Steve Keen

Economists still obsess and believe you can do equilibrium modeling.

So I've used the same techniques to model the economy, and that's why I saw the financial crisis coming, because they had a non-linear, non-equilibrium model of financial dynamics, and it predicted that...

a high level of private debt would lead to a crisis.

And that's exactly what happened in 2007.

And the mainstream economists to this day still don't have a decent explanation for it.

And they ignore the arguments for the financial sector caused the crisis.

Well, it's actually ridiculously simple.

What I look at is the level of private debt.

Now, you'd imagine that economists look at the level of private debt.

They don't.

They collect the statistics because the way that the post-war statistical architecture was set up, a guy called Copeland established what's called the flow of funds tables in the States.

And therefore, as part of that, the economists and statisticians and people working for financial institutions collect data on levels of household and corporate debt as well as government debt.

But the neoclassicals have completely ignored that data.

So according to their preconceptions, they argue that private debt does not change aggregate demand.

So they leave it out completely.

I've proven, not just asserted, I've proven that that's wrong.

that when you borrow money from a private individual, like if I borrowed money from you or vice versa, we'd be changing who can spend the money.

We wouldn't change the amount of money in existence.

But if you go to borrow money from a bank, the bank says, that's a great idea.

Here's half a million euro to buy a property in Dublin.