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.

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.

Debtwatch April 2007: Who’s having a housing crisis then?

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Who’s having a housing crisis then?

Glob­al eco­nom­ic atten­tion has been focused on the sub-prime lend­ing cri­sis in the Unit­ed States recent­ly, and many local ana­lysts have made sooth­ing nois­es to reas­sure Aus­tralians that “it could­n’t hap­pen here”.

The USA’s sub-prime mar­ket is indeed a pecu­liar­ly Amer­i­can phe­nom­e­non; but the lev­el of Aus­tralian house­hold debt (the sum of mort­gage debt and per­son­al debt) is every bit as extreme as the USA’s. And con­trary to pop­u­lar opin­ion, our debt binge dwarfs Amer­i­ca’s. As the chart below shows, Aus­trali­a’s house­hold debt to GDP ratio has been grow­ing more than three times as rapid­ly as the USA’s since 1990. The ratio has grown at an aver­age of just over 2% per annum in the USA; it has grown at over 6.8% per annum here.

Dynamics of endogenous money

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Most con­ven­tion­al and uncon­ven­tion­al com­men­ta­tors on mon­ey believe that mon­ey is destroyed when debt is repaid. I disagree–but explain­ing why takes some time. I received an email this morn­ing from a Eco­log­i­cal Eco­nom­ics dis­cus­sion list in the USA on this issue, and wrote the fol­low­ing expla­na­tion of my posi­tion. I thought that read­ers of this blog might find it instruc­tive.

On the mon­ey issue, this is one where I beg to dif­fer both with the response Josh put for­ward, and most of my fel­low econ­o­mists as well–non-orthodox and non-ortho­dox. I think it’s wrong to say that mon­ey is destroyed when debt is repaid–but to explain why, I need to both put for­ward a dynam­ic mod­el, and find an appro­pri­ate anal­o­gy.

Household Debt: US vs Australia

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As part of the back­ground to the Late­Line inter­view yes­ter­day, I graphed the US house­hold debt to GDP ratio against the Aus­tralian. All the news recent­ly has been about the sub-prime cri­sis in the States, of course: but guess where house­hold debt has been grow­ing fastest? That’s right, good old Aus­tralia has out-done itself once more. The accom­pa­ny­ing graph­ic tells the sto­ry, which I’ll embell­ish in the next Debt­watch report in ear­ly April.

House­hold Debt to GDP, USA & Aus­tralia