Home > The Economics Profession > Robert Lucas gobsmacking stupidities on debt

Robert Lucas gobsmacking stupidities on debt

from Lars Syll

Interviewed in a Swedish Television documentary on the the economic crisis (aired yesterday on SvT), Nobel laureate Robert Lucas answered a question (wind to 19:40 in the programme here) if the level of debt was a problem, by telling us that the high level of debt is not an interesting problem, since, for a country as a whole, debt and credit always “cancel out.” Unbelievable stupidity even to come from a Chicago economist. Fortunately Dirk Bezemer and Steve Keen were also interviewed and could sort things out and give a more sensible view on the increasing indebtedness of modern economies.

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  1. J Natsinas
    November 20, 2012 at 6:47 pm

    Alright, let’s take him at his word. Why, then,doesn’t the same logic apply to public debt? Why is the government debt to GDP ratio supposed to be very important and all horrible things are to happen to you if you get it too high? Public debt and the rights of bondholders cancel out, don’t they?

    • November 20, 2012 at 9:20 pm

      +1

      Lucas and the neo-classicals ought to be pressed on this every time they spew the “debts are someone else’s assets” meme

  2. Bruce E. Woych
    November 20, 2012 at 7:15 pm

    {Source}

    http://en.wikipedia.org/wiki/Nobel_Memorial_Prize_in_Economic_Sciences

    [quote}
    “The Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel is the only non-Nobel prize that has ever been associated officially with the Nobel Foundation.
    Although not one of the Nobel Prizes established by the will of Alfred Nobel in 1895, it is consistently identified with them.
    The Nobel Memorial Prize in Economic Sciences, commonly referred to as the Nobel Prize in Economics,[1][2] but officially the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel (Swedish: Sveriges riksbanks pris i ekonomisk vetenskap till Alfred Nobels minne)…

    The “Prize in Economics”, as it is referred to by the Nobel Foundation, was established and endowed by Sweden’s central bank Sveriges Riksbank, in 1968 on the occasion of the bank’s 300th anniversary, in memory of Alfred Nobel.

    Controversies and criticisms
    Some critics argue that the prestige of the Prize in Economics derives in part from its association with the Nobel Prizes, an association that has often been a source of controversy. Among them is the Swedish human rights lawyer Peter Nobel, a great-grandson of Ludvig Nobel.[26] Nobel criticizes the awarding institution of misusing his family’s name, and states that no member of the Nobel family has ever had the intention of establishing a prize in economics.[27]
    According to Samuel Brittan of the Financial Times, both former Swedish minister of finance Kjell-Olof Feldt and Gunnar Myrdal wanted the prize abolished, saying “Myrdal rather less graciously wanted the prize abolished because it had been given to such reactionaries as Hayek (and afterwards Milton Friedman).”[24]”

    No surprises! Educational Imperialism via cultural capture and authoritarianism

    • November 21, 2012 at 1:08 pm

      How very right you are… thanks for your comment!

  3. November 20, 2012 at 8:24 pm

    Money created as debt to banks is lent again. P <nP

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