Kingston Lec­tures on Endoge­nous Money & Mod­el­ling with Min­sky

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These are two lec­tures on endoge­nous money in macro­eco­nom­ics from the Kingston Uni­ver­sity Polit­i­cal Econ­omy Mas­ters mod­ule “Eco­nomic Change and Ideas”, which I gave yes­ter­day (Fri­day March 6th). I will wait till next year before post­ing the entire lec­ture series, since I’m giv­ing them for the first time this year and they are a bit rough. But one stu­dent couldn’t make yes­ter­day, and I had two lec­tures in one day to make up for my absence next week when I’m attend­ing my niece’s wed­ding in Syd­ney. So these are posted for my absent stu­dent and any­one else who is inter­ested.

I cover Graziani’s bril­liant insights into “What is money?”, the argu­ments Neo­clas­si­cals use to not con­sider banks, debt and money in macro­eco­nom­ics, use my Min­sky soft­ware to com­pare Loan­able Funds to Endoge­nous Money, explain how change in debt con­tributes to both aggre­gate expen­di­ture and aggre­gate income, and derive a dynamic quan­tity equa­tion for money in place of Friedman’s sta­tic equa­tion.

The Pow­er­point file can be down­loaded from here. The Min­sky files I use in the pre­sen­ta­tion are embed­ded in this file; if you want to access them, install Min­sky and then run the pre­sen­ta­tion in Slideshow mode. When they bounce onto the screen, click on them to open them in Min­sky. You can then run them, down­load them to your own com­puter, edit them, etc.

From “What is Money?” to modelling money using Minsky

From the Neoclassical “Loanable Funds” model to the real world of Endogenous Money

Reconciling Aggregate Expenditure is Income with a role for debt

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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  • Bhaskara II

    Bank money
    Book money
    Account­ing money
    [Bank notes, were used in the past]

  • Bhaskara II


    Credit money

  • Bhaskara II

    The first set of terms were used in, “RESPONDER — Richard Werner — The Case for Local Bank­ing “. Near the 9th minute.

    GDP, asset prices, and Debt com­par­isons dis­cussed, after minute 14. Data dis­cus­sion fol­lows after 18m:40s.

  • Bhaskara II

    RE: Just saw in a book deb­its and cred­its explained the same as the (+,-) use in Keen, Min­sky, and Godley´s works and pro­gram.*

    Deb­its and Cred­its

    In the world of book­keep­ing, every trans­ac­tion posted to the Gen­eral Ledger must have deb­its and cred­its of equal value. Because the books should always be kept in bal­ance it is nec­es­sary to make sure that all the cred­its in the sys­tem equal all the deb­its in the sys­tem. Deb­its are con­sid­ered plus fig­ures (+); cre­duts are minus fig­ures (-). So, wheh the deb­its are added and the cred­its are sub­tracted the end rusult should be zero.”

    *Alpha Teach Your­self Book­keep­ing in 24 Hours
    p.64 in google books.

  • Bhaskara II

    I think an other very good descrip­tion of debit and credit as Use and Source is used by the US flow of accounts, in the flow sec­tion.

    In flow of fund flow tables: (gross trans­ac­tion tables for use and souce)

    +, use, (U), debit*
    -, source, (S), credit

    But they also use in flow of funds level tables:

    +, Asset, debit
    -, Lia­bil­i­ties, credit

    See top of table on first page.

  • Bhaskara II

    Pro­fes­sor Keen,

    Here is a quick and dirty way to have updated pri­vate debt data.

    Nate in Seat­tle ?@n8r0n74 Mar 19

    @ProfSteveKeen do you keep these pri­vate vs pub­lic debt charts updated any­where easy-to-find? I’ve seen them from time to time on your blog.

    “A way of auto­mat­i­cally updat­ing the data rather than me doing it by hand @pelle_jons @IDEAeconomics @n8r0n74”

    I have that for you right here!

    The link below ends with a num­ber# that the “fred graph” data base graph­ing site stores the graph spec­i­fi­ca­tions so it can always gen­er­ate an updated graph. The link can be put on a web site etc.

    Now the only prob­lem is your def­i­n­i­tion of pri­vate debt. Here I used the series in the title to gen­er­ate it.

    Please, let me know the series you use if you want me to cor­rect to your def­i­n­i­tion.

    I also included a series I saw for pri­vate non-finan­cial debt.

    Link to con­tin­u­ously updated pri­vate debt to GDP graph:

    Here is the web­site code:


    You can get the data from the first link.


  • Bhaskara II

    Web page ate the web­site code. You can get it by click­ing the share but­ton.

  • Bhaskara II

    Pri­vate debt to GDP was defined as (a-b-c)/d.

    (a) All Sec­tors; Credit Mar­ket Instru­ments; Lia­bil­ity, Level, Bil­lions of Dol­lars, Not Sea­son­ally Adjusted (TCMDO)

    (b) State and Local Gov­ern­ments, Exclud­ing Employee Retire­ment Funds; Credit Mar­ket Instru­ments; Lia­bil­ity, Bil­lions of Dol­lars, Not Sea­son­ally Adjusted (SLGTCMDODNS)

    © Fed­eral Gov­ern­ment; Credit Mar­ket Instru­ments; Lia­bil­ity, Level, Bil­lions of Dol­lars, Sea­son­ally Adjusted (FGSDODNS)

    (d) Gross Domes­tic Prod­uct, Bil­lions of Dol­lars, Sea­son­ally Adjusted Annual Rate (GDP)

    Click on “notes” tab for series def­i­n­i­tions.

  • Bhaskara II

    If you were inter­ested in other coun­tries they might have the series.

    Here is on I made up for Japan for pri­vate non-finan­cial sec­tor debt to GDP. It is the thick line. I used a GDP cal­cu­la­tion to turn a longer indexed GDP to GDP using the nom­i­nal GDP for the index =1 date.

  • Bhaskara II

    This Japan series data came from BLS which I remem­ber you were look­ing at some time back.

    Click­ing the notes tab one gets the fol­low­ing:

    (1) Bank for Inter­na­tional Set­tle­ments. “Long series on credit to pri­vate non-finan­cial sec­tors”.

    Copy­right, 2014, Bank for Inter­na­tional Set­tle­ments (BIS). Terms and con­di­tions of use are avail­able at

    Source: Bank for Inter­na­tional Set­tle­ments

  • Bhaskara II

    Cor­rec­tion the Japan series came from Bank for Inter­na­tional Set­tle­ments (BIS).

  • Nice one Bhaskara, thanks.

  • Her­bert

    Very much enjoy your lec­tures Steve, thanks very much for mak­ing them avail­able.

    Your curves that show unem­ploy­ment vs delta debt are inter­est­ing for me in terms of what level of unem­ploy­ment results from no change in debt level. Look­ing at some of your curves, I get the impres­sion it is some­where in the band 9–15%. Raises some inter­est­ing issues -

    1. What deter­mines this level?
    2. I would con­clude that unless we under­stand and address the under­ly­ing struc­tural issues that give this level of unem­ploy­ment, then the polit­i­cal desire to have low lev­els of unem­ploy­ment (lets say 5%) is finan­cially sui­ci­dal as you inevitably gen­er­ate huge debt in going for this polit­i­cal goal.

  • Not so much that Her­bert as a rate of growth of money–and hence debt in our cur­rent system–is nec­es­sary to achieve high aggre­gate demand. So we need to find a way to gen­er­ate that growth with­out gen­er­at­ing the drag that debt ulti­mately causes.

  • PS The debt growth needed is much lower when you look back at the 1950s & 60s data–but the rate of growth of debt rel­a­tive to GDP drove us up from very low to very high lev­els, where the drag devel­ops. Hence my argu­ments for debt jubilees, or non-debt means to cre­ate money (hence fully funded gov­ern­ment deficits).

  • Bhaskara II

    Pro­fes­sor Keen,

    RE: Ecuador non cor­re­la­tion of change in pri­vate debt to gdp and unem­ploy­ment

    You prob­a­bly know this. I have read that Ecuador’s econ­omy is US dol­lar­ized since year 2000 and unof­fi­cially before that. Dol­lar debt might change the dynamic sig­nif­i­cantly.

  • Bhaskara II

    More accu­rately said:

    For­eign dol­lar debt might sig­nif­i­cantly change the dynamic of change in pri­vate debt to gdp and unem­ploy­ment.

  • Bhaskara II

    RE: A minus of using fred graph

    A minus of link­ing to graphs from Fred is that, if they break it, it won’t work on your web page until they fix it. The plus side of that is that they will prob­a­bly fix it and you are not doing the the sup­port.

    The last few days Fred graph is not work­ing that great. They have started mod­i­fy­ing it sev­eral moths ago.

    Some one who was link­ing to Fred graphs said that Fred destroyed his web site. A month later the graphs were work­ing again and have been for quite a while.

    Of course a data base would be really neat for so many great rea­sons.

    Here are some pages on Fred Graph that might be use­ful:

    Data dump:

    Data access or Data­base access:

    Down­load all Fred data, 250,000+ time series:
    It could be eas­ily con­verted to fill a local data base but might not be the best way. Could be quite quick and good enough. Doable.

    Devel­oper API, I have not used this:
    My thought on this is that it might be an extra step lan­guage to get­ting data into a data base.

    FRED data access from Excel, I have not used it at all:

    Sta­tis­ti­cal Data and Meta­data Exchange (SDMX):
    This looks like a nifty idea.

    R-con­nec­tion to FRED:

  • Bhaskara II


    Devel­oper API, I have not used this:
    My thought on this is that it might be an extra step and lan­guage to get­ting data into a data base.

  • fat­fish

    Dear Pro­fes­sor Keen:
    I down­load the pri­vate debt data from BIS and the GDP from Fed to repro­duce the graph shown in your lec­ture. But my graphs are dif­fer­ent from yours. Would you please tell me how you define or approx­i­mate change in debt to GDP and debt accel­er­a­tor.

  • I have been using Fed­eral Reserve data until recently, when the BIS started pub­lish­ing its data set. That’s prob­a­bly the sole rea­son for the dif­fer­ence. BIS data is also not sea­son­ally adjusted, which will mean that where I can I will con­tinue using the Fed data set.

    Change in debt is sim­ply the cur­rent value’s minus the pre­vi­ous year’s, divided by GDP at the same time; I’m using inter­po­la­tion rou­tines to con­vert quar­terly series into monthly (which is nec­es­sary for Aus­tralia since it pub­lishes monthly credit data and quar­terly GDP data; I devel­oped the rou­tines for Aus­tralia first, and then used the same approach for the USA).