Top Economist Steve Keen reacts to Gary Stevenson’s viral “tax the rich” budget model—and shows where it breaks. The real blind spot? Treating government like a household and ignoring how banks, gilts, and central-bank reserves actually work. This isn’t just about taxes—it’s about the plumbing of money.
In this explosive breakdown, you’ll discover:
✅ Where Gary’s spreadsheet goes wrong (government ≠ household)
✅ How gilt auctions & bank reserves really fund deficits
✅ Why government spending creates money (and when debt stabilizes)
✅ Why “tax the rich” matters—but banks must be in the model
✅ How austerity drains the poor’s deposits and backfires
✅ Ravel simulations: debt ratio & interest payments can plateau
KEY INSIGHTS:
• Primary buyers of new government bonds are banks/CB-account holders, not “the rich.”
• Deficits add net financial assets to the private sector; austerity removes them.
• Taxing the rich helps distribution—but ignoring banking mechanics creates false “debt doom.”
• With realistic flows, debt-to-GDP and interest can stabilize rather than explode.
• Policy focus: tax the wealthy, fix banking incentives, fund real services (NHS, schools, transport).
Credit to : ProfSteveKeen