• Prof. Dr. Steven Keen

    Professor and Head of the School of Economics, History and Politics at Kingston University in London. Until 2013, he was professor of Economics at the University of Western Sydney. Keen studies the effect of debt-deflation based on Minskys financial instability hypotheses and Irving Fishers debt deflation theory and uses a mathematical program to model the problems of excess money creation by commercial banks. He warned of a crisis from 2005 on. Keen got a lot of media attention due to a debate with Paul Krugman about money creation and the role of commercial banks which led to the Forbes-article: Nobody Understands Debt - Including Paul Krugman

Why we Regularly Witness Financial Debt Crises due to Asset Price Inflation

A recent Parliamentary Treasury Committee Inquiry considered three issues that are significant for economic policy:

  • What determines the aggregate level of household net saving and the saving ratio in the macro-economy? Can policy affect the aggregate level of household saving?
  • Household indebtedness and consumer credit and incomes
  • Is the overall level of UK household debt and consumer credit sustainable?

These are important questions for economic policy in general, since it would be agreed across political parties that whatever the government does should at least not harm, and preferably enhance, private sector financial resilience.

Many factors impact upon this objective. To avoid the problem of drowning in the complexity of this topic and therefore “not seeing the wood for the trees”, I will build a series of simple stylized models to address core factors in private sector financial resilience.

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