Steve Keen’s Debt Watch

I show that working from strictly true macroeconomic identities leads to Minsky's model of financial instability. I also build a Minsky model from scratch, showing the various features in the Open Source system dynamics program Minsky https://sourceforge.net/projects/minsky/). My talk in Manchester Economics For Everyone

This is the same talk that I gave in my inaugural lecture at Kingston, spiced by some exchanges with some of the Bristol University economics staff. I cover a realist alternative to the "Lucas Critique" argument that macro models must be developed from microfoundations, explain my model of Minsky, and show that it is empirically supported by the qualitative data of capitalism's two big booms and busts--1920-1940 and 1990 till today.

This is an invited paper by the Private Debt Project, an initiative of the philanthropic organization the Governor’s Woods Foundation to raise awareness about the economic importance and dangers of private debt. The era of low growth known as Japan’s “Lost Decade” commenced in 1990, and persists to this day.  While most authors acknowledge that the seeds for the Lost Decade were sown by excessive credit growth in the preceding Bubble Economy years, only Richard Koo (Koo, 2009, Koo, 2011,...

For decades, some of the most important data about market economies was simply unavailable: the level of private debt. You could get government debt data easily, but (with the outstanding exception of the USA—and also Australia) it was hard to come by. That has been remedied by the Bank of International Settlements, which now publishes a quarterly series on debt—government & private—for over 40 countries. This data lets me identify the seven countries that, on my analysis, are most...

Economists have done dynamics very badly, from the bastardisation of the original Harrod unstable growth model by Hicks, through to today's DSGE models which pretend that a saddle node equilibrium can be an attractor. This lecture uses basic mathematical techniques to show that "multiplier-accelerator trade cycle models" aren't models at all, and explains the basics of working out the dynamical properties of low-order (3 or below) systems of nonlinear differential equations, using the...

The Council on Economic Policies and the Bank of England are organising a workshop on this topic to be held at the Bank on November 14-15 2016. A call for papers has just been put out, with a deadline of June 30th. Background Climate change and other environmental challenges are moving up policy agendas worldwide. Nonetheless, the potential implications of environmental risks and scarcities for central banking as well as the linkages between financial regulation, monetary policy and...

For the last 25 years, Australian politicians of both Liberal and Labor hue have been able to brag that, under their stewardship, Australia has avoided a recession. Those bragging rights are about to come to an end. During the life of the next Parliament — and probably by 2017 — Australia will fall into a prolonged recession. Click here to read the rest of this post, and here to download the Excel file showing the link between a slowdown in the rate of growth of debt and a recession....

I was recently informed that a Spanish translation of Debunking Economics is now available via Amazon Spain, under the title “La Economía Desenmascarada“ There’s one review so far: Hay que agradecer que se haya traducido al español, dicho sea en primer lugar. Podría considerarse este libro como un ‘antimanual’ de los textos que se enseñan en la mayor parte de las facultades del mundo; es, por tanto, atendiendo a las patrañas con las que se ‘intoxica’ las mentes de los estudiantes, un...

I start with a discussion of how economic models should be developed--rejecting the microfoundations approach of Neoclassical economics & instead arguing that we should start from undeniably true economic identities. I develop Goodwin's model of cyclical growth in Minsky (https://sourceforge.net/projects/minsky/), extend this to include debt and show that this simple model generates both a "Great Moderation" and a debt crisis. I then show that this same model is the simplest possible...

The mainstream economic idea that banks are just intermediaries between savers and investors is a fantasy, but given that fantasy, their argument that the level and rate of change of private debt are not macroeconomically significant (except at the “Zero Lower Bound”) is correct. But in the real world, the role of the level and rate of change of private debt is crucial. I illustrate this by building a Minsky model of Loanable Funds and converting it to the real world of Endogenous Money....