Thursday, 10 November 2016

Steve Keen’s strange ideas on debt.

I decided this article left considerable room for improvement, so I’ve scrubbed it and re-written it. Please see here.

1 comment:

  1. I'd say that it could work, but not on its own.

    If it could somehow be combined with a sort of "system reset" of the whole housing sector, then it might work, i.e. a re-pricing of all "normal" (i.e. not talking luxury penthouses) housing such that housing costs (purchase and rental) are much more closely related to average incomes.

    I think when he originally came up with the idea, major economies had ground to a halt to such an extent that inflation was not an immediate concern (and would have been somewhat welcome).

    I think that's much less the case now, at least in the USA and the UK, and maybe Germany.

    For the UK, I think an ideal solution would be an element of debt forgiveness, combined with an increase in supply to hopefully bring down costs gradually (in relative terms). In my view, it would need to be a very interventionist policy, and require much stricter control of mortgage lending in the future.


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