I am ramping up in my preparation to read the Keen book (have some time away next week when I hope to plow through a lot of it, after finishing the current distraction about Burma). Largely, what that means is rummaging through his website to understand his basic position through shorter blog posts. And while I think much of what he has to say about causal elements makes sense (with the requisite caveat that his solutions might not), I do have a question about his explanation that I hope his longer form book will answer.
Essentially, even if I take his theory of endogenous money at face value, I still have yet to see what the main stimulant is for banks to begin the reckless binge of issuing more and more credit to less and less worthy borrowers. He makes reference to Hyman Minsky and the Financial Instability Hypothesis, so maybe he will elucidate on that point and the causation that exists. So far, the best I got, though, is that capitalism is inherently unstable. I don't think that's enough. I tend to think that the Central Bank plays a role here, by keeping interest rates too low for too long, thereby enabling and encouraging the reckless behavior in banks.
But, we shall see what he says.
