Steve Keen’s view of debt is that, now that we are moving out of recession, we are setting ourselves up for another crisis. We need to rethink international debt instead of doing it all the same way – or we will end up with the same answer,
Here is how his article starts:
My call a few weeks ago that the global financial crisis is over was very much an Anglo-centric one, and a US-centric one in particular (Closing the door on the GFC, March 10).
Europe’s continuing own goal from the euro and austerity, and credit excesses in emerging economies, could still derail a global recovery. But the epicentre of the crisis was the US, and the indications are solid there that this particular ‘Minsky moment‘ is behind it.
It might be felt that Minsky is irrelevant, now that the economy has begun its recovery from this crisis. But in fact this period — in the immediate aftermath to a crisis, when the economy is growing once more, and debt levels are only just starting to rise — is precisely the point from which Minsky developed his explanation of economic cycles.
In his own words: “The natural starting place for analysing the relation between debt and income is to take an economy with a cyclical past that is now doing well.