As an economist, I do something very unusual: I treat money seriously.

Though this may be hard for those who have not done an economics degree to believe, economists have it schooled into them that “money doesn’t matter”–that it is just a “veil over barter”, there to make it easier to swap commodities than it would be if you actually had to find someone who had what you wanted, and wanted to sell what you wanted to buy.

The argument that persuades them goes something like this: ”what would happen if you simultaneously doubled all prices and all incomes? Nothing!” In other words, if consumers are rational (now there’s a much abused word, but I digress), they shouldn’t care about the absolute prices of goods, just their relative prices. So doubling all prices and doubling a consumer’s income shouldn’t cause her to do anything different (but of course, changing relative prices would alter behaviour).

Bollocks. Double all prices and my income, and I’d be much better off because my mortgage payments would take less of my income (even if interest rates were also doubled). That’s because I’m in debt–I have a mortgage. And you can’t simply double interest rates to reach the same outcome as doubling prices, because debt repayment dynamics make the whole thing “nonlinear”: include debt seriously in your analysis of consumption, and the “veil over barter” vision of money collapses. But this “inconvenient truth” is omitted from economics–not because economists are deliberately hiding it, but because they have deluded themselves about the nature of money.

I take it into account, and as a result I get a very different picture of how the economy operates than do conventional (“neoclassical”) economists.

I use this blog to post monthly reports on debt levels in Australia and the USA.

Contact me

The best means of communication is via the blog, but if you want to send me an email then do so to my gmail account, which is debunking (AT [written this way to get around automated email scanners] gmail.com).

Personal details

I get numerous requests from media and conference organisers for photos and a biography. Anyof following can be used freely.

Biography

Steve Keen is Associate Professor of Economics & Finance at the University of Western Sydney, and author of the popular book Debunking Economics (Zed Books UK, 2007; www.debunkingeconomics.com). He has over 40 academic publications on topics as diverse as financial instability, the money creation process, mathematical flaws in the conventional model of supply and demand, flaws in Marxian economics, the application of physics to economics, Islamic finance, and the role of chaos and complexity theory in economics. His work has been translated into Chinese, German and Russian.

In Debunking Economics, Steve let the general public in on a little-known secret: that many widely believed economic models have been shown by economists to be wrong—hence the subtitle to his book, “the naked emperor of the social sciences”.

This is emphatically the case with the so-called “Efficient Markets Hypothesis”, which still dominates academic thinking about finance today—even after the Global Financial Crisis. Since 1995, Steve’s main research focus has been the development an alternative, empirically grounded theory, known as the “Financial Instability Hypothesis”, which argues that finance markets are inherently unstable. Steve’s forthcoming book on this topic, Finance and Economic Breakdown, will be published by Edward Elgar (UK) in 2011.

Steve predicted the Global Financial Crisis as long ago as December 2005, and since November 2006 has published Debtwatch, a monthly report which explains the dangers of excessive private debt. This report, which is freely available on his blog (http://www.debtdeflation.com/blogs) has received extensive coverage in the Australian media, and is reproduced by other noted commentators around the world, including Nouriel Roubini’s RGE Monitor (http://www.rgemonitor.com/) and Alan Kohler’s Business Spectator (http://www.businessspectator.com.au/).

Steve’s excellent communication skills were honed in his pre-academic career, which included stints as a school librarian, education officer for an NGO, conference organizer, computer programmer, journalist for the computer press, and economic commentator for ABC Radio National and Radio Australia.

Further reading

  • This blog. I started it in 2006, when I concluded that a serious debt-driven financial crisis was inevitable, and someone had to raise the alarm about the possibility of one happening. Here you will find:
    • The Debtwatch Report which come out just before the RBA meets each month to set rates, and takes a topical look at economics and the rate decision in particular;
    • Academic papers that focus on the topics of debt deflation and the monetary system;
    • A Podcast recorded after each DebtWatch report by Stuart Cameron of Rife Media
  • My report And Deeper in Debt published by the Centre for Policy Development last September.
  • Debunking Economics, a website that supports my book of the same name, and stores my lectures on economics and finance at the University of Western Sydney.
    • The most relevant lectures to explain the approach I take to finance are those on Financial Economics
    • The most accessible lectures on my non-orthodox approach to economics in general are those on Managerial Economics
  • Blogs by other commentators whom I believe have a handle on what has happened. For a decade or more, these writers have been “contrarians”, railing against the stupidity of Wall Street and accommodative Central Banks while the rest of the pundits applauded such financial innovations as … subprime loans:
  • Lest it be thought that I’m a critic of everything the RBA does:
    • Most of my Australian data comes straight from the RBA Bulletin Statistical Tables
    • The RBA Conference on Asset Prices and Monetary Stability had some excellent papers. I only wish that the orientation set in this conference had guided subsequent RBA policy.
    • This RBA paper comparing the Great Depression to the 1890s Depression is one of the most informative historical analyses I’ve ever read
  • Ditto for the US Federal Reserve. While I believe that the “Greenspan Put” has encouraged “moral hazard” behaviour that has made this the worst financial bubble ever, the Fed has also been a bastion of free and accessible data. My US data largely comes from its Flow of Funds report.