Prof. Steve Keen on private debt and his solution people’s QE

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I’ve had some tough interviews over the years (such as the BBC HARDtalk! interview earlier this year with Stephen Sackur), but I’d have to credit the student interviewers at the University of Amsterdam’s Room for Discussion event with giving me the toughest, well-informed grilling my ideas have had in public. I’m following up later today with a keynote speech at the Dutch Rethinking Economics event tonight, and I’ll post that here later this week.

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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13 Responses to Prof. Steve Keen on private debt and his solution people’s QE

  1. Derek R says:

    Good interview. One minor niggle. It’s Ashley Madison, not Ashley Martin. Otherwise spot on as usual.

  2. Karl says:


    At minute 59 you were about to address the situation in Belgium, but cut short in the ongoing discussion.

    Could you please comment on the Belgian case? What is the background, the setting, and how and when are things likely to unfold? In particular with regard to the housing market?

    Any research, data source or further reading you would suggest?

    Thanks & Best regards,
    Karl (Leuven, Belgium)

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  4. drew priest says:

    If we have a people QE / Jubilee / etc program that injects money into the economy, then it will cause inflation, as discussed in the video. To some extent that is desired. As a limit to that inflation, why wouldn’t we use increase interest rates at the same time?

    The advantages I see of increasing the interest rates in pair with the cash injection:
    1 – a tool to limit excess inflation
    2 – drives the price of borrowing up
    2a – naturally drives the private debt down, without complicated & heavy handed intervention into individual financial choices
    2b – makes banks more cautious with loan risks
    3 – the value of savings increases

  5. Derek R says:

    Only money that is spent can cause inflation. Since the great majority of Prof Keen’s Modern Debt Jubilee money goes into paying off debt principal, it never gets spent before it is destroyed by the principal repayment action. Thus it does not cause inflation because it is never spent on physical goods..

    The only risk of inflation comes from the people who have no debt when they receive the payment. These people could spend the money and cause a bit of inflation. However Central Banks have been trying to create a little inflation for some time, so I don’t see them having a problem with that.

  6. cavoniuz says:

    The queen of England asked why no one saw the credit crunch coming. Mostly the answer was “it was an outside shock”. But aliens didn’t invade Earth, there was no giant meteorite, no Gozilla, no biblical flood or swarm of locusts. So you have to ask: did the shock that they talk about, happen outside the real economy or did it happen outside their economic models? Judging by their track record the answer becomes obvious.

  7. Steve Keen says:

    Hi Karl,

    I don’t provide much detail on Belgium in my next book Can we avoid another financial crisis?, but on the metrics there Belgium has a very high private debt level and extremely high credit growth right now. I’m too busy to answer in detail at present, but I’ll be giving more detailed stats on all countries once the supporting website for the book ( is up and running.

  8. Steve Keen says:

    Ah. That fox paw probably reflects my shortage of hair then!

  9. Dr Wirmussen says:

    A very interesting, well-thought through explanation of the merits of this approach and the reasons for it. I’m a big fan of the way you’re spreading these ideas to a new generation that we’d thought lost to the cause.

    I must question, however, your failure to acknowledge the great debt we owe to the originators of these ideas. Henry Ford was a great man and a great American, and although his reputation has been sadly traduced these days we all owe him a great deal for setting out so clearly where the money is being sucked out of our system and who is doing the sucking.

    Your works are some of the most seminal in this field since The International Jew was published, but that doesn’t justify ignoring the intellectual debt you owe to Ford (and of course to the man he inspired, whose name cannot be mentioned).

    Are you going to rectify this?

  10. Steve Keen says:

    I owe Ford no intellectual debt, since I had never read him on this topic prior to your comment. I am now painfully aware of his anti-semitism: I found reading enough of that reference to see his knowledge of money an extremely distasteful experience. Of course I was aware that Hitler understood monetary dynamics, which is why he wrote off so much German debt and ran huge deficits which built up German military might prior to the War. It is strange to now realise that he may have learnt much of this from Ford.

  11. Bhaskara II says:

    @Professor Keen,

    Do you know why the government bond interest rate cycle is so long? If so why or where is the answer?

    The government bond interest rate cycle was on the order of 6o years for the last two cycles. The interest rate has been declining for 35 years.

  12. Bhaskara II says:

    I just saw this. Stanly Druckenmiller suggested a tax change suggesting that it might bring jobs to the US and end Corporate lobbying. I’m not sure that it would end lobbying as the corporations and their share holders could still lobby. (The return on investment for lobbying seems to be >= 10 times.)

    For those outside the US a corporate pays taxes on profit and then the stock holders pay taxes on dividends. The labor pay taxes on revenue.


  13. Bhaskara II says:

    “If the U.S. Won’t Pay Its Teachers, China Will”

    Chinese young lady starts online tutoring company starting with English. That must have been one of the easiest startups to get funding for in China.

    Quotes from the article:

    “Today, Mi is 33 and founder of a startup that aims to give Chinese kids the kind of education American children receive in top U.S. schools. ”

    “Mi is capitalizing on an alluring arbitrage opportunity. In China, there are hundreds of millions of kids whose parents are willing to pay up if they can get high-quality education. In the U.S. and Canada, teachers are often underpaid—and many have quit the profession because they couldn’t make a decent living. Growth has been explosive. The three-year-old company started this year with 200 teachers and has grown to 5,000, now working with 50,000 children. Next year, Mi anticipates she’ll expand to 25,000 teachers and 200,000 children.”

    “Mi’s goal was to deliver not the cheapest way to study, but rather the most efficient way to learn for the time and money invested.”

    ‘VIPKid is already refining its techniques by recording lessons on video and crunching data on which strategies work best. They’ve found students learn more effectively if they can pick teachers that suit their aptitudes and study examples that capture their interest. “It’s just now that we are able to see real gains in efficiency,” says Hutter, who also put money into VIPKid. “Depending on the current choices for learning, you could see 5x or 10x improvements in the time spent per unit of education.” ‘

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