Professorial Lecture Series 2008

Schedule and details

7 July 2008: Professor Graeme Newell spoke about “The Changing Dynamics of Property Investment”. He discussed how commercial property in its significant asset class provides a wide range of property investment vehicles now both in Australia and internationally.

26 August 2008: Associate Prof Steve Keen on his "The Global Debt Bubble" presentation

My research focus has always been on Hyman Minsky's "Financial Instability Hypothesis" (FIH), which is a rival to the conventional "Efficient Markets Hypothesis" that still dominates academic finance theory. I built a nonlinear complex systems dynamic model of the FIH for my PhD, and had planned to move on to a book-length treatment of this hypothesis after finishing the follow-up work generated by my book Debunking Economics.

I was diverted from this academic pursuit in late 2005 when I became aware of just how extreme were the private debt levels behind the OECD's financial bubble--Australia'[s private debt to GDP ratio was then 145%--and is now 165%--when even during the Great Depression, the private debt to GDP ratio peaked at under 80%. This pattern is repeated across the Western OECD.

On Minsky's theories, this level of debt made a serious debt-induced recession inevitable--and even a Depression was a possibility. I decided to raise the alarm about the dangers of a debt-deflation, and began my Debtwatch newsletter.

This presentation covers Minsky's hypothesis, my mathematical models of it, why the current financial crisis is in fact worse than anything Minsky's models predicted, and also introduces a model of endogenous money creation. This is an essential prelude to explaining how modern capitalism has become dominated by what Minsky called "Ponzi Finance", in which leveraged speculation on asset prices rules the roost, leading to an unsustainable level of debt, a financial crisis, and possibly a Depression.

Download Associate Prof Steve Keen's full presentation on "The Global Debt Bubble"