Can we avoid another financial crisis?
Spoiler alert: No!
Boom and bust is inbuilt to the capitalist system in which we live, so after a period of relative calm, you know what’s coming up next.
So says Steve Keen, professor of economics at Kingston University and author of a new book ‘Can we avoid another financial crisis?’
He warns that when things are going well, we start to get ‘euphoric expectations’ – borrowing more and more money because we expect things to carry on improving forever.
But they don’t.
Today, companies and households are in so much debt that they don’t want to take on any more – and so growth starts to slow.
To rebalance, we need to reduce our debt levels, according to Keen. Without this, we won’t get away from the possibility of another financial crisis.
In this episode of the Big Money Questions, Steve Keen lays out his three ideas of how we can lower our debt piles and avoid another financial crisis.
One is devastating, another catastrophic, and the third he believes could never happen.