Announcing the Center for Economic Stability AGM

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The Center for Economic Stability Incorporated was first formed in March 2010, with the initial aim of supporting the Keen Walk to Kosciuszko (which took place in April 2010). That venture was extremely successful, but it took place at a time when--certainly in Australia--there was optimism that the  economic and financial crisis that began in 2007/08 was over.

One year later, that optimism is evaporating around the world, in the face of persistent bad news. Economic growth in America, Europe and Australia is anemic, unemployment is rising, and stock markets have gone from a sustained rally back into near Bear Market territory.

Meanwhile, the neoclassical economists who didn't see the coming have nonetheless remained in charge of economic policy, and still overwhelmingly dominate the academic profession. Having failed to anticipate the crisis, they are now failing to overcome it. Clearly, if we leave the economics establishment to its own devices, it will continue to espouse failed theories, and apply failed remedies. If change is to come to economics, then it has to come from outside the mainstream of the academic profession, and outside the traditional bastions of economic policy.

That is the objective of CfESI. It has operated with minimal funds in the last year--predominantly donations from readers of this blog. If it is to be effective, it has to have substantially more funding than can be raised by donations alone, and it needs more than just the time that volunteers can give.

For these reasons, the first AGM of the CfESI is also the vehicle to attempt to generate a substantial membership base that can fund several important activities, including:

  • Hiring a research assistant to maintain the economic database that lies behind the empirical analysis of debt-deflation published on the Debtwatch blog;
  • Supporting the development of "Minsky", a new software package for modelling the monetary dynamics of capitalism;
  • Enabling policy papers based on the Financial Instability Hypothesis to be developed and widely promulgated.

So please sign up to CfESI, and if you can, come along to the AGM:

I hope to see you there. If you can't make it, I hope you nonetheless sign up to CfESI to support the development of a realistic approach to economic theory and policy. Membership is open to anyone, anywhere in the world.

Cheers, Steve Keen

PS CfESI has two URLs. The shortest is:

The long version is

About Steve Keen

I am Professor of Economics and Head of Economics, History and Politics at Kingston University London, and a long time critic of conventional economic thought. As well as attacking mainstream thought in Debunking Economics, I am also developing an alternative dynamic approach to economic modelling. The key issue I am tackling here is the prospect for a debt-deflation on the back of the enormous private debts accumulated globally, and our very low rate of inflation.
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25 Responses to Announcing the Center for Economic Stability AGM

  1. jeffca says:

    I came across this site by a fel­low Aussie. He focuses on the con­sumer debt prob­lem with a focus on cap­i­tal account and trade deficit. He doesn’t use the term Finan­cial Insta­bil­ity Hypoth­e­sis explic­itly but the unsus­tain­abilty is implied.

  2. Steve Keen says:

    Looks inter­est­ing Jeff, thanks.

  3. peterjbolton says:

    Okay, that’s a start and I remind you that there were 11, I believe, main­stream econ­o­mists that pre­dicted the so-called 2008 reces­sion and many of those by 2009 believed it to be over.

    I am not an Econ­o­mist and I pre­dicted it in my writ­ings in 2006. Accord­ing to the charts, I was more cor­rect that most as by Feb­ru­ary 2007, the reces­sion or pre-Depression Dark Age, which is still com­ing — made its obvi­ous appearances.

    I repeat here my pre­vi­ous post on the pre­vi­ous thread.

    @ Peter­jbolton August 22, 2011 at 7:26 pm | #
    @ Steve Keen August 22, 2011 at 6:28 pm | #
    “… there were many finan­cial crises under a Gold stan­dard. That’s not to say that one with med­dling Cen­tral Banks is any bet­ter though.”

    I believe that it is nec­es­sary to add to my com­ment above, that the rea­son that Gold remains indis­putably the pre­ferred money by the major­ity of peo­ples on this planet, is due to the fact, that Econ­o­mists come across no bet­ter than Priests – as we are all expe­ri­enc­ing now, – and manip­u­la­tors and crooks – as I have posted at length with ref­er­ence mate­r­ial at:-

    Until Eco­nom­ics is and Econ­o­mists are brought under that crit­i­cal rea­son and integrity of the Prin­ci­ples of Sci­ence, Gold will always remain the only “money” on the planet. Your mileage may vary.

    And, Lord Keynes and Pro­fes­sor Bernanke can suck on that.

    A Reces­sion is when your neigh­bour loses his job; a Depres­sion is when you lose your job.”

    Note that there are 26%+ of the USA work­force out of work! I would haz­ard a guess that some would agree with me.

    Ship of Fools

  4. peterjbolton says:

    @ Lyon­wiss
    August 22, 2011 at 5:16 pm | #
    Peter­jbolton August 22, 2011 at 3:24 pm
    “It was offi­cial pol­icy in early 2009, “to save the world at all costs”, what­ever it took, which included cook­ing the books”:

    This arti­cle is out­stand­ing in its clear indi­ca­tions that the mar­kets and the finance indus­tries are sheer insanity:

    I explain:

    The arti­cle reports the announce­ment to falsely mark assets to fan­tasy — it is a clear go ahead — for crime — “Let it all hang out — a go-ahead by the Author­i­ties to drop all rea­son and Ethics and Law — and cook the books as pre­ferred to cor­po­rate advan­tage; all pro­tec­tions of the investors are removed. This is com­plete law­less­ness and not just Moral Haz­ard. And now it is clear, that all pub­lic pro­tec­tions under Law have been removed — not just pric­ing assets to what­ever is required! Screw every­body — Open Season.

    My point is: On the news — the mar­ket soared! This is rape and pil­lage and as I have pre­vi­ously stated, every­body wants a sys­tem that they can get a bit of — at any cost. This is con­sen­su­al­ity; like incest, a game the whole fam­ily can play.

    Nobody cares: so, nobody should complain!

    It’s the Pro­hi­bi­tion days of the ’20’s all over again. And the gov­ern­ment is in on the game.

  5. Alan Gresley says:

    Of inter­est.

    Even if Europe and Amer­ica slide back into reces­sion with fis­cal deficits already dan­ger­ously stretched and inter­est rates on the floor, finan­cial author­i­ties still have the means to pre­vent a spi­ral into debt-deflation.”

    The source is Ambrose Evans-Pritchard writ­ing in The Daily Tele­graph, Lon­don. I guess we have reach the point where faith alone can save us.

    Relax, cen­tral banks can still save us.”

  6. Alan Gresley says:

    Inter­est­ing read.

    Even if Europe and Amer­ica slide back into reces­sion with fis­cal deficits already dan­ger­ously stretched and inter­est rates on the floor, finan­cial author­i­ties still have the means to pre­vent a spi­ral into debt-deflation.”

    As Mil­ton Fried­man taught us — though nobody in Frank­furt — it is a fal­lacy to think that low rates are loose. Zero can be extremely tight. That may be the case now with US Trea­sury yields sig­nalling defla­tion and M2 veloc­ity col­laps­ing as it did pre-Lehman.”

    I guess faith alone can save us all.

  7. Lyonwiss says:

    Ken August 22, 2011 at 8:05 pm

    Will the inves­ti­ga­tions into credit rat­ing agen­cies (CRA) widen? Prob­a­bly not, for the fol­low­ing reasons.

    CRA mod­els are the accepted bench­marks for inter­na­tional bank­ing reg­u­la­tion under Basel Accord. Inter­nal rat­ing mod­els of indi­vid­ual banks use the same meth­ods, but with pro­pri­etary data of their own.

    The rea­son why no CRA saw the global finan­cial cri­sis (GFC) com­ing is because all mod­els (except S&P with an ele­ment of judge­ments) are largely based on extrap­o­la­tions of his­tor­i­cal data.

    Risk man­age­ment of the finan­cial sys­tem is based on the false assump­tion that the world is in a sta­ble, quasi-stationary, eco­nomic equilil­brium, con­sis­tent with neo­clas­si­cal economics.

    Any thor­ough inves­ti­ga­tion into CRAs would lead to the con­clu­sion that whole idea that banks can man­age their risks and set aside ade­quate cap­i­tal is a mis­lead­ing, dan­ger­ous and waste­ful bureau­cratic scam. The GFC proved this and we are grap­pling with the aftermath.

  8. RickW says:


    I came across this site by a fel­low Aussie. He focuses on the con­sumer debt prob­lem with a focus on cap­i­tal account and trade deficit. He doesn’t use the term Finan­cial Insta­bil­ity Hypoth­e­sis explic­itly but the unsus­tain­abilty is implied.

    That is the most tar­geted analy­sis I have seen on cur­rent eco­nomic insta­bil­ity. It looks like Leigh Hark­ness has nailed what needs to change with money sup­ply and the required con­trol strategy.

    How is that such lucid analy­sis does not get con­sid­er­ably more atten­tion? Leigh worked in the Aus­tralian Treasury!

    The dif­fi­culty now is to unwind 40 years going in a diver­gent direc­tion — uncook­ing the burnt cake!!

  9. centerline says:


    uncook­ing the burnt cake!!”

    Just wanted to say that I like the anal­ogy. Seems quite fit­ting every­where one looks today. The very nature of the ponzi scheme of debt is so ingrained in our cul­ture now — after so many gen­er­a­tions of what seemed like pros­per­ity — is going to be a real trick. I do fear that we are going to wind up toss­ing the cake and start­ing from scratch on a new one. Here’s to the next ingre­di­ents being from folks like you guys.

  10. Alan Gresley says:

    Of inter­est.

    Even if Europe and Amer­ica slide back into reces­sion with fis­cal deficits already dan­ger­ously stretched and inter­est rates on the floor, finan­cial author­i­ties still have the means to pre­vent a spi­ral into debt-deflation.”

    I guess we can have faith that the cen­tral banks can save us.

  11. sj says:

    Mr Keen
    It was a great time to com­ment on your blog March April 2010 many blog­gers will­ing to help out and they had a sense of humour.
    Lets hope same spirit is in the AGM.
    The sta­bil­ity eco­nom­ics is real counter intu­itive because your own mod­els must show that eco­nom­ics can never be sta­ble it’s chaos and unpre­dictable the same stuff as the uni­verse.
    The Snowy Moun­tains can be blue sky and change to a cold rainy day very quickly, it’s the same with eco­nom­ics at the moment it’s rain­ing gold.
    Mr Keen your AGM should be call shoe walk­ing eco­nom­ics because we all need to get out of our intel­lec­tual com­fort zone and see eco­nom­ics as a nat­ural eco sys­tem.
    This is where Uni­ver­sites need to change, be open to new ideas, the com­plex math­e­mat­ics fancy sup­ply and demand charts need to put in the rub­bish bin.

  12. Lyonwiss says:

    RickW August 23, 2011 at 9:55 am

    Leigh Hark­ness is miles ahead of most econ­o­mists (about 100 sig­na­tures) who sup­ported this site:

    where the first arti­cle of faith, to which all pledged sup­port, is:

    Gov­ern­ment $deficit = non gov­ern­ment $sur­plus (net finan­cial assets).

    This equa­tion has led many on this and other blogs to jus­tify gov­ern­ment deficit spend­ing, in order to cre­ate non gov­ern­ment sav­ings. How you can infer causal­ity from an account­ing iden­tity is a mys­tery to me.

    But the equa­tion is actu­ally inap­pro­pri­ate in the real world of the US or Aus­tralian (open) economies, where we should have

    Cur­rent account $deficit = gov­ern­ment $deficit — non gov­ern­ment $sur­plus (net finan­cial assets).

    The chart by Hark­ness (see below) shows that over the last 25 years (to 2010), the for­eign debt accu­mu­lated from cur­rent account deficits is due mainly to accu­mu­lated US gov­ern­ment deficits. That is to say, US gov­ern­ment deficits has pro­vided no net US non gov­ern­ment sav­ings over 25 years, only piles of for­eign debt.

  13. centerline says:


    It also more accu­rately sug­gests that once gov­ern­ment deci­fits can­not be increased any fur­ther for any rea­son (i.e. debt ceil­ing), cur­rent account deficits can only be main­tained by canna­bal­iz­ing the non-government sec­tor. That is, the inter­est on the debt is paid by the pri­vate sec­tor. This was recently wit­nessed in the US with the raid­ing of pen­sion funds prior to the increase of the debt ceil­ing. Of course, this phe­nom­e­non would be very defla­tion­ary. Thus, gov­ern­ment deficits do mat­ter. In fact, they must con­tinue unabated in the cur­rent scheme to at least the pace of com­pound­ing inter­est owed on those same deficits. Clearly unsus­tain­able in an open sys­tem with imbal­ances between eco­nomic systems.

    What con­tin­ues to amaze me is how every other econ­o­mist, jour­nal­ist, etc. always talks about eco­nomic “growth” — and with­out what it seems any under­stand­ing of what this means. For­give me if I sound “eco­nom­i­cally chal­lenged” … but it seems to me that this notion of per­pet­ual growth is sim­ply not in har­mony with nature aside from our species pop­u­la­tion growth — which also appears very ques­tion­able at this point rel­a­tive to a planet with finite resources.

    I sub­mit that the “per­cep­tion” of growth may be a key ide­o­log­i­cal com­po­nent of an econ­omy in order to keep peo­ple pro­duc­tive. But, in my hum­ble opin­ion, con­tin­ued evi­dence seems to indi­cate that in an unbal­anced open sys­tem, debt based money is noth­ing more than wealth trans­fer mechanism.

  14. Lyonwiss says:

    Cen­ter­line August 24, 2011 at 3:25 am

    It is all lead­er­ship CON. The argu­ment for growth is based on improve­ment in the stan­dard of liv­ing. So we focus on growth and for­get about the stan­dard of liv­ing, which has not improved for most Amer­i­cans. As you also sug­gest growth does not mea­sure envi­ron­men­tal degra­da­tion and its impact on the qaulity of life. Growth as a proxy for what we really want is a CON. The same sub­sti­tu­tion CON applies to many other issues.

  15. sj says:

    Mr Keen
    I have been dis­ci­pline only mak­ing one com­ment a day so the sen­si­tive princess blog­gers don’t get upset.
    Before any­body talks their own book and cheer on their own foot­ball team should make it clear they per­son­ally own gold or have pur­chase more them­selves.
    I see gold fell hard over night where are all fancy charts gold bugs , you only show gold charts one way that’s up.
    To say gold is the only show in town is very nar­row minded since March 2009 mas­sive rally in many resource stocks have increase over 300% still have a good div­i­dend on top of the 300% cap­i­tal gain.
    Gold no yeild or div­i­dend.
    Brings me to War­ren Buf­fett and Char­lie Munger they are on record say­ing
    “Gold is for jerks!“
    Why would Char­lie Munger say such a nasty com­ment?
    Because these very suc­cess­ful busi­ness­men under­stand gold does noth­ing just sits there look­ing a pretty yel­low colour.
    Gold breeds fear and gloom.
    You want to invest your money in real good busi­ness with strong cash­flow and good div­i­dend at the same time increase employ­ment.
    To me that helps human­ity , buy­ing gold hop­ing the finan­cial sys­tem blows up and we have hyper­in­fla­tion is not much fun,infact it’s insanity.

  16. Alan Gresley says:

    While read­ing the SMH, I came across this com­ment by BillR to Ross Git­tins’ opin­ion piece, “Hear that boom? That’s Aus­tralia steel­ing itself for good times.”

    Ross, I mostly agree with what you have to say, and can­not dis­agree with your analy­sis. But I have to say that I think you’ve slipped back into the econ­o­mists mold, in believ­ing that we live in an econ­omy rather than a society.

    How very true this is and reflect­ing on the words above by Lyon­wiss, is growth in eco­nom­ics bet­ter than growth in social cohe­sion? The poverty of soci­ety (which is grow­ing) is a phe­nom­e­non that I have observed over the last few decades.

    Here are some obser­va­tions from me. Since the onset of the GFC, the qual­ity of dis­carded items in road­side cleanups has dropped. The amount of road­side cleanups have dropped. A glance of the over­all items seem to indi­cate that these cleanups are more from house­holds of peo­ple who have been evicted.

    If the amount of dis­carded items is drop­ping over­all, this could indi­cate sev­eral things, that either peo­ple are either hang­ing on to items to sell a garage sales, items are being donated to char­i­ties or less items are being obtained to be dis­carded later. Another thing that I have noticed that is grow­ing, and that is the amount of peo­ple that are vis­it­ing road­side cleanups.

  17. jeffca says:

    A ques­tion regard­ing the stagfla­tion the US faced in the 70s where they had an out­put gap and also faced a sup­ply shock and I expect no one has con­sid­ered con­sumer debt. I was think­ing (expect­ing) that con­sumer credit (and for­eign debt) was explod­ing after the gold win­dow was closed in 1971. The house buy­ing, credit cards, imports were all lead­ing to a sur­pris­ing infla­tion because as you men­tion tra­di­tional eco­nom­ics ignores con­sumer debt in macro-analysis.

    I’m not sure if your work has looked at that or it is on your to do list but it could in part explain the infla­tion that occurred.

  18. Steve Keen says:

    The infla­tion came from a more than fully employed econ­omy com­bined with a debt-bubble dri­ving asset prices Jeff,

    Then the bub­ble burst and the whole thing came down, but the resid­ual infla­tion­ary momentum–in both wages and com­mod­ity prices, espe­cially oil–took time to dissipate.

    Check one of the graphs of debt to GDP ratios on this site and–particularly for Australia–you’ll clearly see a mini-bubble, which then burst but restarted again in about 1980. That burst­ing caused a huge drop in aggre­gate demand, and a stock mar­ket crash to match it.

  19. Robert K says:

    Hello Pro­fes­sor Keen: Could you indi­cate the cor­rect pro­ce­dure to wire funds from
    USA, or is swift code as indi­cated suf­fi­cient. Thanks.

  20. Steve Keen says:

    Hi Robert K,

    The SWIFT code plus the account num­ber should be suf­fi­cient. Give it a try and we’ll see how it works.

  21. Pingback: Another Sign That The Huge Aussie Housing Bubble Is Popping | Twin Rivers

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  23. jchyip says:

    Have you con­sid­ered Open Sourc­ing “Min­sky” and get help from volunteers?

  24. Steve Keen says:

    It will be Open Source jch, and cross-platform too of course. The first ver­sion is being pro­to­typed in Tcl/Tk, and then devel­oped in C++. Once it is released it will be as an Open Source project.

    We may retain the rights to charge for full-scale ver­sions at some later stage to help with con­tin­ued fund­ing, but the objec­tive has always been to make a teach­ing ver­sion freely avail­able to pro­mote the use of dynamic mon­e­tary meth­ods in economics.

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