Steve Keen teaches economics at the University of Western Sydney in Australia, and is so smart, he won the Revere Prize for being the economist who most clearly warned the world – Paul Revere style – of the coming financial collapse.
And he says the way back to prosperity is simple. You cut the debt. Not just the federal debt, but also private debts – which are three times public debt.
But it has to be cut in a certain way, and it’s not by cutting spending or raising taxes.
“Oh no. The only way out is to actually abolish the debt,” says Keen.
Yes. Get rid of it. How? The government simply starts paying off mortgages.
“The Federal Reserve could actually do a transfer of money from itself to debtors of private banks,” says Keen.
I would wake up on morning to find my mortgage had been paid.
“Exactly,” he says.
You heard him – and as long as the money was used strictly to pay off debt and not for people to go crazy buying overpriced homes again, there should be almost no inflation.
So how much money would each of us get?
“I would start with small doses. I wouldn’t do it in one big bang. But I would try say something like $5,000 a year and see what happened,” says Keen.
That’s the word from Australian economist Steve Keen. It may sound crazy, but he says either we do that, or we will be in the doldrums for another 15 years.