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.

Debt­watch gets a men­tion in Par­lia­ment

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It’s not yet the main topic of debate between Lib­eral and Labor, but some of the argu­ments in Debt­watch have at least made their way into Hansard cour­tesy of a speech by Lau­rie Fer­gu­son. The full extract from the speech is shown below.

This makes a mock­ery of the claim by the Prime Min­is­ter that we have never been bet­ter off. Whilst the Howard gov­ern­ment crows about the suc­cess in the econ­omy, which was largely inher­ited from Labor and fuelled by the raw mate­ri­als demands of India and China, there is an alter­na­tive real­ity of an out-of-con­trol per­sonal debt spi­ral. Steve Keen from the Uni­ver­sity of West­ern Syd­ney writes:

First home pay­ments hit $3000 per month

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Jes­sica Irvine from the SMH has writ­ten an excel­lent piece with this head­line in today’s SMH. I’ve linked it on the blog roll, but it’s linked here too for quick ref­er­ence.

 My Debt­watch report will be very brief this com­ing month: I’m off to the USA tomor­row for some con­fer­ences, and I’m “under the gun” to pro­duce papers and pre­sen­ta­tions to suit. I also won’t be avail­able for com­ment at the time of the RBA’s next meeting–which is of course highly unlikely to move rates in either direc­tion.

PM on New Zealand Reserve Bank Pol­icy Shift–transcript

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Will Bud­get tax cuts fuel inflation?  (click here for the MP3 file)
PM — Wednes­day, 9 May , 2007  18:14:52
Reporter: Stephen Long
MARK COLVIN: Now, will the tax cuts in the Bud­get cause infla­tion?

Some lead­ing econ­o­mists argue that the Reserve Bank could be forced to lift inter­est rates down the track because Gov­ern­ment spend­ing and tax cuts will increase con­sump­tion and prices.

But oth­ers dis­agree. They argue that debt lev­els are so high that many peo­ple will be hand­ing their tax cuts straight to the bank.

ABC PM tonight–major pol­icy shift by New Zealand RB?

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Stephen Long from ABC News brought to my atten­tion the fact that the Reserve Bank of New Zealand appears to be con­tem­plat­ing a return to reg­u­lat­ing lend­ing.

This is only hinted at at present, but it rep­re­sents a major shift in Cen­tral Bank thinking–and a wel­come one, from a debt-defla­tion­ary point of view.

I’m inter­viewed about it on PM tonight; in the mean­time, here are some rel­e­vant excerpts from the Reserve Bank of New Zealand: Finan­cial Sta­bil­ity Report, May 2:

Why have the Lib­er­als got it in for busi­ness stu­dents?

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This is another non-debt post. I’ve just heard Costello describe tonight’s bud­get as an “Edu­ca­tion Bud­get”. There was a wel­come “equity” bequest to uni­ver­si­ties, to fund infra­struc­ture and research: but there was also a shal­low “shell and pea” trick in the allo­ca­tion of fund­ing for Uni­ver­sity places.

The com­pli­cated CGS band­ing system–which deter­mines what the Gov­ern­ment pro­vides per stu­dent, and varies depend­ing on the dis­ci­pline being studied–is being ratio­nalised from 14 bands to 7. In 6 of those new bands, the amount being given in 2008 is slightly more than the high­est amount given to the pre­vi­ous bands. For instance, the four bands of Maths, Behav­ioural Sci­ences, Edu­ca­tion and Com­put­ing are being amal­ga­mated into one band; the high­est fund­ing level per stu­dent in 2007 was $8,057 for Com­put­ing, and the low­est $5,381 for Maths; the new fund­ing level is $8,217–a 2% rise for Com­put­ing, and a 52% increase for Maths.

Debt­watch May 2007: Boom­ing on Bor­rowed Money

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It goes with­out say­ing that I’m a Cas­san­dra amongst the Pollyan­nas crow­ing about Australia’s cur­rent eco­nomic per­for­mance data. Low infla­tion, low unem­ploy­ment, and no sign of a wages break­out, are the usu­ally-quoted sweet eco­nomic indi­ca­tors (admit­tedly with some strange bed­fel­lows, includ­ing a rel­a­tively slow rate of eco­nomic growth for these con­di­tions, and a huge bal­ance of trade deficit despite the best terms of trade in his­tory).

So how do I jus­tify the stance of a Cas­san­dra? Because things can’t con­tinue as nor­mal, when nor­mal involves an unsus­tain­able trend in debt. At some point, there has to be a break–though tim­ing when that break will occur is next to impos­si­ble, espe­cially so when it depends in part on indi­vid­ual deci­sions to bor­row.

Pub­lic Talk at UTS today 1pm

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I’m speak­ing at Real­ity Check, as part of the ALP Fringe Con­fer­ence pro­gram, which runs par­al­lel to the national con­fer­ence and pro­vides NGOs and other groups with an inter­est in influ­enc­ing ALP pol­icy with a plat­form to host dis­cus­sions and sem­i­nars.

I’m one of three speak­ers and we have only one hour, so it will be rushed: if you want to par­tic­i­pate, don’t be late:

Date: Fri­day April 27th; Time: 1-2pm; Venue: UTS Hay­mar­ket Cam­pus, Build­ing C, level 1, Room 31. Just up Dar­ling Drive from the Con­ven­tion Centre/down from UTS Library (view map) Enter via Block D next to the ‘Art of food’ cafe.

Hell’s Belles

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This post has nothing–well, almost nothing–to do with debt. But this is a blog, right? So I can post what­ever I want.

And what I want is for you to see a new play called Hell’s Belles–or at least spread the word about it.  It’s a com­e­dy with the under­ly­ing theme of “Be care­ful what you wish for”: two divorcees fan­ta­sis­ing about the ideal man acci­den­tally con­jure up a demon, who can only leave once he has someone’s sig­na­ture on a con­tract that offers a wish in return for a soul.