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Most post-World War II recessions have lasted less than a year; this crisis has been going on for five. The preferred cure of austerity seems to be making it worse. To understand where it came from, why it hasn’t gone away, and what might work to end it, you have to understand the dynamics of private debt. Steve Keen’s models, inspired by Hyman Minsky’s ‘Financial Instability Hypothesis’, anticipated the crisis and explain why it won’t go away until private debt levels are drastically reduced. Steve Keen was one of the handful of economists to realize that a serious economic crisis was imminent, and to publicly warn of it from as early as December 2005.
