Steve Keen: “We are in a Depression”

EXCLUSIVE AUDIO-INTERVIEW: Imagine you were sitting in a university lecture and listened to a talk given by the Australian economist Steve Keen. Topic: „Causes of the Financial Crisis, which is a Depression.“

By Lars Schall

Steve Keen, born 1953, is Associate Professor of Economics and Finance at the University of Western Sydney, Australia. Moreover, he is a Fellow at the Centre for Policy Development, an Australian independent public interest think tank that was founded in 2007. A post-Keynesian himself, he differs from the norm for critics of conventional economics by being highly mathematical in his own research, criticizing modern neoclassical economics as inconsistent, unscientific and empirically unsupported. His main research interest is in developing mathematical models of Hyman Minsky’s Financial Instability Hypothesis.

Aside from Minsky and Keynes, the major influences on Keen’s thinking about economics include Irving Fischer, Joseph A. Schumpeter, Piero Sraffa, and Francois Quesnay. In 2001, his book “Debunking Economics: the naked emperor of the social sciences“ was published, and a new, expanded and extensively revised version of “Debunking Economics“ was released in 2011 (see for more: In 2009, Keen received the „Revere Award for Economics“ from the “Real-World Economics Review“ for predicting the financial crisis before it happened. His website is:

You can listen to the podcast here:

The questions that I have asked vis-à-vis Prof. Steve Keen were:

In what kind of crisis we’re actually in?

Part of the crisis is the sovereign debt situation. Is this the logical outcome of our monetary system?

What has led to “the biggest financial bubble of all time,“ as you call it? And isn’t it also connected to the inner-logic of the monetary system?

Are traditional economical views also responsible for the crisis?

Doesn’t money makes the world go around?

A lot of people blame Keynesianism for the crisis. Do you agree? And furthermore, isn’t Keynesianism perfectly possible without the theories of John Maynard Keynes?

Since when did you warn about the coming crisis?

Why have you been largely ignored?

What does you as an economist think about Peak Oil?

Did rather heterodox approaches like the one of Hyman Minsky helped you to foresee the crisis?

Should economists therefore pay more attention to the work of Minsky and what is called “The Minsky Moment“?

As you are very well aware of, there is this study to a specific problem of the crisis: “No One Saw This Coming,“ written in 2009 by Dirk Bezemer (Dirk J. Bezemer: “No One Saw This Coming: Understanding Financial Crisis Through Accounting Models.” MPRA Paper No. 15892, June 16, 2009). With regards to this, a very influential opinion-maker here in Germany, Hans-Olaf Henkel, stated exactly this in the past: that no one has foreseen the financial crisis, that he laughs himself to death whenever someone claims it was foreseen, and that it was caused by „starry-eyed idealism“ of politicians in Washington. What’s your reaction to this?

Furthermore, Mr. Henkel said later on that the crisis was caused because the „red lining“ practice in the U.S. was abolished. Isn’t this a bit too much?

The former banking regulator and now professor for economics at the University of Missouri in Kansas City (UMKC), William K. Black, said recently:

“If you go and read the economic literature on this crisis, you will find that Akerlof and Romer are cited for example in maybe, generously, 1 out of 100 articles that purport to discuss the causes of the crisis. And you will see that fraud is virtually never discussed as even a potential major contributor. And that is poor; and that is really the tribal taboo that still exists in economics against any serious consideration of the word fraud.“

What do you think about this?

Is it deepening the crisis that the criminal aspect of it isn’t punished?

Will this have repercussions for the political landscape and society?

Are austerity measures the way to go?

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