Interview with renegade economist — Professor Steven Keen
He accurately picked the peak of the housing market prior to the recession of 2008.
In 2019, he also forecast that the US would enter a recession in 2020.
I’m talking about the renegade economist Professor Steven Keen — author of Debunking Economics.
His research on complex systems modelling of debt-deflation was awarded the eminent Revere Award from the ‘Real-World Economics Review’, describing Keen as the economist:
‘…who first and most clearly anticipated and gave public warning of the Global Financial Collapse and whose work is most likely to prevent another GFC in the future.’
He wasn’t the first economist to give warning but he was one of the most prominent to do so.
Keen didn’t make his forecasts using the 18-year cycle (although he’s familiar with the concept).
His analysis comes from a purely monetary standpoint.
But let me rewind a little. Professor Steven Keen hasn’t got a great reputation in the MSM here.
Back in 2008, it was widely publicised that he walked more than 200km from Canberra to the top of Australia’s highest mountain, Mt Kosciuszko.
You can read about it here.
He’d lost a bet to (now former) Macquarie Group interest rate strategist Rory Robertson that Aussie house prices would dive by 40% from their peak in 2008.
The property crash we didn’t have to have was due to a Christmas hamper of buyer incentives offered by the Rudd government to prevent the market collapsing.
The story is told in Wayne Swan’s book The Good Fight.
Swan received a call from US Treasury Secretary Henry Paulson on 10 January 2008:
‘I can remember every word of our conversation: “Look...if we can avoid a meltdown in house prices, then we might be able to see a way through this...”’
We’re all familiar with the order of things.
Keeping the land market inflated is always the government’s starting point for avoiding economic meltdown.
Most recently, Steve Keen ran as a senate candidate in the 2022 federal election.
The attempt was unsuccessful. However, it allowed him to publicise his cure for the boom/bust cycle and point out the flaws in the current system.
I reached out to Steve for an interview to discuss all the above and gain an understanding of his plans going forward.
The interview was recorded just following the election and before the recent hike in the cash rate.
Albeit the conversation is very relevant to recent events.
We discuss what will be the drivers of the housing market over the next few years and the potential effect of rising lending rates on the cycle.
I don’t align with all of the views Steve shares, but when it comes to the topic of money and its relation to housing, Steven Keen is an important voice to pay attention to.
You can listen to the interview here!
Until next time,
Editor, Cycles, Trends & Forecasts