“I know my place” was the title of a famous sketch on Eng­lish class sen­si­bil­i­ties from the 1960s, star­ring the very tall (Upper Class) John Cleese, the aver­age height (Mid­dle Class) Ron­nie Bark­er, and the very short (Low­er Class) Ron­nie Cor­bett.

The Upper Class Cleese gen­er­al­ly looked down on both Mid­dle Class Bark­er and Low­er Class Cor­bett; Bark­er looked up to Cleese and down on Cor­bett; and Cor­bett “knew his place”. That was at the bot­tom of the Eng­lish class sys­tem peck­ing order, and sur­viv­ing his place meant liv­ing life with low­ered expec­ta­tions.

This paper will be pub­lished in a forth­com­ing book on the cri­sis edit­ed by Malliaris, Shaw and She­frin. In what fol­lows, I derive a cor­rect­ed for­mu­la for the role of the change in debt in aggre­gate demand, which is that ex-post aggre­gate demand equals ex-ante income plus the cir­cu­la­tion of new debt, where the lat­ter term is the veloc­i­ty of mon­ey times the ex-post cre­ation of new debt.

The PDF is avail­able here: Keen2014ModelingFinancialInstability. The Min­sky mod­els used in this paper are here in a ZIP file. The lat­est ver­sion of Min­sky can be down­loaded from here.

• Introduction

That ver­bose title is almost the reverse of a quin­tes­sen­tial­ly arro­gant state­ment of eco­nom­ic suprema­cy pub­lished in the UK’s Dai­ly Tele­graph — on the edi­to­r­i­al page of the busi­ness sec­tion — by Andrew Lil­i­co. Enti­tled “Econ­o­mists are near­ly always right about things, despite what you may think” in the print edi­tion, its con­tent and tone encap­su­lat­ed every­thing about eco­nom­ic the­o­ry, and econ­o­mists’ blind belief in it, that led me to write Debunk­ing Eco­nom­ics over a decade ago.

Fig­ure 1: Lil­i­co’s arti­cle in the print edi­tion of the UK Dai­ly Tele­graph

On Jan­u­ary 31, we will bid good­bye to chair­man Ben Bernanke and say hel­lo to chair­man Janet Yellen. Most com­men­tary has focused on what Yellen’s ascen­dan­cy might mean for the Fed­er­al Reserve and the US econ­o­my, but today I’d like to con­sid­er how Bernanke’s lega­cy might he be regard­ed in future years — say, 70 years after the cri­sis we’re in now.

It cer­tain­ly won’t be as he expect­ed it to be before he took on the job of Fed chair­man in Feb­ru­ary 2006. In the worst case sce­nario, he will be blamed for caus­ing the ‘Great Reces­sion’, just as he blamed his pre­de­ces­sors for caus­ing the Great Depres­sion.

To sup­port Source­Forge’s Project of the Month fea­tur­ing Min­sky, here are some sam­ple Min­sky mod­els. To down­load them, right click and choose “save as”–otherwise they will open in a sep­a­rate brows­er win­dow as XML files.

I’ve also made a playlist of 8 short videos show­ing some of the fea­tures of Min­sky. Those videos are also linked at the bot­tom of this post.

General Dynamic Models

• Sin func­tion
• Sin and oth­er func­tions
• Sim­ple har­mon­ic oscil­la­tor
• Preda­tor-prey (pop­u­la­tions not yet linked)
• Anoth­er Preda­tor-Prey
• Lorenz Attrac­tor
• Lorenz Attrac­tor with shock para­me­ter
• Henon Attrac­tor
• Rossler

Source­Forge is one of the main devel­op­ment and repos­i­to­ry sites for Open Source soft­ware, and late last year their com­mu­ni­ty vot­ed to make Min­sky its Project of the Month for Jan­u­ary 2014.

We (myself and Dr Rus­sell Stan­dish, who is the chief pro­gram­mer for Min­sky) were delight­ed of course: it’s a pub­lic affir­ma­tion that the project is use­ful and respect­ed by a very crit­i­cal audi­ence: oth­er devel­op­ers of Open Source soft­ware. Here is the inter­view Source­Forge con­duct­ed with us, which is pub­lished on its blog.

Source­Forge: Tell us about the Min­sky project please…

I was going to write a ret­ro­spec­tive on Ben Bernanke this week, since his tenure as Fed­er­al Reserve chair­man ends soon, and it’s time to look back on his peri­od in office – as he him­self did on his pre­de­ces­sors dur­ing the Great Depres­sion. But a far more impor­tant depar­ture occurred last week: the Ital­ian econ­o­mist Pro­fes­sor Augus­to Graziani died at the age of 80.

Augus­to who, you may ask? Graziani’s name is not wide­ly known even among econ­o­mists, let alone the gen­er­al pub­lic, because he was out­side the neo­clas­si­cal main­stream – and also out­side con­ti­nen­tal Amer­i­ca, which has a pseu­do-monop­oly on fame in eco­nom­ics these days. His Wikipedia entry empha­sis­es his cur­rent obscu­ri­ty: it is a mere stub.

I’m sor­ry, I could­n’t help it: when Lar­ry Sum­mers first made his sec­u­lar stag­na­tion speech at the IMF, and the Amer­i­can eco­nom­ics tribe her­ald­ed it as if it were the great­est (and lat­est) thing since sliced bread, my irony gene went into overload—and that showed in my first post on the top­ic. The argu­ment that the West has been suf­fer­ing from sec­u­lar stag­na­tion, and that only a series of finan­cial bub­bles have kept the illu­sion of pros­per­i­ty going, has been part of non-ortho­dox eco­nom­ics for over three decades.

Blog­ging on eco­nom­ics and the ecol­o­gy are not nec­es­sar­i­ly eco­nom­ic propo­si­tions, but many of those who do it com­menced for phil­an­thropic rea­sons, rather than finan­cial. One of the plea­sures of blog­ging for me has been meet­ing such peo­ple, and one of my favourites is Nicole Foss, who main­tains the Auto­mat­ic Earth site.

Nicole has just released a new 4 hour video pre­sen­ta­tion enti­tled Fac­ing the Future, co-pre­sent­ed with Lau­rence Boomert and avail­able from the Auto­mat­ic Earth Store. If you’re look­ing for a thought pro­vok­ing gift, or some­thing to stim­u­late your own brain cells over the Fes­tive Sea­son, con­sid­er pur­chas­ing Nicole’s video and help­ing keep the Auto­mat­ic Earth oper­at­ing in 2014.

The fol­low­ing short inter­view has been post­ed on the “Eco­nom­ics in Debate” web­site in The Nether­lands.