Wednesday, March 13, 2013

Steve Keen on US Stock Market Bubble

A nice, short interview here with Steve Keen on the US stock market and its relation to margin debt.

You can find Robert J. Shiller’s stock market data (and U.S. Home Price Indices) here.

N.B.: There may be technical difficulties with the video. Not sure what is going on.


  1. The embed is working fine.

  2. Hmm... yes, a friend and I spotted this back in January. But Keen, as usual, has gone behind the numbers. I wonder if it will have effects on the real economy. My guess is that it won't; but you never know.

    Also, from the point-of-view of the market themselves, I was sort of hoping that the gold price was coming down so that all the vulgar Austrians would stop going on about it. If the stock markets crashes, the price of gold may well rise. It's not guaranteed, but I could see it happening. That means another few years of having to listen to the likes of Schiff and his hyperinflation garbage. Ugh... it never ends.


    Was Keynes more focused on the rate of interest than on fiscal stimulus?
    and does Fiscal Stimulus(or public investment), have more of an application ahead of demand-side stimulation to even boosting labour productivity and competitiveness on the supply-side?

    1. First, the Keynes of 1933 is not the necessarily the Keynes who wrote the GE. Keynes's socialisation of investment in the GE is really just about fiscal policy.

      Yes, I am sure he still did advocate interest rates to some extent in the GE, but see what I wrote above on this.

      Not sure what you mean by your last question.

    2. 1)Did Keynes promote Public Investment as much as you seem to do?
      He seemed lukewarm to it in 1941, where he was anti-inflation, and he seemed to shift his position.

      2)Would he acknowledge the usefulness of public investments in human capital such as welfare and so on?

    3. (1) 1941 is exceptional! Why? It is wartime.

      In general, see these links:
      - Keynes endorsed Abba Lerner's functional finance model of fiscal policy. That is fairly significant.
      - See the discussion on "socialisation of investment" (towards the end).

      (2) Yes, obviously he did.

    4. But the Socialization of Investment, as Skidelsky puts it, is basically public-private partnerships. It still doesn't seem clear cut to me.

    5. Public-private partnerships to increase income by greater employment and spending via public works build by the private sector.

      That constitutes fiscal policy.

    6. Also, the link you cite just confirms what I have said:

      "Thus, the important thing was not to nationalize the capital stock, but to socialize investment. Industry could be safely left in private hands, provided the state guaranteed enough spending power in the economy to maintain a full-employment level of investment. This could be achieved by monetary and fiscal policy: low interest rates and large state investment programs."

      As it happens, Keynes was actually a bit conservative. Even with nationalisation of some of limited industries -- the "commanding heights" as it were -- capitalism still works.