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

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.

Explain the concept of endogenous expansion of spending power in relation to debt.

What is the significance of the level and rate of change of private debt according to the text?