Phil and Steve take aim at the so-called Nobel Prize in Economics and the assumptions behind the models influencing central-bank policy. They discuss why Steve believes mainstream economics underplays the role of banks, private debt and financial crises—and why models built around equilibrium and external shocks can struggle to explain events like the Great Depression and the global financial crisis. Along the way, they challenge the idea that economies naturally return to stability, examine the limits of interest-rate policy, and explore the history and influence of the economics prize. A lively, sharp-edged conversation about what economic models leave out—and what that means for understanding inflation, unemployment and financial instability. And why the Novel prize for economics isn't the same as other Nobel prizes.
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