Chapter
Margin Debt and the Feedback Loop
3:02:13 - 3:08:49 (06:35)
The excessive use of margin debt creates a positive feedback loop that can lead to a slump when the demand for it disappears. If we stop speculative lending and focus on lending for innovation, investment, and essential consumption items, we can avoid a slump on the other side.
Clips
Falling prices can amplify the impact of being insolvent and margin debt can contribute to the accumulation of private debt.
3:02:13 - 3:05:52 (03:38)
Summary
Falling prices can amplify the impact of being insolvent and margin debt can contribute to the accumulation of private debt. It's crucial to avoid both in order to prevent a financial crisis.
ChapterMargin Debt and the Feedback Loop
Episode#303 – Steve Keen: Marxism, Capitalism, and Economics
PodcastLex Fridman Podcast
The level of private debt, specifically margin debt, plays a crucial role in both causing economic booms and ultimately triggering slumps, and should be a target of economic policy as much as inflation or unemployment rates.
3:05:52 - 3:07:31 (01:39)
Summary
The level of private debt, specifically margin debt, plays a crucial role in both causing economic booms and ultimately triggering slumps, and should be a target of economic policy as much as inflation or unemployment rates.
ChapterMargin Debt and the Feedback Loop
Episode#303 – Steve Keen: Marxism, Capitalism, and Economics
PodcastLex Fridman Podcast
By removing the rate level at which debt can reach and stopping speculative lending, financial instability can be controlled.
3:07:31 - 3:08:49 (01:17)
Summary
By removing the rate level at which debt can reach and stopping speculative lending, financial instability can be controlled. Focusing on instability is the key to avoid financial breakdown.