What Is Neoclassical Economics & an Alternative Monetary Macroeconomics

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This is a talk I gave in Tel Aviv, Israel at the invitation of the Rethinking Economics Student Forum there (which is a member of the International Student Initiative for Pluralism in Economics), and at the Palestine Economic Policy Research Institute in Ramallah, Palestine. I cover the defining features of Neoclassical Economics, contrast these with Post Keynesian Economics, and simulate a debt deflation using the Open Source modelling program Minsky.

The naivety of the UK economic debate

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I was interviewed by Chris Menon from Every Investor last week and asked to comment on the economic policies of the two major parties in the UK election. Chris’s introduction to the interview is below; click here to see the interview itself.

In an exclusive interview with Every Investor, Professor Steve Keen from Kingston University has warned that politicians who promote austerity economics are naïve.

The economist, who was one of the few who predicted the Great Recession, warned last year that the US and UK economies wouldn’t make a sustainable recovery due to the problem of high levels of private debt – public debt being more a symptom than a cause of this economic malaise.

Keep It Simple And Complex, Stupid

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My last post supporting the use of nonlinear models (“You Do Need A Weatherman”) generated some thoughtful responses, mainly along the lines of this post by Ari Andricopoulos entitled “A View on the Economic Model Debate from a Non-economist (but someone who builds models for a living)”. The basic argument is that a full nonlinear model of any significant economic process would be too complicated, and that it was better therefore to stick with tractable linear models, while keeping in mind that the real world is nonlinear:

You Do Need A Weatherman

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I’ve just come back from the annual Institute for New Economic Thinking conference in Paris, where the President of INET Rob Johnson is infamous for opening every session he chairs with an apt set of lyrics from the 1960s. I’ve aped Rob here by misquoting one of Bob Dylan’s great lines “You don’t need a weatherman to know which way the wind blows”. In fact, you do.

Click here to read the rest of this post.

Bernanke-Summers Debate II: Savings Glut, Investment Shortfall, Or Monty Python?

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A Twitter follower accused me of being “a little nasty” with my last blog post (see Figure 1). He was right, and I don’t apologize.

I’ve spent 40 years trying to highlight just how limited the dominant ideas in economics are. But even I didn’t fully appreciate how tiny the intellectual gene pool behind these ideas was.

Then, as I started to write a post on the economic issues in the Bernanke-Summers debate, I re-read Summers’ original secular stagnation post and realized that, not merely were the ideas coming from a single perspective, most of the major proponents of these ideas came not only from the same University (MIT), and even the same seminar (Class 14462, conducted by Stanley Fisher).

The Inbred Bernanke-Summers Debate On Secular Stagnation

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Ben Bernanke has recently started blogging (and tweeting), and his opening topics were why interest rates are so low around the world, and a critique of Larry Summers’ “secular stagnation” explanation for this phenomenon, and for persistent low growth since the financial crisis. Summers then replied to Bernanke’s argument, and a debate was on.

Click here to read the rest of this post.

 

Demonstration of Minsky at UK System Dynamics Conference

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The UK Chapter of the International System Dynamics Society invited me to speak about my Minsky software at its annual conference on March 26. This is my talk, where I poked some fun at economists and their ignorance of system dynamics. The Powerpoint file and Minsky files used are downloadable from here–see below the video.

Powerpoint File

Use “right-click” and “Save as” to download these files, otherwise your browser will fill up with XML code (since Minsky saves in XML format):

Minsky Simplest Banking File

Minsky Formatting File

Minsky Loanable Funds file

The Fed Has Not Learnt From The Crisis

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The Financial Crisis of 2007 was the nearest thing to a “Near Death Experience” that the Federal Reserve could have had. One ordinarily expects someone who has such an experience—exuberance behind the wheel that causes an almost fatal crash, a binge drinking escapade that ends up in the intensive care ward—to learn from it, and change their behaviour in some profound way that makes a repeat event impossible.