Economist Steve Keen is one of the few economists who have predicted the global financial crisis and now he says it is time governments gave money to debtors to pay down debt instead of to creditors such as banks who have held onto it.

Watch the interview on BBC here or a longer 25 minute version on YouTube here. 

  “We have two sources of money in the economy: (1.) The banks can create money by extending loans and (2.) The government create money by running a deficit. We had back in the early sixties the ratio of government created money to the overall money supply of about 15%. It’s fallen so far that we’ve got the entirely debt-based system.”

“We have to give the money to debtors rather than to creditors.” 

“The system is failed, not the individuals in it…” 

Steve Keen is a Professor in economics and finance at the University of Western Sydney. He presents a wide variety of critiques on neoclassical economic theory, and argues that they show neoclassical assumptions are fundamentally flawed. Keen’s full-range critique of neoclassical economics is contained in his book Debunking Economics.