Steve Keen: Credit Created Out of Thin Air 3/7

Steve Keen: Credit Created Out of Thin Air 3/7

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Business

University

Hard

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The transcript discusses the lack of awareness among economists about the exponential growth of derivatives and credit default swaps, which contributed to the financial crisis. It highlights the oversight in financial theory regarding private debt and critiques the neoclassical view of lending and saving. Krugman's model of the crisis is examined, emphasizing the misunderstanding of debt's role. The real-world banking process, as explained by Alan Holmes, is contrasted with traditional economic teachings, showing how banks create money and the implications of private debt growth.

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5 questions

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1.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What was a major oversight by economists that contributed to the financial crisis?

The rapid growth of derivatives and credit default swaps

The increase in global poverty

The decline in stock market values

The rise of inflation rates

2.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

According to Krugman's paper, what aspect of debt is considered impactful on the economy?

The interest rates on debt

The distribution of debt

The currency in which debt is denominated

The total amount of debt

3.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What is the neoclassical view of lending?

Lending is a redistribution of wealth among citizens

Lending is a transfer of reserves from banks to borrowers

Lending is a creation of new money by the government

Lending is a transfer of spending power from savers to borrowers

4.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

How do banks create money according to the discussed theory?

By transferring existing reserves

By increasing interest rates

By printing new currency

By lending and creating deposits

5.

MULTIPLE CHOICE QUESTION

30 sec • 1 pt

What does the endogenous expansion of spending power refer to?

The increase in government spending

The growth of private debt

The expansion of international trade

The rise in consumer savings