Steve Keen's Debtwatch

The big­ger the finan­cial sec­tor gets, the more it can destroy. And Bank of Eng­land Gov­er­nor Mark Carney’s vision of British banks nine times the size of GDP is pos­i­tively terrifying…

The penul­ti­mate Win­dows ver­sion of Min­sky (released a few days ago) inad­ver­tently installed an old ker­nel with a very low exe­cu­tion speed. This has been fixed in the lat­est ver­sion. If you down­loaded a few days ago and now find that mod­els run very slowly, please down­load the lat­est ver­sion today (it has the same name: Minsky.1.D32). If you down­loaded before then, the exe­cu­tion speed will be fine, but a few bugs have also been fixed in this release: see Tick­ets for the details (from my per­spec­tive, the main bug was a fail­ure to pass LaTeX for­mat­ting codes between God­ley Tables).

Last week I satirised Australia’s out­moded belief that the rate of inter­est can be used to fine tune the econ­omy. This belief was ensconced in the so-called “Tay­lor Rule”, which accu­rately described what cen­tral banks tended to do until the eco­nomic cri­sis hit in 2007. That rule saw the infla­tion rate and the unem­ploy­ment rate as the two key eco­nomic indi­ca­tors, and the inter­est rate as the key mech­a­nism needed to achieve an accept­able bal­ance between them.

With the announce­ment that Toy­ota will stop its man­u­fac­tur­ing in Aus­tralia in 2017, Aus­tralia has become one of the few wealthy nations on the planet with­out a car indus­try. But there’s a good argu­ment that Aus­tralia never had a car indus­try in the first place.

Dou­glas Adams’ bril­liant comic farce The Hitchhiker’s Guide to the Galaxy describes Earth as resid­ing in sec­tor ZZ9 Plural Z Alpha, one of “the uncharted back­wa­ters of the unfash­ion­able end of the West­ern Spi­ral Arm of the Galaxy” and being inhab­ited by “ape-descended life forms” who “are so amaz­ingly prim­i­tive that they still think dig­i­tal watches are a pretty neat idea”.

“I know my place” was the title of a famous sketch on Eng­lish class sen­si­bil­i­ties from the 1960s, star­ring the very tall (Upper Class) John Cleese, the aver­age height (Mid­dle Class) Ron­nie Barker, and the very short (Lower Class) Ron­nie Corbett.

This paper will be pub­lished in a forth­com­ing book on the cri­sis edited by Malliaris, Shaw and She­frin. In what fol­lows, I derive a cor­rected for­mula for the role of the change in debt in aggre­gate demand, which is that ex-post aggre­gate demand equals ex-ante income plus the cir­cu­la­tion of new debt, where the lat­ter term is the veloc­ity of money times the ex-post cre­ation of new debt.

That ver­bose title is almost the reverse of a quin­tes­sen­tially arro­gant state­ment of eco­nomic supremacy pub­lished in the UK’s Daily Tele­graph - on the edi­to­r­ial page of the busi­ness sec­tion — by Andrew Lil­ico. Enti­tled “Econ­o­mists are nearly always right about things, despite what you may think” in the print edi­tion, its con­tent and tone encap­su­lated every­thing about eco­nomic the­ory, and econ­o­mists’ blind belief in it, that led me to write Debunk­ing Eco­nom­ics over a decade ago.

On Jan­u­ary 31, we will bid good­bye to chair­man Ben Bernanke and say hello to chair­man Janet Yellen. Most com­men­tary has focused on what Yellen’s ascen­dancy might mean for the Fed­eral Reserve and the US econ­omy, but today I’d like to con­sider how Bernanke’s legacy might he be regarded in future years — say, 70 years after the cri­sis we’re in now.

To sup­port SourceForge’s Project of the Month fea­tur­ing Min­sky, here are some sam­ple Min­sky mod­els. To down­load them, right click and choose “save as”–otherwise they will open in a sep­a­rate browser win­dow as XML files.

I’ve also made a playlist of 8 short videos show­ing some of the fea­tures of Min­sky. Those videos are also linked at the bot­tom of this post.