House prices shoot towards a ceiling

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The bulls are roaring, house prices are rising, and all’s well with the world.

Or maybe not. Certainly house prices have risen — and contrary to popular opinion, I expected price rises this year, since mortgage debt has been accelerating since the beginning of 2012 (see Figure 1). One of my many economic heresies is the argument that asset prices are driven by rising debt. Rising asset prices — in this case, houses — require accelerating debt (in this case, mortgage debt), and that’s indeed what we’ve had since the beginning of 2012.

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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.
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33 Responses to House prices shoot towards a ceiling

  1. Steve Hummel says:

    Intangible assets like private banking licenses require a symmetry producing intangible counterpart like a Citizen’s Dividend/Discount Authority to finance consumption….just to mirror the symmetry that is present…in the rest of the cosmos.

    Symmetry and wholeness in all things! Even finance.

  2. Steve Keen says:

    “When things simmer down a bit”… Now that’s a day I dream of!

    It was a very good session though, and the discussion was good–though to be honest I can’t recall any of it right now. But we did focus upon the inherent instabilities of capitalism, from three very different but complementary perspectives.

  3. Steve Hummel says:

    When I have suggested that the ever present effects of the rules of cost accounting have a destabilizing effect on our ability to liquidate prices most orthodox economists chortle that “the maths just don’t add up due to the various velocities of money”. Some, perhaps because they are less arrogant, just rarely if ever acknowledge my input. I’m still not buying that critique actually, considering that cost accounting’s effects ARE ever present on every dollar actually remaining in and passing through commerce itself, but this idea is my answer to it anyway.

    Re-visiting my post on a CDG (consumer dividend grace as in gift) currency….the idea arose from my thinking about Wisdom being the science of integrative thinking and acting, what I refer to as the BOTH/AND perspective, and the natural experience of Grace as the pinnacle of the distillations of that wisdom also being a BOTH/AND phenomenon. In other words a CDG currency is one designed to have BOTH the plus AND the minus aspect of our money system, and even more importantly also be a means of redressing the asymmetries of power between the world’s economic/financial and monetary systems and the individual.

    What I am saying about a CDG currency is that it be added to the pool of individual purchasing power created by work for pay and interest on savings, directly distributed to the individual and originally exclusively tagged as only for consumption. Now it could be kept in existence after retail sale as either profit or savings for individuals or businesses and utilized by them for only more consumption or, if used for traditionally productive investment…it could be transformed back into regular money and allowed to re-circulate for that specific purpose only. Thus within the regular money system it could be a BOTH/AND form of money, and it would also be BOTH an individual freedom enhancing mechanism AND liquidity providing mechanism for traditional investment.

    Traditional Banking would still exist and speculative ventures would also still be possible, but only with non CDG monies and under tight regulation.

    This is my BOTH/AND Production/Grace the free gift economic/financial/monetary system.

  4. Steve Hummel says:


    Perhaps we should call this DCDG currency as in Domestic ONLY Consumer Dividend Gift currency. That way any country can adopt it….instead of having a private self interested globally controlled one….which ominously seems to be the trend of thinking.

  5. Steve Hummel says:

    I can hear it already:

    “But what about the poor Bankers and Banking system?”

    Well, maybe it will be good if they, like every OTHER business plan…..had some actual competition instead of no competition or faux competition.

  6. Endless says: brought to you by Steve Hummel…

  7. Steve Hummel says:

    Who’s stopping anyone from posting?

    And if the major thrust of my ideas/policies is the very thing that addresses/resolves the most glaring problems facing us like the dominance of the TBTF Banks/Banking system, the elimination of both excessive personal debt and the permanent robustness of the traditionally productive economy as well as the economic freedom of individuals….with a dual purpose transforming currency….what is the objection? Cynicism is not relevant debate, and is more an indication of lack of Faith as in Confidence. But after all, that is what the present systems are designed (consciously or unconsciously) to create. Let us have something systemically “new under the sun”.

  8. Patrick Sunter says:

    Steve, I’m wondering if you’re prepared to comment on the spatial political economic issues that are part of Australia’s high house prices :- do supply constraints play at least some role, as well as government policies like first home owners grant, negative gearing, and bank lending policies?

    I.E. the right-wing Demographia consultancy recently reported on Australia’s highly unaffordable house prices relative to income – but then basically pointed the finger of blame completely at “the widespread adoption of urban containment policies” since the 1980s (

    Alternatively, just saw a more balanced blog post arguing land supply is one of the factors, along with pop growth, planning restrictions on redevelopment in existing areas (

    So are supply constraints at least part of the picture?
    BTW this is in no way a ‘trick question’, I’m certainly skeptical myself of the supply argument being advanced as the primary/only cause of high prices.

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