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.

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

Debtwatch goes blog

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A sub­scriber to my Debt­watch newslet­ter sug­gest­ed that I estab­lish a blog. I plan to pub­lish my month­ly Debt­watch report here, as well as send­ing it out to sub­scribers.

Next month I will also start a USA ver­sion of Debt­watch. The recent pan­ic on Wall Street can be seen as yet anoth­er “cor­rec­tion”, but it might also be the begin­ning of the unwind­ing of Amer­i­ca’s long-run­ning hous­ing bub­ble, which has dri­ven pri­vate debt lev­els there to over 160 per cent of GDP–higher even than Aus­trali­a’s. While we def­i­nite­ly have enough debt “home brew” of our own to trig­ger a cri­sis, we are as always just min­nows next to the USA; the old say­ing that “if the USA sneezes, Aus­tralia catch­es a cold” may come home very pow­er­ful­ly soon if the world’s largest econ­o­my actu­al­ly comes down with the pneu­mo­nia of a debt defla­tion.