The podcast explores the causes of the Great Depression, asserting it stemmed from high private debt and low inflation, a situation exacerbated by negative credit. Economist Irving Fisher's analysis of debt deflation is central, highlighting how efforts to reduce debt paradoxically increased its real burden due to falling prices. The speaker criticizes neoclassical economists, particularly Ben Bernanke, for ignoring Fisher's insights and Minsky's Financial Instability Hypothesis, leading to a repeat of past mistakes during the 2008 financial crisis. Using a model, the speaker contrasts the neoclassical view of banks as intermediaries with Fisher's view of banks. The speaker argues that only increased government spending after World War II prevented an even worse outcome during the Great Recession, and warns against current efforts to reduce government deficits.
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