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.

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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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