Steve Keen’s Debt Watch

Credit Drives Economic Performance, Not Beliefs.

Quantitative easing is often hailed as a necessary tool for economic recovery. But let’s take a closer look. It’s like giving a lifeline to a drowning swimmer while ignoring the fact that he’s swimming in a pool of sharks. The wealthy, who own the majority of shares, are the ones benefiting from rising stock prices. Meanwhile, the average person is left treading water, gasping for air. This isn’t just a minor inconvenience; it’s a widening chasm of...

The Great Depression: Can It Happen Again?

Economic stability is often viewed as a distant goal. Many believe that simply managing government debt will suffice. This is a dangerous misconception. Ignoring private debt levels is like ignoring a ticking time bomb. When households are over-leveraged, they can’t spend. This leads to reduced demand, which spirals into economic downturns. The Great Depression is a prime example. As private debt soared, spending plummeted. The more people tried to pay off their debts,...

Naive Economics for Kindergarten Kids

Climate change is often dismissed as a minor inconvenience. The belief that it will only cause a 1.4% drop in GDP is laughable. This figure is based on models that ignore tipping points. Tipping points are like the moment a dam breaks. A small crack can lead to catastrophic failure. When climate models fail to account for these tipping points, they underestimate the damage. Real-world impacts will be far more severe. Imagine a factory that relies on stable weather patterns....

Neoclassical Myths Exposed

To reduce private debt and stabilize the economy is a common belief. Many think that simply cutting government spending will solve our economic woes. This is wrong. When governments cut spending, they inadvertently reduce the money supply. This creates a vicious cycle. Less money means less spending. Less spending leads to lower demand. Lower demand results in businesses cutting back, leading to layoffs. The economy shrinks, and private debt becomes more burdensome....

Main Street Gets Left Behind.

The more debtors pay, the more they owe. This isn't just a catchy phrase. It's a harsh reality. Imagine trying to fill a bucket with holes. You pour in water, but it keeps leaking out. That's what happens when debtors try to pay off their debts in a deflationary environment. Each dollar they pay back becomes worth more. So, while they might reduce the number of dollars owed, the value of what remains skyrockets. It's like running on a treadmill set to a steep incline. You...