Steve Keen on Debt and the next Global Recession

Johnson Controls announced on Monday that it would be merging with Tyco International and Russia’s economy contracted at its fastest pace in six years in 2015. Ameera David weighs in. Then, Ameera is joined by Steve Keen – head of economics, history, and politics at Kingston University – to talk about debt and the global economy.

After the break, Bianca Facchinei takes a look at the Ifo Institute’s recent Business Climate Index. Afterwards, Ameera and RT correspondent Manuel Rapalo discuss Airbus’ major deal with Iran. And in The Big Deal, Ameera and Edward Harrison talk about the US economy.

Steve Keen -- Private Debt and Economic Stagnation

This is the talk I gave at the 8th Subversive Festival in Zagreb on May 15th 2015. I start with the Queen of England's question "If these things were so large, how come everyone missed them? Why did nobody notice it?" and then show how private debt was the missing ingredient in the models that conventional economists have, which is why they missed the crisis. I finish with the assertion that economic growth will remain low (and inequality will remain high) until the level of private debt is drastically reduced. I recommend a "Modern Debt Jubilee" as the way to do this.

Steve Keen: The Deliberate Blindness Of Our Central Planners

The models we use for decision making determine the outcomes we experience. So, if our models are faulty or flawed, we make bad decisions and suffer bad outcomes.

Professor, author and deflationist Steve Keen joins us this week to discuss the broken models our central planners are using to chart the future of the world economy.

How broken are they? Well for starters, the models major central banks like the Federal Reserve use don't take into account outstanding debt, or absolute levels of money supply. It's why they were completely blindsided by the 2008 crash, and will be similarly gob-smacked when the next financial crisis manifests.

And within this week's podcast is a hidden treat. Steve's character exposition on Greek Financial Minister Yanis Varoufakis. Steve has known Varoufakis personally for over 25 years, and is able to offer a win

Steve Keen: "Loans create deposits!" aka No One Understands Banking

Our lead story: Erin talks net neutrality. Netflix CEO Reed Hastings called for rules that ensure that big broadband providers like Comcast can't charge companies like Netflix a fee to connect directly to their networks. What do you think? Erin gives you the details.

For our interview today, we invite economist Steve Keen to talk about some bold assertions made by the Bank of England about how money is created. Turns out that your economics textbook on banking was wrong: there is no money multiplier in this story.

To round out the week, check out Edward Harrison and Erin's discussion of the viewer feedback, or "Accrued Interest," the Boom Bust team has received over the week.

Steve Keen : The New Economic Thinking

Steve Keen: A Computer Simulation of Monetary Dynamics



The financial crisis that ran from 2007 to 2009 has been called a "Minsky Moment," meaning it offered a much-needed reminder to all economists of Hyman Minsky's neglected dictum that "capitalism is essentially a financial system."

But even with this reminder, it is hard to know what to do next, since it is difficult to express Minsky's vision using the standard equilibrium methods of economics. Arguably that is one reason that Minsky has remained a minority taste in economics.

Steve Keen, a grantee of the Institute for New Economic Thinking, wants to change all that by developing a computer simulation tool that captures the monetary side of the economy in a realistic way, including its non-linear dynamic development over time. When Keen is done, students of economics will be able to build their intuition by simulating money flows through the banking system. And professional economists will be able to explore complex interactions without imposing limits of tractability, simply by tweaking the model and seeing what happens.

Keen gives credit to Augusto Graziani's writings on the monetary circuit for showing him how to translate the complex workings of the monetary economy into something that can be programmed to run on a computer. He met Graziani in 1998, the same year he finished his Ph.D., and has been following the money circuit ever since, first in his own work and now by developing tools for the rest of us. Sometimes new tools are what we need to create new thinking.

Steve Keen -- Private Debt , Australia and BitCoin as an enduring platform

Steve Keen is a well-known economist who is considered one of the leading critics of mainstream economics' treatment of debt and money. He considers himself a post-Keynesian in that he adheres to John Maynard Keynes' idea that demand matters in the long as well as the short run. But his focus is debt , and specifically how Hyman Minsky's "financial instability hypothesis" is reflected in highly indebted economies.



Right now, Dr. Keen is working on an ambitious mathematical model of financial instability called simply, 'Minsky'.
Erin Ade spoke with Dr. Keen about debt generally and private debt specifically as well as the Australian economy.

Also, Erin Ade and Edward Harrison discuss how Bitcoin purchases at casino hotels will be processed through BitPay, a service that streamlines transactions using tablet and mobile interfaces. Could BitCoin itself crash and burn but the platform and application endure anyway?

Steve Keen about money and debt

Economists know especially why they do not have money and debt in their models as Steve Keen, Professor of Economics and Finance, University of Western Sydney. Or by incorporating it into an economic model private debt Keen knew in 2005 that a crisis was coming, the private debts were too high.