Steve Keen's Debtwatch

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.

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:

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.

My inter­view starts at 3 min­utes 48 sec­onds into the pro­gram.

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).

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.

There are many ways that you can divide the world into two groups. Men and women, for example—with the for­mer being about 50.2% of the pop­u­la­tion and the lat­ter 49.8%. Or those that like math and those that don’t—where there are no accu­rate fig­ures, but I’d haz­ard a guess at a 10% to 90% split.

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 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.

A Twit­ter cor­re­spon­dent remind­ed me of this inter­view from two years ago in Ire­land, where the top­ic was pre­dom­i­nant­ly the Euro, the Maas­tricht Treaty, and the like­li­hood of a polit­i­cal break in Europe due to aus­ter­i­ty.

The dis­cus­sion has quite a bit of rel­e­vance to what is hap­pen­ing in Greece now–and what may hap­pen in Spain lat­er this year. Hence I thought it was worth re-post­ing it.

@andywattoes @ProfSteveKeen Remem­ber Steve on a show in Ire­land 2012 https://t.co/Y86QtzNulr

— Shane Hes­kin (@shaneheskin) March 27, 2015