Predictions for 2011 Part VIII: with Steve Keen
Posted by commoditywatch on January 20th, 2011
In part VIII of our of shows looking at 2011, Dominic Frisby talks to Australian economist Steve Keen of Debtdeflation.com.
Steve is Associate Professor of Economics & Finance at the University of Western Sydney, and author of the popular book Debunking Economics (Zed Books UK, 2001; www.debunkingeconomics.com).
Steve predicted the financial crisis as long ago as December 2005, and warned that back in 1995 that a period of apparent stability could merely be “the calm before the storm”. His leading role as one of the tiny minority of economists to both foresee the crisis and warn of it was recognised by his peers when he received the Revere Award from the Real World Economics Review for being the economist who most cogently warned of the crisis, and whose work is most likely to prevent future crises.
He has over 50 academic publications on topics as diverse as financial instability, the money creation process, mathematical flaws in the conventional model of supply and demand, flaws in Marxian economics, the application of physics to economics, Islamic finance, and the role of chaos and complexity theory in economics. His work has been translated into Chinese, German and Russian.
Click here to read Steve's essay of December 2009 on the global debt crisis, Debtwatch No 41, December 2009: 4 Years of Calling the GFC.
Click here for more on the book, Debunking Economics.
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January 20th, 2011 at 8:58 am
Steve Keen is brilliant. What I particularly like about him is that he is not afraid (as Dominic mentioned at the beginning) to stick his head out and speak bluntly. As he is in the academia and not in the private sector like other Dominic’s guests, he is not afraid to profess his left inclinations. Actually it is quite interesting. I gather that Mish Shedlock who is very far right in his crusade to destroy public unions and basically to privatize everything, respects him and both are on friendly terms…
January 20th, 2011 at 5:56 pm
Excellent interview. Although I love gld A LOT because the REAL PRICE of gold WILL go up. (Source: Bob Hoye)
January 20th, 2011 at 6:52 pm
Talking of inflation, it’s a pity the commonly reported CPI doesn’t take into account *real* inflation - i.e. inflation of the money supply, M3 growth, and the big one - house price inflation! The latest RBA financial aggregate data (see chart below, 8th chart on the page)…
Real Inflation - RBA Financial Aggregates Chart http://s4.zetaboards.com/Australian_Property/pages/gallery
…shows these forms of real inflation running well above the RBA 2-3% inflation target, meaning we should really have much higher interest rates, and wouldn’t that pop the bubble and bring house prices back to sensible levels!
The source data for that RBA financial aggregates chart can be found on the RBA site here…
http://www.rba.gov.au/statistics/frequency/fin-agg/2010/fin-agg-1110.html
Cheers, Sean.
Oz Housing Crash Blogs http://s4.zetaboards.com/Australian_Property/pages/blogs
January 21st, 2011 at 10:33 am
thanks a lot!)
January 21st, 2011 at 1:08 pm
this guy will probably be declared a genius and have an economy based upon his name but unfortunately not in 70 years from now the gangsters seem to have the system in deadlock
his free and clear thinking is admirable, but then again he could be all wrong…
respect!
January 21st, 2011 at 6:10 pm
Great interview with Steve Keen!
I agree that if we want to stop land price bubbles from occurring in future, we have to apply a land ‘tax’ (it behaves as a rent rather than a tax) and to abolish as many taxes as possible to regenerate the economy once the current bubble has finally deflated.
Wont be as many vested interests against it at that time, and, by capturing publicly-generated land rent to the public purse, this leaves less rent in private hands to be capitalised into higher prices.
High land prices don’t reflect a low supply of land as many economists tell us, but the extensive rent left in (mainly a few) private hands.
January 24th, 2011 at 2:05 am
Many thanks for the Steve Keen interview. His is the most realistic, to my way of thinking, analysis of what’s happening economically, of any. Which is not to short change Mish and some others for whom i have great respect.
January 24th, 2011 at 5:55 pm
Sean (above) - thanks for expressing something I’ve been thinking for a long time: if you are looking to buy a property, then the real inflation rate for you is huge in an overheated property market (your savings are evaporating in the bank). It’s normally the biggest purchase of one’s life, so the rate of inflation on everything else is almost trivial by comparison - the only difference is that many people would only buy one property (or would benefit from the “inflation” if they re-sell). Clearly I’m not an economist, but it does seem that if property were included in the CPI, there would be no bubble (as you say).
February 4th, 2011 at 4:53 pm
Steve Keen’s book ‘Debunking economics’ is dreadful. However, it does contains one of my all-time favourite quotes: ‘…this lazy pedagogy bifucates economics students into three camps.’ That’s worthy of John Prescott.