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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21 Responses to Kingston Lectures on Endogenous Money & Modelling with Minsky

  1. Bhaskara II says:

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

  2. Bhaskara II says:


    Credit money

  3. Bhaskara II says:

    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.

  4. Bhaskara II says:

    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.

  5. Bhaskara II says:

    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.

  6. Bhaskara II says:

    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.


  7. Bhaskara II says:

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

  8. Bhaskara II says:

    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)

    (c) 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.

  9. Bhaskara II says:

    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.

  10. Bhaskara II says:

    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

  11. Bhaskara II says:

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

  12. Steve Keen says:

    Nice one Bhaskara, thanks.

  13. Herbert says:

    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.

  14. Steve Keen says:

    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.

  15. Steve Keen says:

    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).

  16. Bhaskara II says:

    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.

  17. Bhaskara II says:

    More accurately said:

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

  18. Bhaskara II says:

    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:

  19. Bhaskara II says:


    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.

  20. fatfish says:

    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.

  21. Steve Keen says:

    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).

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