Let’s go “Back, to the Future!”

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If you were told the fol­low­ing graph showed two indi­ca­tors of Australia’s eco­nom­ic health, and one of them had to be addressed urgent­ly, which one would you expect politi­cians and econ­o­mists to try to bring under con­trol first?

If you picked the blue line, you’ve obvi­ous­ly not a politi­cian. The blue is the ratio of pri­vate debt to GDP in Aus­tralia; the red line is the ratio of gov­ern­ment debt to GDP (debt to the bank­ing sec­tor only; both series come from RBA table D02). The red line is the one that both sides of pol­i­tics in Can­ber­ra are obsessed about; the blue one they both ignore.

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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.