# Dr. Steve Keen



## BradK (16 October 2008)

Dr Steve Keen has had a nice little run in the media of late as the lone voice of the ultra doom and gloom brigade, and SMH have given him some webspace this afternoon with his assertion that interest rates will hit 0% sometime in 2010! 

It wont encourage me to spend - I will take it as an opportunity to smash my loan within a few short years! 

What do you all think of Mr Keen? 

Brad 


Zero per cent

University of Western Sydney associate professor of economics and finance Steve Keen is radically bullish on interest rates, predicting a 2% cash rate by the end of 2009, dropping to 0% in 2010.

Dr Keen said the RBA would become more concerned about high household debt levels than inflation, as deep rate cuts in 2009 failed to stimulate the economy.

''The debt bubble is bursting and when it bursts, people stop spending and borrowing,'' he said.

''They (the RBA) can cut the pain but they can't boost the economy.''

Earlier this month, the RBA cut interest rates by 100 basis points for the first time since May 1992.

The RBA cut rates by one percentage point on five occasions during 1991 and 1992.

Dr Keen said another series of deep rate cuts were needed now because household debt levels made up a much bigger portion of gross domestic product (GDP) than in the early 1990s.

He said central bank policymakers before the 1930s Depression focused on consumer price inflation and ignored asset prices, and have repeated that mistake more recently.

''Reserve banks everywhere go it wrong, not just ours,'' he said. ''They focused on the wrong problem which was inflation.''

Macquarie's Mr Robertson said the RBA was more concerned about reversing the 12 rate rises from 2002 to March this year and would deliver bigger than usual rate cuts before Christmas to reduce home mortgage and business borrowing rates.


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## YELNATS (16 October 2008)

BradK said:


> He said central bank policymakers before the 1930s Depression focused on consumer price inflation and ignored asset prices, and have repeated that mistake more recently.
> 
> ''Reserve banks everywhere go it wrong, not just ours,'' he said. ''They focused on the wrong problem which was inflation.''




I saw him on tv and admire his spunk. 

I studied Keynesian economics at uni in the 1960's and it still holds up. The latest batch of neoclassicists have got it wrong. We need to regulate the financial system, the "invisible hand' is just that, "invisible". We need some fiscal bravery and more public works/infrastructure spending to get us out of this morass.


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## bluelabel (16 October 2008)

BradK said:


> predicting a 2% cash rate by the end of 2009, dropping to 0% in 2010.




What the???

How does 0% work? (I get it, it’s rhetorical)

I realise the economy needs a kick in the pants, but a rocket up it’s a….?  Is that taking things a bit too far?

Has 0% ever occurred anywhere, and if so what where the results?


:bier:

blue


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## BradK (16 October 2008)

Japan? Cash rate we are talking - it wont get that far to consumers. 

Might get as low as 4% at a stretch. But certainly not 0%. 

What is America at now? 2.5%? And their mortgage rates are a bit over 6%.

Brad


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## barrett (17 October 2008)

YELNATS said:


> I saw him on tv and admire his spunk.
> 
> I studied Keynesian economics at uni in the 1960's and it still holds up. The latest batch of neoclassicists have got it wrong. We need to regulate the financial system, the "invisible hand' is just that, "invisible". We need some fiscal bravery and more public works/infrastructure spending to get us out of this morass.





Well, we do now that the ridiculous Keynesian monetary policies got us into it in the first place!  Intervention begets intervention.  To be fair to Keynes, he did advocate restricting money supply - something Greenspan completely ignored, and I believe that's the real source of the current problem.  Those who think the problem was a lack of regulation should consider the absurdity of a system that allows banks to create almost unlimited credit out of thin air, and then creates a regulatory agency to stop them from doing it!  It's nanny-state on crack!  The problem was more monetary than regulatory


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## chops_a_must (17 October 2008)

barrett said:


> Well, we do now that the ridiculous Keynesian monetary policies got us into it in the first place!  Intervention begets intervention.  To be fair to Keynes, he did advocate restricting money supply - something Greenspan completely ignored, and I believe that's the real source of the current problem.



My understanding is that it is some kind of abused Keynesian philosophy, where you only act on one side of the cycle.

Seems to me that Keynes' main aim was stability, and aimed at knocking off the peaks, and limiting the troughs. Yet modern theory and practice is just to stimulate regardless, which is lunacy... and leads to crap like we have.


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## Pronto (17 October 2008)

All Lord Keynes ever did was to write an apology for the prevailing policies of governments. 

As Ludwig Von Mises wrote in _Planning for Freedom_ in 1952, 'the essence of Keynesianism is its complete failure to conceive the role that saving and capital accumulation play in the improvement of economic conditions.'

Seems strikingly relevant to the root cause of the current US difficulties...


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## Temjin (17 October 2008)

Pronto said:


> All Lord Keynes ever did was to write an apology for the prevailing policies of governments.
> 
> As Ludwig Von Mises wrote in _Planning for Freedom_ in 1952, 'the essence of Keynesianism is its complete failure to conceive the role that saving and capital accumulation play in the improvement of economic conditions.'
> 
> Seems strikingly relevant to the root cause of the current US difficulties...




Exactly right. Kenyesians don't believe in saving at all. It's all about expanding credits and liquidity.


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## motorway (17 October 2008)

Steve Keen is heavily influenced by Hyman Minsky

I was explaining this to someone who sent a PM about the B% and Minsky  back in  Feb,,,,

https://www.aussiestockforums.com/forums/showthread.php?p=254443&highlight=minsky+pattern#post254443

 Here is some of that email   also I related it to P&F ,B% and the seasons of The S  curve ( Winter , Spring, Summer , Autumn , Winter )

( Principles need application )


Winter is both beginning and end.

stability always causes instability

unless something has died....

---------------

S curve following a Minsky pattern ?

some context... Hymen Minsky had some good ideas 

If the real fundamentals are sound ...
Then it is  a matter of flushing out the ponzi borrowers ( will happen fast )
and some of the speculative borrowers...

That is what winter does........................... ( _ update now --A twist since is that markets went down with a lot of liquidation still to be done_   so L pattern to the bottom ?)
( that was Feb....Maybe  even some (most?) hedged borrowers will have to be purged )



> Minsky is most famous for the idea that 'stability is unstable'. In
> short, unusually long periods of economic stability lull investors
> into taking on more risk. This leads them to borrow excessively and
> to overpay for assets.
> ...





Hence a Cycle
Hence  Seasons




> Stage One - Displacement
> 
> Every financial crisis starts with a disturbance. It might be the invention of a new technology, such as the internet ( China ? ). It could be a shift in economic policy. For example, interest rates might be reduced unexpectedly. Whatever it is, the world changes for one sector of the economy. People see the sector differently.
> 
> ...








> B% has been displaying a weak structure since early 2007
> 
> Ponzi Borrowers have been having a very hard time
> 
> ...




Look  at the 1%  x 3 XAO P&F chart in the P&F thread (S curve )

P&F is an intrinsic time clock of the market seasons
on any scale of magnitude.



The depth of winter was under estimated at the time of the XAO post
But principles are sound as is the application (imo)
About identifying not predicting..

POSTION


motorway


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## Solly (12 March 2009)

On Steve Keen's 

http://www.debtdeflation.com/blogs/

there is an interview with Phil Dobbie from BNet Aust & Steve Keen.

His outlook is very concerning where his view is that we are headed for a... Depression

Any comments..??


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## Aussiejeff (12 March 2009)

BradK said:


> Japan? Cash rate we are talking - it wont get that far to consumers.
> 
> *Might get as low as 4% at a stretch*. But certainly not 0%.
> 
> ...




LOL! 

Hey Brad, with the benefit of a little hindsight and plumetting interest rates worldwide, would you care to reflect on these musings now? Hehe.


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## metric (12 March 2009)

0% gives a whole new meaning to paying 'interest only' on loans. 

might save a few asses though.....not sure if thats the idea behind it ?


.


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## MR. (12 March 2009)

Solly said:


> On Steve Keen's
> 
> http://www.debtdeflation.com/blogs/
> 
> ...




I agree.  Interesting his train of thought on debts needing to be written off.  I have also brought this up before. 

No easy investments around. One thing is for sure I will not be pressured into investing into products for the sake of the potential of some cash from being dwindled away. No one wants to be left behind....  Both salesman scare tactic pitches! The problem out there is "Future incomes have already been spent" 

What do you think of Dr. Keen's thoughts? Also how are you recieving an income?  I've spent the last few years living in Runaway Bay.  You'd also know what a change this northern end of the gold coast is/has gone through. How about Tipplers closing, just along with the rest, a sign of the times. Or the times to come!


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## Glen48 (12 March 2009)

Just watched the ABC news had a story about all the USA  tent cities popping up..maybe we should send some pollie to Mug Garbie country for a lesson on dealing with poverty and Gazzalion $ notes?  
Then the Feds can bring out the FTO ( First Tent Owners ) scam.


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## Solly (13 March 2009)

MR. said:


> What do you think of Dr. Keen's thoughts?




I've always given credit to the theories of Hyman Minsky. I tend to agree that we are in a more severe financial downturn than is more widely accepted by my peers. So basically I tend be more accepting of his views, I don't have a PhD in Economics or hold the tenure of an Associate Professor so I defer to Steve in many areas for a more qualified opinion. I'd say he would have a better feel for what's happening than many others and pick up on ques better than me. I'm always wary of an A/C with paint worn off the rudder pedals, so I'm sure Steve sees warning signs and concerns in his field of interest.



> Also how are you recieving an income?




I have multiple income streams.. Investment distributions, a "wage", etc. 
I don't really "own" much at all, but I have _the use and access _to the quality essentials in life 
Although I really love "working", never ever retire it kills people !
Sipping lattes from your Hedges Ave balcony overlooking the sea every day with nothing to do is toxic as well. You've got to keep active, interested and have diverse range of activities and business/income interests.



> I've spent the last few years living in Runaway Bay.  You'd also know what a change this northern end of the gold coast is/has gone through. How about Tipplers closing, just along with the rest, a sign of the times. Or the times to come!




Runaway Bay is quite a pleasant area, although it's changing quite quickly. Good to see some of the old 70's brick boxes being knocked over around Paradise Pt. I've considered a move to Soverign Islands, I know a couple of people there. I don't like what they have done to Ephraim Island reminds me of No.1 Division at Bogga Rd Gaol. As for Tipplers going...well everything has it's day. I spend more time around Couran for short day trips or venture to Nth Straddie. I don't want to become a Bay Warrior who fires up the Riviera for a couple of Sundays a year with a bunch of freeloaders/hangers on and calls that fun and relaxing.

Although I must admit many, many years ago when much siller and younger, a group of us hired a Cuddles Flybridge Cruiser from the Runaway Bay Mariner and had quite an "eventful" time around Tipplers for a few days but dignity stops me from publishing the antics here! Although one of the funniest things was when one of us tried to convince a young lady that we owned the boat, even though was a big "for rental enquiries" sign on the side. I'm glad my life has changed and is more stable and balanced now.....


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## kincella (13 March 2009)

I have to wonder about SK...if he was so smart why didn't he take his own advice ? He bought property at the height of the boom, then in such dire straits he had to sell when prices were going down. Now some of us know you can have a negative attitude to property, and prefer to live at home or rent with your mates, but that all changes when you gain a partner.

Wondering if that is what happened to him. And why did he have to sell ? Insufficient funds to continue with the mortgage?

I believe he made outrageous statements to get some free PR, since writing another book.  And its worked everyone is talking about him.

But just a little word of warning, if you need a mentor, find someone who is successful in their line of work. Can back up their claims, can prove their success.  (SK can offer no proof, in fact he shows how not to do it.)

For example...Bill Gates, Warren Buffett and all the other successful people in business.
Too easy for ordinary people to get caught up in fraudulent schemes, because they do what everyone else does (or so they think), no other reason.
Just ask Storm, Madoff, Opes etc investors....


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## moXJO (13 March 2009)

kincella said:


> I have to wonder about SK...if he was so smart why didn't he take his own advice ? He bought property at the height of the boom, then in such dire straits he had to sell when prices were going down.




I thought that was a bit suss as well.


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## Temjin (13 March 2009)

kincella said:


> I have to wonder about SK...if he was so smart why didn't he take his own advice ? He bought property at the height of the boom, then in such dire straits he had to sell when prices were going down.




The easiest way to reject one's opinion is to criticise his/her action. Of course, like I said a billion times before, his theories is certainly against your own financial interests. It's impossible for you to accept him.



			
				kincella said:
			
		

> Now some of us know you can have a negative attitude to property, and prefer to live at home or rent with your mates, but that all changes when you gain a partner.




A generalisation. I have talked to and meet many couples who totally understand what is going on at the moment (negative attitude to property) and is more than willing to rent for a bit longer before purchasing one. 

They only consider property as a liability, something that they would purchase if they desire the utility that it provides, not the profit. 



			
				kincella said:
			
		

> Wondering if that is what happened to him. And why did he have to sell ? Insufficient funds to continue with the mortgage?
> 
> I believe he made outrageous statements to get some free PR, since writing another book. And its worked everyone is talking about him.




Perhaps you should really join his blog and attempt to disprove his theories. (and not with us or me) You cannot deny that he had predicted the crisis ahead of many other mainstream economists. 

I cannot prove or disprove his theories because I am not in the position to do so. I don't think you can as well. Of course, I don't expect you to do so anyway since you would think it's a waste of time and it is much better to stick to your believes and maintain your own self interest instead.  

But that alone does not necessary mean he is "completely wrong". He was right about the deleveraging process happening in the US/UK right now, and in Australia too. He has statistic data from "official source" to prove it. Anything could happen now. 



			
				kincella said:
			
		

> But just a little word of warning, if you need a mentor, find someone who is successful in their line of work. Can back up their claims, can prove their success. (SK can offer no proof, in fact he shows how not to do it.)
> 
> For example...Bill Gates, Warren Buffett and all the other successful people in business.




Yep, I follow people like Jim Rogers, Marc Faber, Bill Gross, Nouriel Roubini, etc. They are amoung the gloom and doomer of this world and again, have all predicted the crisis before it all happened.  They can certainly back up their claims and prove their success due to their fame and wealth. And of course, their views are all "against" your own interest. 

Remember that Steve Keen isn't the only one that is mentioning about "too much debt / living beyond the mean" crash mentatility. You should consider reading what they have to say. 

Now what happens if I took Peter Spann as my mentor in properties. I would have made millions following his property investment strategies back many years ago. Now that he has changed to become a "doom and gloomer", should one still consider him as a mentor? But he HAD success to back up his claims. I think he is smart enough to realise a major trend is occuring and accept that his past theories may be proven wrong and is willing to take actions to suit the new reality. Now that is a ex-perma-bull real estate investor that I admire. 



> Too easy for ordinary people to get caught up in fraudulent schemes, because they do what everyone else does (or so they think), no other reason.
> Just ask Storm, Madoff, Opes etc investors....




Including investors who believe in real estate promotors that leveraging yourself in residential properties is one SURE WAY to make you rich over the LONG TERM. That is if you follow their STRATEGIES.

This is exactly like Storm investors who think they could do the same by getting into massive debt to play leverage into the stock market without any regards to risk management. 

As for Madoff, I could only imagine why so many high profile and sophisticated investors with tens or hundred of million of dollars in net wealth were not immune to his scam. Do you know his profile and history? Do you know why a lot of people TRUSTED him? It's certainly believeable once you read the story in full.


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## MR. (14 March 2009)

Soly, sometimes when people post looking for feedback they post without giving their stand point or suggestions.  Perhaps this is on purpose not to persuade the reader to reply in any particular direction but I usually find these question/s of little benefit to any replier. Thanks for touching on the issues at least I can now see where you’re coming from. 


Solly said:


> I don't have a PhD in Economics or hold the tenure of an Associate Professor so I defer to Steve in many areas for a more qualified opinion.



I know, I don’t sort enough opinions from the experts in their fields.  A few months ago, Steve suddenly turns up on the screen in front of me telling me what I’ve been talking about for years. I’d never heard of him, but suddenly, there he is. That’s the media for you, the **** is already hitting the fan.  I found Alan Kohler of some support over the last year. Something had to give, so many have been spending like there was no tomorrow.  An interesting observation just reading around the threads here, the use of debt appears very much still in favour for the creation of wealth.  We will have to see how that pans out....  


> Although I really love "working", never ever retire it kills people !



Yes.....  There is nothing worse than retiring. You start inventing things that aren’t very constructive.  Start telling everyone your problems...  and so on.  Actually was not the intention but has turned out that way. For example some of that Arundel industrial land (just off Brisbane road) had been reserved.  By the time they finally got around to pricing the land it had jumped more than 100% to near 1 million for 2000 square metres. Don’t see much incentive in that and makes you want to just continue to sit on your ****.


> Sipping lattes from your Hedges Ave balcony overlooking the sea every day



But isn’t that the meaning of life. Then after 6 months you fall off the perch.  That Gold Coast mould I do not fit, I’m happy to say.


> I've considered a move to Soverign Islands



A few years ago in a tinny with my huge 7.5HP outboard I passed Soverign, a very large boat came out from one of the canals saw me then took off.  The wave was huge.....  Welcome to the Gold Coast.  
If you want to buy there’s  plenty of people wanting  to sell!  Otherwise some good prop’s going at rents that must make the landlords cry.   But Runaway Bay is a far nicer spot and I’m not being bias. 

Back to the thread.  I do wonder how much of Steve’s expectations will be seen this time round. Find it very hard to change my tune. Hope opportunity is seen when presented.  I also hope it wasn’t the market earlier this week.  If that was it, that's it for me in shares. Can't do a buffet! 
Also have no ambition to become a trader.


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## Solly (4 December 2011)

Keen: Government should print money to pay off our debts

Economist Steve Keen is one of the few economists to have predicted the global financial crisis and now he says we are already in a Great Depression. He says the way to escape it is to bankrupt the banks, nationalise the financial system and pay off people's debt.


Here's an interview from BBC Hardtalk. 
Quite an interesting position.

http://news.bbc.co.uk/2/hi/programmes/hardtalk/9641873.stm


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## Starcraftmazter (4 December 2011)

Solly said:


> Keen: Government should print money to pay off our debts
> 
> Economist Steve Keen is one of the few economists to have predicted the global financial crisis and now he says we are already in a Great Depression. He says the way to escape it is to bankrupt the banks, nationalise the financial system and pay off people's debt.
> 
> ...




I really liked it. Give everyone some big amount of money, and people who didn't get into debt are suddenly wealthy


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## Bill M (5 December 2011)

BradK said:


> University of Western Sydney associate professor of economics and finance Steve Keen is radically bullish on interest rates, predicting a 2% cash rate by the end of 2009, dropping to 0% in 2010.




Well none of that happened so he got that wrong.



Solly said:


> Here's an interview from BBC Hardtalk.
> Quite an interesting position.
> 
> http://news.bbc.co.uk/2/hi/programmes/hardtalk/9641873.stm




My goodness after watching that interview I think that Dr. Keen is bordering on lunacy. I think he needs to retire, poor bloke.


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## Starcraftmazter (7 December 2011)

Bill M said:


> Well none of that happened so he got that wrong.
> 
> 
> 
> My goodness after watching that interview I think that Dr. Keen is bordering on lunacy. I think he needs to retire, poor bloke.




I love your in-depth analysis....oh wait 

In conclusion, perhaps you should get a clue buddy.


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## young-gun (7 December 2011)

Solly said:


> Keen: Government should print money to pay off our debts
> 
> Economist Steve Keen is one of the few economists to have predicted the global financial crisis and now he says we are already in a Great Depression. He says the way to escape it is to bankrupt the banks, nationalise the financial system and pay off people's debt.
> 
> ...




i like. this guy shares a similar view to that of harry dent. eventually debt is going to have to be written off, paid down, written down whatever, only difference is that he recommended banks would have to write down home loans to their true value and have the bank incur the loss(which would be footed by a fed bailout anyway) but at least its getting to the root of the problem. as opposed to freeing up the banks to give a few bonuses and try and create even more debt.


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## ZSlaveski (12 December 2011)

BradK said:


> Dr Steve Keen has had a nice little run in the media of late as the lone voice of the ultra doom and gloom brigade, and SMH have given him some webspace this afternoon with his assertion that interest rates will hit 0% sometime in 2010!




Keen is a little out with his timing but the ZIRP is coming there is no doubt about that.

Australia is in a massive debt bubble and this bubble is popping as we speak

RBA has no choice other than slash interest rates in doomed attempt to prevent this collapse!

This collapse will take down real estate, shares and the whole economy!

You don't believe there's a bubble? Check these charts in this gallery.

http://www.australianpropertyportal.com/Gallery

Now you know what the biggest bubble in this planet's history looks like.

We're looking at worse than great depression event beginning 2012.


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## carlos169 (21 January 2012)

Wow Kincella. Tamjin put you in your place. No response? No ramblings littered with many full stops?



Temjin said:


> The easiest way to reject one's opinion is to criticise his/her action. Of course, like I said a billion times before, his theories is certainly against your own financial interests. It's impossible for you to accept him.
> 
> 
> 
> ...


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