Get ready for an Australian recession by 2017

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For the last 25 years, Australian politicians of both Liberal and Labor hue have been able to brag that, under their stewardship, Australia has avoided a recession. Those bragging rights are about to come to an end. During the life of the next Parliament — and probably by 2017 — Australia will fall into a prolonged recession.

Click here to read the rest of this post, and here to download the Excel file showing the link between a slowdown in the rate of growth of debt and a recession.

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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11 Responses to Get ready for an Australian recession by 2017

  1. carson0900 says:

    Steve, do you have a link to the Bank of International Settlements data?

  2. Dinero says:

    The private sector has a stock of savings and so and the spending in a year is not from earning plus borrowing. The spending is from earnings, borrowings and savings.

  3. Steve Keen says:

    Except that one individuals savings means a reduction in another individual’s income. Savings is an illusory concept when applied to macroeconomics: individuals can save (change the amount of money they possess) but economies cannot unless (a) banks create more money–simultaneously creating debt–or (b) the government runs a deficit.

  4. Dinero says:

    The stock of savings , that have accumulated in previous years, is a real quantity that can be used for spending. There can be a stock of savings in the economy as a whole, that can be used for spending.

    For clarity, if there was no earning and no borrowing in a year by the spenders in the economy there can be spending in that year, from the stock of savings.

    So that illustrates that the stock of savings exist as a source of spending.

  5. twowithinthreethatisone says:

    Both increased borrowing and government deficit spending increase costs……(because it goes into the economy as the enterprise of government and which consequently has a flow of additional costs such as depreciation). Thus deficit governmental spending does not resolve the disequillibrated monetary state of the economy. A modern technologically advanced and hence increasingly capital intensive economy is inherently cost inflationary as the increased costs of capital assets must be continually factored into total costs. And even if the economy can limp along for relatively long periods of time without completely collapsing every other business model is dominated by Finance and probably upward of 95% of the entire populace is enslaved by same. Factor in the just getting started disruptive effects of innovation and artificial intelligence eroding aggregate demand…and you’ve got a real problem.

    The only valid economic way to resolve this inherent and increasing problem is to integrate monetary grace as in direct to the individual Gifting into the debt based money system.

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  7. koonyeow says:

    Are there ways to short the Australian market then?

  8. KGKG says:

    Dear Prof Keen

    I am among thousands who thoroughly enjoy and appreciate your non-neoclassical economics and related commentary. The main stream media in-particular in Australia are against unconventional narration!

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  10. nrlsupercoach says:

    Dear Dr Keen,

    Looking at wikipedia page ( and sorting by % of GDP .

    There are plenty of countries with rations higher ( much much higher ) than Australia. Most notable to me is UK with (569%).

    How did these countries accumulate such high debt and why wouldnt Australia keep on accumulating more? In other words which rule says that the Debt ratio has to come down once 200 % is reached?

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