New Documentary: Economic Science and the Debt Crisis

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How could the world’s leaders and top economists not see the debt crisis coming? What are the underlying causes of this greatest financial crisis since the 1930s? And how can we get out of it?

New documentary by the Swedish public broadcaster SVT is an absolute must watch.

“How is money actually created? That may seem a strange question. This question leads us to the very heart of the debt crisis.”

To get the English subtitles you have to start the video and then left-click on Captions (the left-most button at the right bottom of the video). Most of the interviews are in English.


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“The set of flawed economics doctrines were at the core of creating the crisis.”

Joseph Stiglitz (Columbia University)


“It’s insane to have a model of macroeconomy that excludes banks, money and debt.”

Steve Keen (University of Western Sydney)


“Banks create money, out of thin air.”

Michael Kumhof (IMF)


“When a bank extends a loan, it creates money.”

Dirk Bezemer (University of Groningen)


“When money is created, debt is also created. By definition.”



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  • johan

    “Welcome to the epicenter of the debt crisis: Spain.”
    Quite a biased statement right at the beginning of the documentary!

    • John Morrison

      Spain may not be the epicentre but it sure got caught with its pants down. Spain was on a construction boom. This wasn’t completely stupid, Spain now has ample housing and office space and good infrastructure. The problem was that with a construction boom comes a buying boom and vultures took advantage of this. Those vultures include builders, estate agents, mortgage lenders and foreign banks who lent to Spanish banks to inflate their lending capacity. The latter is a troublesome phenomena of the Euro, cash accumulating in Germany being used to enable lending in Spain. All in this chain stood to gain by driving prices up and collectively they were well able to do it. During a boom of this type, buyers have liitle influence over the price they pay (especially at the bottom of the market). The estate agent tells them what they must pay and a mortgage lender agrees to lend it. This took the price of property way above its real value. The result is a lot of people and businesses with mortgage debts way above the value of their property. This is a problem because those debts are effectively what we are using as money and it looks like they might never get paid. This makes Spain the centre of a very important monetary dynamic. I say, cap property debt to market value and haircuts for all of the vultures. Inflation would heal everything but Spain can’t do that with the Euro.

  • Stop Hurting Start Healing

    Nature has to be included into our money system.

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  • Simon

    Very good video. It is incredible that Nobel prize winning economists like Robert Lucas can see no problem with the huge build up of debt. It is also incredible that he has been awarded a Nobel prize if he is so blind to reality. I am no economist, but even the ordinary man on the street can see that lending someone 8 times his salary on an interest only mortgage is sooner or later going to cause a problem. We went through a more mild version of this in the late 1980s early 1990s, so people like Robert Lucas have no excuse for failing to see that an unsustainable boom usually leads to a big bust. It is a bit like a doctor failing to notice that his patient is bleeding to death, and then continuing to prescribe the wrong medication when his earlier pateints have also died. We need less economists who fail to predict problems, and more engineers and systems people who usually come up with the correct analysis and solutions. The sooner politicians and regulators start to listen and act on the sound theories proposed by groups like Positive Money the better, and hopefully the outdated ideas of people like Robert Lucas will retire / die with him.

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  • Not MacroBusiness

    These guys in Wall Street don’t know exactly how the world operates, so how do they think they can speculate on the direction of the US or any other economy? The problem with the Wall Street traders is they speculate on everything. That’s what drives the price of stock up and down. Just like the recent spike on the oil prices. They speculated about the war in Libya and the truth was the USA only buys about 2% of their oil. So these traders (analysts) in Wall Street have nothing better to do, than just sit there and speculate. Most of what’s happening in the world these days is unsustainable from population growth, to stock market growth, to housing growth, to energy consumption. Everyone is talking about the next bubble (see ). After the US housing bubble, they ask what the next bubble is? All the hot money being pumped into the global economy is chasing fools gold, and the biggest speculative gamble is China itself. China itself is the next bubble!

  • Clare Darwish

    An excellent documentary… well researched and presented. Congratulations and thank you Mira for a job well done!

  • Clare Darwish

    An excellent documentary… well researched and presented. Congratulations and thank you Mira for a job well done!

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