Steve Keen Interview & Private Credit Systems

[Joe Leote]

Long interview with Steve Keen, very educational, concerning the realistic role of banks, government, interpretations of Marx, socialist politics, China, and more:

The Economist Who Predicted 2008 Explains China's Endgame

Keen argues that banks create money to fuel aggregate demand (AD) while nonbank financial intermediaries cannot provide such economic stimulus. However, a more nuanced reality exists because banks end up providing credit to nonbank FIs via direct loans and other credit enhancements. I think banks and NBFIs can both contribute to AD via leverage aka balance sheet expansion as we saw in the aftermath of the 2007-2009 financial crisis. The systemic risk creeps back in as banks and nonbanks skirt regulations to expand credit via innovation typically with off-balance sheet accounting tricks.

This is a recent report on ties between banks and private credit:

Report on Vulnerabilities in Private Credit

This discussion begins by comparing private credit to junk bonds:

BlackRock Insider Reveals What’s REALLY Happening in Private Credit - YouTube

Joe