#134 - Steve Keen - How Modern Economics Became Ideology
The Peter McCormack Show
Peter McCormack
4.8 • 2.7K Ratings
🗓️ 9 December 2025
⏱️ 150 minutes
🧾️ Download transcript
Summary
Modern economics is built on competing theories that often describe the world in very different ways. In this conversation, economist Steve Keen sets out his explanation for how money works, why he believes mainstream economic models fail, and why debt, banking and housing play a far greater role in economic crises than most policymakers acknowledge.
Keen's perspective challenges the assumptions of neoclassical, Keynesian and Austrian economists alike.
In this episode we discuss:
– How economics became political ideology
– Why neoclassical theory broke the West
– The Left vs Right illusion in economic policy
– What money really is (and how banks actually create it)
– Why inflation is misunderstood by almost everyone
– How private debt fuels instability and inequality
– Housing, mortgages & the destruction of the middle class
– Why equilibrium economics is fantasy
– What a sane, reality-based economic model looks like
– How young people can survive a debt-driven system
Economics didn't fail by accident — it failed because ideology replaced reality.
Steve Keen is one of the world's leading heterodox economists, known for his critiques of mainstream theory and his work on private debt, banking, financial instability and the 2008 crisis, which he warned about years in advance.
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TIMESTAMPS:
00:00:00 – Introduction
00:03:12 – Why Economics Became Ideology
00:09:04 – Economists vs Reality
00:14:47 – How Money Actually Works
00:21:18 – Banks, Loans & Money Creation
00:33:44 – Inflation: What Really Drives It
00:38:59 – Wages, Markups & Bargaining Power
00:47:55 – The Housing Crisis Explained
00:54:03 – Deregulation & the Death of Affordability
00:59:22 – Middle Class Collapse
01:04:48 – Left and Right Get Economics Wrong
01:11:02 – Neoclassical Economics
01:17:26 – The Problem With Economic Models
01:22:31 – Why Economists Misunderstand Production
01:28:08 – AI, Automation & The Future of Work
01:44:28 – Structural Failures
01:55:46 – Can Government Use Good Economics?
02:01:23 – Global Debt, Fragility & Future Crises
02:06:40 – What Would Real Reform Look Like?
02:13:28 – Why Young Generations Feel Hopeless
02:19:47 – Can We Build a Post-Ideological Economics?
02:25:10 – Final Thoughts
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CONTACT PETE
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CONNECT WITH STEVE KEEN
› Website – https://www.patreon.com/ProfSteveKeen
› Twitter – https://x.com/profstevekeen
SPONSORS
› IREN - https://www.iren.com/
› Ledger - https://www.ledger.com/
› Gemini - https://gemini.com/
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LISTEN / SUBSCRIBE
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FILMED BY CURTIS TAYLOR
› https://www.curttaylor.co.uk/
› https://x.com/curttayloruk/
EDITED BY CONOR MCCORMACK
› https://x.com/ConorM04
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Transcript
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| 0:00.0 | Economists get away with this garbage, and it is garbage in my opinion, because you don't need the economists to have an economy. |
| 0:07.0 | The economy is something which exists independent of economists. |
| 0:11.0 | That doesn't apply to engineering. Without engineers, you don't have engineered products. |
| 0:16.0 | So economists effectively have no skin in the game to use telebsase. They can say whatever they like and still be taken seriously |
| 0:24.3 | if they get inside the mind of a politician. |
| 0:28.0 | And that's where economics turns into ideology. |
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| 0:37.0 | Iron builds and operates next generation |
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| 0:49.4 | powering the future of AI, check out iron.com to learn more, which is iran.com. Steve, hi. Hi. Good to be back here. How long ago since we last told? I'm going to say, it was very early when I did the podcast. I'm going to say seven or eight years. Okay, okay. Yeah, a long time ago. And you know what? It's funny enough, that show still does really well. Oh, okay. You're a good guest to have for Google. It's lived well. But I'm glad we're doing it in person. And, you know, the show's very different now. I deeply care about two things right now. Economics and politics and the cross-section of the two. |
| 1:28.1 | Yeah, yeah. And therefore the future of this country. |
| 1:30.3 | Think about it a lot. |
| 1:32.0 | And so it's good to talk to you again. |
| 1:34.2 | I've obviously been entrenched into the Austrian school quite a bit. |
| 1:38.2 | Of course, yeah, yeah. |
| 1:39.1 | And I'm sure we'll have things we agree or disagree on that. |
| 1:41.2 | But really, I'm just more interested in you and what you talk about. Why does economics matter? Oh, economics is the description of the way in which our social |
| 1:50.5 | system functions. So if you want to know how it functions, you've got to know economics, but the question |
| 1:55.4 | is, does economics actually fulfil its task? In my opinion, at the moment, no, it does not. |
| 2:05.6 | We have a whole range of competing schools of thought about how the economy operates, all of which talk past each other, and that's standard for competing paradigms in virtually any discipline. |
| 2:11.6 | But the reality is most of a decision-making about how we should change the economy to make it work better, |
... |
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