Debunking Economics - the podcast

This week Phil and Steve dig into the storm of controversy over Australia's new budget rules targeting property speculators. The Labor government has scaled back negative gearing and abolished the 50% capital gains tax discount for established dwellings—major tax shelters that have historically rewarded people for gambling on rising asset prices rather than working productive jobs. Steve demonstrates that the country's absurd house-price-to-income ratio is driven entirely by the acceleration of private mortgage debt, heavily fueled by decades of destructive government policies designed to protect the wealth of baby boomers. Phil notes that while these changes may discourage real estate hoarding, Australia's massive, housing-reliant pool of intergenerational wealth still avoids inheritance taxes. So, is this a smart move by the Australian government, and could curbing the rentier class finally force the financial system to back local innovation instead of property speculation? Hosted on Acast. See acast.com/privacy for more information.

This week Phil and Steve dismantle the structural shift of the global economy toward a permanent state of debt dependence. Following a critique of Steve’s recent debate on the Piers Morgan show and a revisit to last week’s discussion on th link between energy and productivity, they look at how policy since the 1980s aggressively incentivizes borrowing over saving. Steve argues that the banking sector now functions primarily to inflate asset bubbles—particularly in housing—rather than funding productive industry, effectively conditioning entire generations to rely on debt-fueled asset growth for wealth. By debunking the neoclassical "savings myth," they show how the broader economy is dangerously fragile to any slowdown in the relentless creation of new debt. Hosted on Acast. See acast.com/privacy for more information.

Phil Dobbie talks to Prof Steve Keen about the one modern economy that actually let its banks fail — Iceland — and what the rest of the world should have learned from it. They unpack how a tiny country ended up with banks eleven times the size of its GDP, fuelled by high interest rates, foreign borrowing, and a carry‑trade frenzy that made Iceland look less like a nation and more like a hedge fund with a flag. When the krona collapsed, imports doubled in price, inflation exploded, and the banking system imploded — yet Iceland refused to socialise the losses, letting foreign creditors take the hit while rebuilding with new domestic banks, capital controls, and a currency so cheap it sparked a tourism boom. Phil and Steve contrast that with Ireland, Greece, and Cyprus, where governments guaranteed bank debts, couldn’t devalue, and ended up trapped in austerity. The episode asks the big question: what’s the real lesson from Iceland’s crash — and why did so few countries follow it? Hosted on Acast. See acast.com/privacy for more information.

In this episode of Debunking Economics, Phil Dobbie and Professor Steve Keen dive into the thorny world of “sovereign money” and “100% money” — two reform proposals that aim to radically reshape how modern banking works. Prompted by a listener email, the conversation unpacks why today’s system of bank‑created money, reserves, and government deficits is so convoluted, and whether a simpler, more transparent architecture is even possible. Phil sketches the appeal of a world where everyone holds an account directly at the central bank, bypassing the private banking system for everyday payments, while Steve explores what such a shift would mean for money creation, government spending, and the role of commercial banks.As the discussion deepens, they examine the historical roots of these ideas, from Irving Fisher’s 1930s push for 100% reserve banking to modern proposals emerging from Switzerland and Germany. Steve highlights the technical and political challenges: how to separate the payment system from the credit system, whether banks could remain profitable without the ability to create money, and why double‑entry bookkeeping is essential to understanding any reform. Phil presses on the potential benefits — stability, simplicity, and a more direct way for governments to manage the money supply — while Steve warns that poorly designed reforms could unintentionally collapse the very financial system they aim to fix.The result is a lively, accessible exploration of one of the most misunderstood corners of economics. Whether you’re curious about sovereign money, sceptical of private bank power, or simply trying to make sense of how money actually moves around the economy, this episode offers a clear and provocative guide through the debate Hosted on Acast. See acast.com/privacy for more information.

In this episode of Debunking Economics, Phil Dobbie and Professor Steve Keen tackle the global obsession with interest rates. From Australia’s Reserve Bank to the UK’s faltering economy, they explore how central banks use rate changes as a blunt tool to manage inflation and growth. Phil highlights the real‑world pressures on households—mortgages, rents, and tax thresholds—while Steve dismantles the neoclassical models that underpin mainstream policy, exposing their unrealistic assumptions about consumption, altruism, and infinite planning horizons.Together they reveal how rate hikes often enrich bondholders while squeezing ordinary borrowers, skewing income distribution and destabilising financial systems. The conversation ranges from Keynesian misinterpretations to modern monetary theory, questioning whether interest rates can ever be the fine‑tuned instrument economists claim. It’s a lively, critical look at the myths of monetary policy and the urgent need for alternatives that address capacity, inequality, and democratic accountability. Hosted on Acast. See acast.com/privacy for more information.

Foreign aid is shrinking fast. The UK has cut its commitment from 0.7% of national income to 0.3%, the US has scrapped USAID and axed 80% of its projects, and overall global aid is down by more than a quarter in just five years. That’s less than 0.2% of the world economy — smaller than Walmart’s turnover — even as the Gates Foundation warns that cuts have already reversed decades of progress in child survival. In 2025 alone, 200,000 extra children under five are expected to die from preventable causes. And in places like Afghanistan, Somalia, and the Central African Republic, one in ten infants won’t make it to their first birthday.Economist Steve Keen argues that aid is often designed with the assumption that chunks of it will flow back to donor countries through trade and contracts, reinforcing global imbalances rather than fixing them. He suggests revisiting Keynes’s old idea of a Bancor — a global currency to balance trade — so aid isn’t just a disguised subsidy for rich economies. Without structural reform, we’re left with the paradox of trying to support countries where GDP per capita is $150–$200, while the same amount is a single day’s salary in Luxembourg. Rethinking aid means asking whether we’re propping up conflicts and fragile states, or building a fairer system where resources actually stick and help people survive. Hosted on Acast. See acast.com/privacy for more information.

The early days of Bitcoin its proponents argued that this could be the global currency to replace fiat money. Governments the world over were issuing too much currency, leading to inflation, whilst imposing arbitrary regulations that would be impossible once authorities lost control of money.Steve says for that to work Bitcoin would need to be capable of the instantaneous transactions we are used to with the billions of banking transactions that happen every day. What’s more, the limited supply of Bitcoin means increases in productivity are likely to result in deflation p- a bigger enemy to the economy than rising prices.Instead Bitcoin has become just another asset class. The initial argyument that it served as a useful hedge against a downturn, in the same way gold does. Except now Bitcoin has started to mirror movements of other assets, like shares. And speculators are buying into it, often in highly leveraged positions. Risky?Still the argument remains that Bitcoin could be a workable currency. One that consumes a lot of energy in the process. When energy becomes really scarce, says Steve, Bitcoin will be the first thing to be turned off. Hosted on Acast. See acast.com/privacy for more information.