How rising debt causes inequality and crisis

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In a (for me!) brief presentation with 7 slides, I explain why rising private debt necessarily causes increased inequality, and leads to an economic crisis when the rate of growth of debt exceeds the rate of decline of wages as a share of national income. Crucially, the actual breakdown is preceded by an apparent period of tranquility–a “Great Moderation”.

This was a short talk to a public audience at ESCP Europe in Paris, which was presented in English and also translated into French by Gael Giraud, Chief Economist of the French Development Agency and the translator of Debunking Economics (so the soundtrack is in both English and French).

2 new positions at Kingston University London

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We are hiring two new staff at Kingston University: one permanent position at Associate Professor level, and one short-term contract to cover an absent colleague.

If you’d like to work at one of the few pluralist-friendly economics departments in the world, and you’re suitably qualified, please follow the links below for more details and to submit your application. Or if they don’t work–as a correspondent has told me–send an email to asking for details.

Associate Professor position

Short-term lecturer position

The deadline for applications is tight: they are due by June 26.


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.