A much more neb­u­lous con­cep­tion”

Flattr this!

For this post in PDF, click here: CfESI Mem­bers; Debt­Watch Mem­bers; Signup CfESI; Signup Debt­watch

Chris Joye’s reply to my last post on hous­ing pro­vides a neat segue into the broader topic of why I entered the pub­lic debate on eco­nom­ics in the first place. It was because in Decem­ber 2005, I became con­vinced that a major global eco­nomic cri­sis wasabout to hit. I felt that some­one had to raise the alarm, and that—at least in Australia—I was prob­a­bly that some­body.

Two years later, that cri­sis did hit. Called “the Global Finan­cial Cri­sis” by Aus­tralians and “the Great Reces­sion” by Amer­i­cans, it is now uni­ver­sally regarded as the worst eco­nomic cri­sis since the Great Depres­sion.

The vast major­ity of econ­o­mists were taken com­pletely by sur­prise by this crisis—including not just Chris Joye and the ubiq­ui­tous “mar­ket econ­o­mists” that pep­per the evening news, but the big fish of aca­d­e­mic, pro­fes­sional and reg­u­la­tory eco­nom­ics as well.

As late as June 2007, the Chief Econ­o­mist of the OECD observed that:

the cur­rent eco­nomic sit­u­a­tion is in many ways bet­ter than what we have expe­ri­enced in years… Our cen­tral fore­cast remains indeed quite benign: a soft land­ing in the United States, a strong and sus­tained recov­ery in Europe … In line with recent trends, sus­tained growth in OECD economies would be under­pinned by strong job cre­ation and falling unem­ploy­ment. (Jean-Philippe Cotis, 2007, p. 7; emphases added)

In Aus­tralia, the Reserve Bank was equally con­fi­dent that the future was rosy, both locally and glob­ally:

Eco­nomic data in Aus­tralia over recent months have sig­nalled a pick-up in the pace of growth in demand and activ­ity… These con­di­tions have been accom­pa­nied recently by higher-than-expected under­ly­ing infla­tion.

Growth of the Aus­tralian econ­omy has for some time been assisted by favourable inter­na­tional con­di­tions. Cur­rent expec­ta­tions of offi­cial and pri­vate-sec­tor observers are that the world econ­omy will con­tinue to grow at an above-aver­age pace in both 2007 and 2008. (RBA, August 2007, p. 1; empha­sis added)

The award for the worst tim­ing has to go to Oliver Blan­chard, found­ing edi­tor of the Amer­i­can Eco­nomic Asso­ci­a­tion’s spe­cial­ist jour­nal, AER: Macro. On August 12, 2008, Blan­chard pub­lished a glow­ing overview of con­ven­tional macro­eco­nom­ics:

For a long while after the explo­sion of macro­eco­nom­ics in the 1970s, the field looked like a bat­tle­field. Over time how­ever, largely because facts do not go away, a largely shared vision both of fluc­tu­a­tions and of method­ol­ogy has emerged. Not every­thing is fine. Like all rev­o­lu­tions, this one has come with the destruc­tion of some knowl­edge, and suf­fers from extrem­ism and herd­ing. None of this deadly how­ever. The state of macro is good. (Olivier Blan­chard, 2009p. 210; empha­sis added, Olivier J. Blan­chard, 2008)

How wrong they were. The eco­nomic and finan­cial cri­sis that is now the defin­ing social con­text of our times began months after the OECD declared the future “benign”, days after the RBA pre­dicted above aver­age growth, and one year before Blanchard’s hap­less paean. Unem­ploy­ment rose rather than fell—dramatically so in the USA. Four years later, US unem­ploy­ment remains stub­bornly high, despite the biggest eco­nomic stim­u­lus pack­ages in his­tory, while recent data even shows an uptick in unem­ploy­ment in Aus­tralia, the OECD coun­try that has weath­ered the cri­sis with the least dam­age to date.

Fig­ure 1: Con­ven­tional eco­nom­ics fore­casts of falling unem­ploy­ment in 2007-08 were dra­mat­i­cally wrong

Why did con­ven­tional econ­o­mists not see this cri­sis com­ing, while I and a hand­ful of non-ortho­dox econ­o­mists did (Dirk J Beze­mer, 2009, Dirk J. Beze­mer, 2011, 2010)? Because we focus upon the role of pri­vate debt, while they, for three main rea­sons, ignore it:

  • Firstly, they believe that the pri­vate sec­tor is ratio­nal in every­thing it does, includ­ing the amount of debt it takes on. For this rea­son, Ben Bernanke, the neo­clas­si­cal “expert” on the Great Depres­sion, ignored Minsky’s Finan­cial Insta­bil­ity Hypoth­e­sis:

    Hyman Min­sky (1977) and Charles Kindle­berger (1978) have in sev­eral places argued for the inher­ent insta­bil­ity of the finan­cial sys­tem but in doing so have had to depart from the assump­tion of ratio­nal eco­nomic behav­ior. [A foot­note adds] I do not deny the pos­si­ble impor­tance of irra­tional­ity in eco­nomic life; how­ever it seems that the best research strat­egy is to push the ratio­nal­ity pos­tu­late as far as it will go. (Ben S. Bernanke, 2000, p. 43; emphases added.)

  • Sec­ondly, they believed that the level of pri­vate debt—and there­fore also its rate of change—had no major macro­eco­nomic sig­nif­i­cance:

    Fisher’s idea was less influ­en­tial in aca­d­e­mic cir­cles, though, because of the coun­ter­ar­gu­ment that debt-defla­tion rep­re­sented no more than a redis­tri­b­u­tion from one group (debtors) to another (cred­i­tors). Absent implau­si­bly large dif­fer­ences in mar­ginal spend­ing propen­si­ties among the groups, it was sug­gested, pure redis­tri­b­u­tions should have no sig­nif­i­cant macro-eco­nomic effects… (Ben S. Bernanke, 2000, p. 24; emphases added)

  • Finally, the most remark­able rea­son of all is that debt, money and the finan­cial sys­tem itself play no role in con­ven­tional neo­clas­si­cal eco­nomic mod­els. Many non-econ­o­mists expect econ­o­mists to be experts on money, but the belief that money is merely a “veil over barter”—and that there­fore the econ­omy can be mod­elled with­out tak­ing into account money and how it is created—is fun­da­men­tal to neo­clas­si­cal eco­nom­ics. Only eco­nomic dis­si­dents from other schools of thought, like Post Key­ne­sians and Aus­tri­ans, take money seri­ously, and only a hand­ful of them—including myself (Steve Keen, 2010http://www.economics-ejournal.org/economics/journalarticles/2010–31)—for­mally model money cre­ation in their macro­eco­nom­ics.

Even the most “avant-garde” of neo­clas­si­cal econ­o­mists, like Paul Krug­man, have only just begun to con­sider the role that debt might play in the econ­omy:

Given both the promi­nence of debt in pop­u­lar dis­cus­sion of our cur­rent eco­nomic dif­fi­cul­ties and the long tra­di­tion of invok­ing debt as a key fac­tor in major eco­nomic con­trac­tions, one might have expected debt to be at the heart of most main­stream macro­eco­nomic models—especially the analy­sis of mon­e­tary and fis­cal pol­icy. Per­haps some­what sur­pris­ingly, how­ever, it is quite com­mon to abstract alto­gether from this fea­ture of the econ­omy. (Paul Krug­man and Gauti B. Eggerts­son, 2010, p. 2)

Even when he attempted to break from this mould, Krug­man did so from the same point of view as Bernanke above—that the level of debt doesn’t mat­ter, only its dis­tri­b­u­tion, and that one can abstract com­pletely from how money is cre­ated:

Ignor­ing the for­eign com­po­nent, or look­ing at the world as a whole, the over­all level of debt makes no dif­fer­ence to aggre­gate net worth — one person’s lia­bil­ity is another person’s asset… In what fol­lows, we begin by set­ting out a flex­i­ble-price endow­ment model in which “impa­tient” agents bor­row from “patient” agents [where what is bor­rowed is not money, but “risk-free bonds denom­i­nated in the con­sump­tion good”], but are sub­ject to a debt limit… (Paul Krug­man and Gauti B. Eggerts­son, 2010, pp. 3 & 5)

In con­trast, I have ded­i­cated my aca­d­e­mic life to extend­ing the Finan­cial Insta­bil­ity Hypoth­e­sis first devel­oped by Hyman Min­sky, and for that rea­son I was always aware that pri­vate debt plays a much more impor­tant role in the econ­omy than neo­clas­si­cal econ­o­mists com­pre­hend. Hav­ing been given the task of explain­ing (in an Expert Wit­ness Report) how enforc­ing a preda­tory loan could have dele­te­ri­ous con­se­quences for peo­ple who were not par­ties to the loan, I there­fore turned imme­di­ately to the level and rate of growth of pri­vate debt.

What I saw in Decem­ber 2005 shocked me. Though five years ear­lier, when writ­ing Debunk­ing Eco­nom­ics, I had com­mented that I expected a debt-induced finan­cial cri­sis at some stage in the future (Steve Keen, 2001, pp. 311–312), the sheer scale and rate of growth of debt was stag­ger­ing. The 40-year long trend for pri­vate debt to rise 4.2% faster than GDP sim­ply couldn’t be sus­tained for­ever, and I felt that its break­ing was immi­nent. When it broke, I expected that the Aus­tralian econ­omy would enter a slump that would be far worse than that of the early 1990s (I’ll dis­cuss why I was wrong on this expec­ta­tion later).


Fig­ure 2: Aus­tralian pri­vate debt rose 4.2% faster than GDP from 1965 till 2006

I quickly checked the US data to see whether this was merely an Aus­tralian phe­nom­e­non, or a global one. The pri­vate debt to GDP ratio was grow­ing more slowly in the USA—though over a much longer time­frame (at an aver­age 2.25% p.a. since 1945). The US’s ratio was almost twice as high as Australia’s, and five times as high as it was at the end of WWII.

Fig­ure 3: A five-fold increase in US pri­vate debt to GDP since 1945

When these trends of ris­ing pri­vate debt ended, I felt we were cer­tain to expe­ri­ence an eco­nomic down­turn whose sever­ity would be unprece­dented in the Post-WWII period—and which could even rival the Great Depres­sion.

The rea­son why I believed that a change in the rate of growth of debt could cause a cri­sis, while con­ven­tional econ­o­mists (in which cat­e­gory I include every­one from Paul Krug­man and Ben Bernanke to Chris Joye) saw no prob­lem with a higher level of pri­vate debt, is because the eco­nomic tra­di­tion to which I belong acknowl­edges that the growth in pri­vate debt boosts aggre­gate demand. When a bank lends money, it cre­ates spend­ing power by cre­at­ing a deposit at the same time. This addi­tional money adds to spend­ing power of the bor­rower, with­out reduc­ing the spend­ing power of savers.

Neo­clas­si­cal eco­nom­ics, on the other hand, treats banks as sim­ple inter­me­di­aries between savers and lenders. A loan there­fore increases the spend­ing power of the bor­rower, but reduces the spend­ing power of the saver.

If the neo­clas­si­cal model of bank­ing were cor­rect, then the macro­eco­nomic effects of debt would be muted, as Bernanke and Krug­man argued. How­ever, there is over­whelm­ing empir­i­cal evi­dence that this model is wrong. This evi­dence was first com­pre­hen­sively analysed by the Amer­i­can Post Key­ne­sian econ­o­mist Basil Moore (Basil J. Moore, 1979, 1988a, 1995, 1988b, 1997, 2001, 1983), but it was also rec­og­nized by the then Senior Vice-Pres­i­dent of the New York Fed­eral Reserve, Alan Holmes, in 1969. While explain­ing why the Mon­e­tarist-inspired attempt to con­trol infla­tion by con­trol­ling the growth of the money sup­ply had failed, Holmes quipped that “In the real world, banks extend credit, cre­at­ing deposits in the process, and look for the reserves later”.

At more length, Holmes summed up the Mon­e­tarist objec­tive of con­trol­ling infla­tion by con­trol­ling the growth of Base Money as suf­fer­ing from “a naive assump­tion”:

that the bank­ing sys­tem only expands loans after the [Fed­eral Reserve] Sys­tem (or mar­ket fac­tors) have put reserves in the bank­ing sys­tem. In the real world, banks extend credit, cre­at­ing deposits in the process, and look for the reserves later. The ques­tion then becomes one of whether and how the Fed­eral Reserve will accom­mo­date the demand for reserves. In the very short run, the Fed­eral Reserve has lit­tle or no choice about accom­mo­dat­ing that demand; over time, its influ­ence can obvi­ously be felt”… [and] “the reserves required to be main­tained by the bank­ing sys­tem are pre­de­ter­mined by the level of deposits exist­ing two weeks ear­lier.” (Holmes 1969, p. 73) (Alan R. Holmes, 1969, p. 73; empha­sis added.)

Why did neo­clas­si­cal econ­o­mists ignore this per­fectly sen­si­ble analy­sis, and the host of empir­i­cal evi­dence sup­port­ing it accu­mu­lated by Moore and oth­ers, includ­ing even neo­clas­si­cal stan­dard-bear­ers like Kyd­land and Prescott (Finn E. Kyd­land and Edward C. Prescott, 1990, p. 4)? I would like to say that “faced with a choice between real­ity and their assump­tions, neo­clas­si­cal econ­o­mists chose their assump­tions”, but strictly speak­ing that wouldn’t be true. The vast major­ity of neo­clas­si­cal econ­o­mists have no idea that this empir­i­cal evi­dence even exists. But if they had heard of it, most of them would have dis­missed it any­way because it under­mines numer­ous core beliefs in neo­clas­si­cal eco­nom­ics, includ­ing the belief known as Wal­ras’ Law. This is because, once it is acknowl­edged that the growth in credit can expand aggre­gate demand, then:

  • In place of a nec­es­sary equiv­a­lence between (notional) aggre­gate demand and aggre­gate sup­ply (Robert W. Clower, 1969, Robert W. Clower and Axel Lei­jon­hufvud, 1973), aggre­gate demand will exceed aggre­gate sup­ply if debt is ris­ing, and fall below it if debt is falling.
  • The nom­i­nal amount of money mat­ters, and bank­ing & debt dynam­ics have to be included in macro­eco­nomic mod­els, while neo­clas­si­cal eco­nom­ics ignores them.
  • The neat sep­a­ra­tion of macro­eco­nom­ics from finance can no longer be main­tained, since the change in debt finances pur­chases of assets, as well as pur­chases of newly pro­duced goods and ser­vices.
  • Worst of all, the belief that every­thing hap­pens in equi­lib­rium has to be aban­doned. Ris­ing debt is not nec­es­sar­ily bad—in fact it is an essen­tial aspect of a grow­ing economy—but it is nec­es­sar­ily a dis­e­qui­lib­rium process, as Schum­peter argued long ago (Joseph Alois Schum­peter, 1934, pp. 95, 101).

Work­ing from the per­spec­tive that the econ­omy is dri­ven by aggre­gate demand, and that aggre­gate demand is GDP plus the change in debt, I there­fore expected the cri­sis to begin when the rate of growth of debt slowed down sub­stan­tially. In August 2007, when the RBA pub­lished its opti­mistic fore­cast for 2007 and 2008, I pub­lished the fol­low­ing obser­va­tion on the Aus­tralian econ­omy:

Reduc­ing the rate of growth of debt from its cur­rent level of 15% to the seven per cent rate of growth of nom­i­nal GDP would mean a reduc­tion in spend­ing next year, com­pared to the cur­rent trend, of over $100 bil­lion. That is equiv­a­lent to an eight per cent reduc­tion in aggre­gate demand com­pared to trend, and would have the same impact on the econ­omy as a ten per cent fall in nom­i­nal GDP. This real­i­sa­tion is why I first observed in early 2006 that an even­tual reces­sion is inevitable—and why, in mock hon­our of Keating’s famous phrase, I gave it the moniker of “The Reces­sion We Can’t Avoid”. (Steve Keen, 2007, p. 37)

That hypo­thet­i­cal process began in the USA in early 2008 (though Aus­tralia did in fact avoid that recession—a point I dis­cuss later). Aggre­gate demand fell sharply in 2008 even though debt was still ris­ing; then in mid-2009 the change in debt actu­ally turned neg­a­tive.

Fig­ure 4: A slow­down in the rate of growth of debt caused the Great Reces­sion

Since aggre­gate demand deter­mines employ­ment, the rate of unem­ploy­ment exploded as the debt-financed por­tion of aggre­gate demand col­lapsed.

Fig­ure 5: Change in debt-financed demand and unem­ploy­ment, USA




Since debt finances asset pur­chases as well as pur­chases of goods and ser­vices, I also expected the turn­around in the growth of debt to cause asset mar­kets to tank as well—which they did, in spec­tac­u­lar fash­ion.

But here the cau­sa­tion was complex—because as well as ris­ing debt caus­ing asset prices to rise, ris­ing asset prices also encour­age would-be spec­u­la­tors to enter the stock and hous­ing mar­kets with bor­rowed money. There was there­fore what engi­neers call a “pos­i­tive feed­back loop” between the change in asset prices, and debt.

Fig­ure 6: A pos­i­tive feed­back between ris­ing (and falling) debt and ris­ing (and falling) asset prices

This aspect of cap­i­tal­ism is com­pletely abstracted from by neo­clas­si­cal eco­nom­ics, since its macro­eco­nomic analy­sis only con­sid­ers the buy­ing and sell­ing of newly pro­duced com­modi­ties. To con­sider it prop­erly, we have to tran­scend the core con­cept of neo­clas­si­cal think­ing, Walras’s Law.

The Schumpeter-Minsky Law

The cor­ner­stone of the Neo­clas­si­cal barter model of cap­i­tal­ism is “Walras’s Law”. To cite the Wikipedia here, “Wal­ras’ Law hinges on the math­e­mat­i­cal notion that excess mar­ket demands (or, con­versely, excess mar­ket sup­plies) must sum to zero. That is, Sum[XD] = Sum[XS] = 0”.

The essence of Wal­ras’ Law is the propo­si­tion that, to be a buyer, one must first be a seller—so that the source of all demand is sup­ply. In an envi­ron­ment of free exchange where it is assumed that most mar­ket par­tic­i­pants were “nei­ther thieves nor phil­an­thropists”, neo­clas­si­cal econ­o­mists asserted that “the net value of an individual’s planned trades is iden­ti­cally zero” (Robert W. Clower and Axel Lei­jon­hufvud, 1973, p. 146). A seller was assumed to only sell in order to buy, and to expect a fair return, so that the sum of each person’s sup­ply would equal that person’s demand. Call­ing the gap between a person’s demand and sup­ply “excess demand”, neo­clas­si­cal econ­o­mists asserted that:

The money value of all indi­vid­ual EDs [excess demands] summed over all trans­ac­tors and all com­modi­ties, is iden­ti­cally zero. (Robert W. Clower and Axel Lei­jon­hufvud, 1973, p. 152)

Sev­enty years ago, the great evo­lu­tion­ary econ­o­mist Joseph Schum­peter argued that Wal­ras Law was false in a credit econ­omy, because credit gave entre­pre­neurs spend­ing power that did not come from the sale of exist­ing goods.

An entre­pre­neur, in Schumpeter’s model, was some­one with an idea but no money to put it into prac­tice. How does such a per­son actu­ally get the money, Schum­peter mused?

whence come the sums needed to pur­chase the means of pro­duc­tion nec­es­sary for the new com­bi­na­tions if the indi­vid­ual con­cerned does not hap­pen to have them?(Joseph Alois Schum­peter, 1934, p. 72)

After rul­ing out the con­ven­tional answer that it came solely from sav­ings on partly quan­ti­ta­tive and partly log­i­cal grounds, Schum­peter observed that:

there is another method of obtain­ing money … the cre­ation of pur­chas­ing power by banks… It is always a ques­tion, not of trans­form­ing pur­chas­ing power which already exists in someone’s pos­ses­sion, but of the cre­ation of new pur­chas­ing power out of noth­ing … which is added to the exist­ing cir­cu­la­tion. (Joseph Alois Schum­peter, 1934, p. 73)

The capac­ity for banks to cre­ate money endogenously—“out of nothing”—is cru­cial here. Given this capacity—which Schum­peter took as obvi­ous, and which later empir­i­cal work has shown to be the case—aggregate demand is greater than aggre­gate sup­ply, with the dif­fer­ence being accounted for by the change in debt.

Schumpeter’s stu­dent Min­sky added to this the obser­va­tion that the growth of debt was nec­es­sary to sup­port a grow­ing econ­omy:

If income is to grow, the finan­cial mar­kets, where the var­i­ous plans to save and invest are rec­on­ciled, must gen­er­ate an aggre­gate demand that, aside from brief inter­vals, is ever ris­ing. For real aggre­gate demand to be increas­ing, … it is nec­es­sary that cur­rent spend­ing plans, summed over all sec­tors, be greater than cur­rent received income and that some mar­ket tech­nique exist by which aggre­gate spend­ing in excess of aggre­gate antic­i­pated income can be financed. It fol­lows that over a period dur­ing which eco­nomic growth takes place, at least some sec­tors finance a part of their spend­ing by emit­ting debt or sell­ing assets. (Hyman P. Min­sky, 1982, p. 6; empha­sis added)

Min­sky also pointed out that the entre­pre­neur is not the only one who gets spend­ing power this way: so too does the Ponzi Financier, the spec­u­la­tor who attempts to profit by buy­ing and sell­ing assets on a ris­ing mar­ket:

A Ponzi finance unit is a spec­u­la­tive financ­ing unit for which the income com­po­nent of the near term cash flows falls short of the near term inter­est pay­ments on debt so that for some time in the future the out­stand­ing debt will grow due to inter­est on exist­ing debt. Both spec­u­la­tive and Ponzi units can ful­fill their pay­ment com­mit­ments on debts only by bor­row­ing (or dis­pos­ing of assets). The amount that a spec­u­la­tive unit needs to bor­row is smaller than the matur­ing debt whereas a Ponzi unit must increase its out­stand­ing debts. As a Ponzi unit’s total expected cash receipts must exceed its total pay­ment com­mit­ments for financ­ing to be avail­able, via­bil­ity of a rep­re­sen­ta­tive Ponzi unit often depends upon the expec­ta­tion that some assets will be sold at a high enough price some time in the future. (Hyman P. Min­sky, 1982, p. 24; empha­sis added)

Min­sky thus inte­grates the dynam­ics of asset mar­kets with Schumpeter’s vision of a credit-based econ­omy, in which an impor­tant com­po­nent of aggre­gate demand comes from the endoge­nous expan­sion of spend­ing power by the banks. This yields an account­ing iden­tity which is true in a credit-based econ­omy, whereas Wal­ras’ Law is only true in the neo­clas­si­cal fic­tion of a pure barter econ­omy (David Grae­ber, 2011).The “Schum­peter-Min­sky Law” is thus that:

The sum of all incomes plus the change in debt equals the rev­enue the sale of goods and ser­vices plus net asset sales.

Putting this in a more styl­ized way:

Wages + Prof­its + Change in Debt = Price Level * Out­put + Net Asset Sales,


Net Asset Sales = Asset Price Level * Quan­tity of Assets * Frac­tion of Assets sold.

The change in debt is thus related to the cur­rent level of eco­nomic activity—on both com­mod­ity and asset markets—which explains the cor­re­la­tions shown ear­lier between the rate of change of debt, the level of out­put (and hence of unem­ploy­ment), and the level of asset prices.

An obvi­ous sec­ond-order impli­ca­tion of this—first explored sta­tis­ti­cally by (Michael Biggs et al., 2010; see http://ssrn.com/paper=1595980)–is that the accel­er­a­tion of debt is related to the rate of change of out­put, unem­ploy­ment, and asset prices. Enter “the neb­u­lous con­cep­tion” that Chris Joye derided, the “Credit Accel­er­a­tor”: It is a log­i­cal con­se­quence of a credit-based view of how cap­i­tal­ism func­tions.

To be con­tin­ued next week…

Bernanke, Ben S. 2000. Essays on the Great Depres­sion. Prince­ton: Prince­ton Uni­ver­sity Press.

Beze­mer, Dirk J. 2009. ““No One Saw This Com­ing”: Under­stand­ing Finan­cial Cri­sis through Account­ing Mod­els,” Gronin­gen, The Nether­lands: Fac­ulty of Eco­nom­ics Uni­ver­sity of Gronin­gen,

Beze­mer, Dirk J. 2011. “The Credit Cri­sis and Reces­sion as a Par­a­digm Test.” Jour­nal of Eco­nomic Issues, 45, 1–18.

____. 2010. “Under­stand­ing Finan­cial Cri­sis through Account­ing Mod­els.” Account­ing, Orga­ni­za­tions and Soci­ety, 35(7), 676–88.

Biggs, Michael; Thomas Mayer and Andreas Pick. 2010. “Credit and Eco­nomic Recov­ery: Demys­ti­fy­ing Phoenix Mir­a­cles.” SSRN eLi­brary.

Blan­chard, Olivier. 2009. “The State of Macro.” Annual Review of Eco­nom­ics, 1(1), 209–28.

Blan­chard, Olivier J. 2008. “The State of Macro.” SSRN eLi­brary.

Clower, Robert W. . 1969. “The Key­ne­sian Counter-Rev­o­lu­tion: A The­o­ret­i­cal Appraisal,” R. W. Clower, Mon­e­tary The­ory. Har­mondsworth: Pen­guin Books,

Clower, Robert W. and Axel Lei­jon­hufvud. 1973. “Say’s Prin­ci­ple, What It Means and Doesn’t Mean: Part I.” Inter­moun­tain Eco­nomic Review, 4(2), 1–16.

Cotis, Jean-Philippe. 2007. “Edi­to­r­ial: Achiev­ing Fur­ther Rebal­anc­ing,” OECD, Oecd Eco­nomic Out­look. Paris: OECD, 7–10.

Grae­ber, David. 2011. Debt: The First 5,000 Years. New York: Melville House.

Holmes, Alan R. 1969. “Oper­a­tional Con­straints on the Sta­bi­liza­tion of Money Sup­ply Growth,” F. E. Mor­ris, Con­trol­ling Mon­e­tary Aggre­gates. Nan­tucket Island: The Fed­eral Reserve Bank of Boston, 65–77.

Keen, Steve. 2001. Debunk­ing Eco­nom­ics: The Naked Emperor of the Social Sci­ences. Annan­dale Syd­ney & Lon­don UK: Pluto Press Aus­tralia & Zed Books UK.

____. 2007. “Deeper in Debt: Australia’s Addic­tion to Bor­rowed Money,” Occa­sional Papers. Syd­ney: Cen­tre for Pol­icy Devel­op­ment,

____. 2010. “Solv­ing the Para­dox of Mon­e­tary Prof­its.” Eco­nom­ics: The Open-Access, Open Assess­ment E-Jour­nal, 4(2010–31).

Krug­man, Paul and Gauti B. Eggerts­son. 2010. “Debt, Delever­ag­ing, and the Liq­uid­ity Trap: A Fisher-Min­sky-Koo Approach [2nd Draft 2/14/2011],” New York: Fed­eral Reserve Bank of New York & Prince­ton Uni­ver­sity,

Kyd­land, Finn E. and Edward C. Prescott. 1990. “Busi­ness Cycles: Real Facts and a Mon­e­tary Myth.” Fed­eral Reserve Bank of Min­neapo­lis Quar­terly Review, 14(2), 3–18.

Min­sky, Hyman P. 1982. Can “It” Hap­pen Again? : Essays on Insta­bil­ity and Finance. Armonk, N.Y.: M.E. Sharpe.

Moore, Basil J. 1979. “The Endoge­nous Money Stock.” Jour­nal of Post Key­ne­sian Eco­nom­ics, 2(1), 49–70.

____. 1988a. “The Endoge­nous Money Sup­ply.” Jour­nal of Post Key­ne­sian Eco­nom­ics, 10(3), 372–85.

____. 1995. “The Endoge­nous Money Sup­ply,” M. Musella and C. Pan­ico, The Money Sup­ply in the Eco­nomic Process: A Post Key­ne­sian Per­spec­tive. Alder­shot, U.K.: Edward Elgar Pub­lish­ers, 459–72.

____. 1988b. Hor­i­zon­tal­ists and Ver­ti­cal­ists: The Macro­eco­nom­ics of Credit Money. Cam­bridge: Cam­bridge Uni­ver­sity Press.

____. 1997. “Rec­on­cil­i­a­tion of the Sup­ply and Demand for Endoge­nous Money.” Jour­nal of Post Key­ne­sian Eco­nom­ics, 19(3), 423–28.

____. 2001. “Some Reflec­tions on Endoge­nous Money,” L.-P. Rochon and M. Ver­nengo, Credit, Inter­est Rates and the Open Econ­omy: Essays on Hor­i­zon­tal­ism. Edward Elgar: Chel­tenham, 11–30.

____. 1983. “Unpack­ing the Post Key­ne­sian Black Box: Bank Lend­ing and the Money Sup­ply.” Jour­nal of Post Key­ne­sian Eco­nom­ics, 5(4), 537–56.

RBA. August 2007. “State­ment on Mon­e­tary Pol­icy,” Syd­ney: RBA,

Schum­peter, Joseph Alois. 1934. The The­ory of Eco­nomic Devel­op­ment : An Inquiry into Prof­its, Cap­i­tal, Credit, Inter­est and the Busi­ness Cycle. Cam­bridge, Mass­a­chu­setts: Har­vard Uni­ver­sity Press.

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.
Bookmark the permalink.