had to get a hold of. So they brought food and other things to the armies in exchange for the coins and markets cropped up around the armies.

    Again I’m not sure if your interested in the questions or if your already familiar with them. If not, I apologize for cluttering your blog with this. But if so, here’s a couple of articles/interviews you might want to read:

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