He was the guy who promised to walk from Canberra to Wollongong if he was wrong. In 2008, Steve Keen made a bet that Australian house prices would tank by 40%. They didn't. He walked. For 200 kilometers, he wore a t-shirt that said, "I was wrong on house prices."
But honestly? Focusing on that one missed call is where most people get him totally wrong.
Steve Keen isn't just some "permabear" looking for a headline. He’s one of the few people who actually saw the 2008 Global Financial Crisis (GFC) coming while the rest of the world was busy popping champagne. He’s a rebel. A "heterodox" economist who thinks the stuff they teach in Finance 101 isn't just boring—it's dangerous.
The Man Who Picked a Fight with a Textbook
Most economists treat the economy like a giant, self-balancing machine. They think if you leave it alone, it finds "equilibrium." Steve Keen thinks that’s absolute garbage.
To him, the economy is a complex, chaotic system. It’s more like a weather pattern than a clock. If you’ve ever read his most famous book, Debunking Economics, you’ve seen him dismantle the "neoclassical" model brick by brick. He argues that the math mainstream economists use is fundamentally broken because it ignores three tiny things: money, banks, and debt.
Wait, what? How can an economist ignore money?
Basically, mainstream models often treat banks as "intermediaries." They think if I put $100 in the bank, the bank lends that same $100 to you. Keen says that’s a myth. Banks don't lend out existing money; they create it out of thin air when they issue a loan. This "credit creation" is the engine of the economy, but it’s also the fuse for every major crash we’ve seen in the last century.
Why 2026 Feels Like Deja Vu
We’re sitting in 2026, and Keen is still sounding the alarm. This time, it’s not just about housing; it’s about the sheer weight of private debt.
While everyone obsessively tracks government deficits, Keen is looking at the credit card balances and mortgages of regular people. He calls it "The Minsky Moment," named after Hyman Minsky. It’s that terrifying second when debt levels get so high that people can’t even afford the interest, let alone the principal.
🔗 Read more: Servant Leadership Explained: The Only Style That Genuinely Puts People First
You’ve probably seen his recent warnings on YouTube or through his work at University College London. He’s been pushing a "Modern Debt Jubilee." Essentially, he wants to "print" money to pay off private debt instead of bailing out the banks again. It sounds radical. Kinda crazy, even. But when you realize that private debt in the U.S. and Australia is still sitting at eye-watering levels relative to GDP, his "crazy" ideas start to look like the only exit ramp left.
The Climate "Accounting" Error
Recently, Keen has pivoted. He’s taking on the economics of climate change, and he’s being—as usual—brutally honest.
He recently tore into the work of Nobel laureate William Nordhaus at London Climate Action Week 2025. Keen argues that the models economists use to predict climate damage are "appallingly bad." Why? Because they assume that as long as an industry happens indoors (like manufacturing or banking), it won't be affected by a 5°C rise in temperature.
He finds it hilarious in a dark way. "They think as long as you have air conditioning, the economy is fine," he's joked in various podcasts. He points out that if the ecosystem collapses, it doesn't matter if your office is 22°C; the supply chains are still going to melt.
The Tools of the Trade: Minsky and Ravel
Keen isn't just a critic; he's a builder. He spent years developing Minsky, an open-source software program that lets you model the economy using double-entry bookkeeping. It’s not flashy. It looks like something from the 90s. But it does something "professional" models can't: it tracks the flow of money and debt in real-time.
Lately, he’s been using a newer tool called Ravel. If you’ve watched his 2026 "Why the crash will be worse" videos, you’ve seen these flow charts. They show how money moves from the government to the private sector. It’s his way of proving that government "debt" is actually the private sector’s "surplus."
It’s a perspective that flips the script on austerity. If the government spends less, we have less. It’s simple math, but it’s math that makes most politicians break out in a cold sweat.
The Criticisms: Is He Just a "Crash Prophet"?
Look, Keen has his detractors. Mainstream guys like Paul Krugman have sparred with him for years. The biggest knock against him is his timing. He’s been "calling" for a collapse in the Australian property market for over fifteen years.
He’s been wrong on the when plenty of times. The Australian government has proven remarkably good at kicking the can down the road with first-home buyer grants and immigration spikes. But Keen would argue that every time you "save" the market, you just make the eventual bubble bigger.
His view is nuanced. He isn't saying the world ends tomorrow. He’s saying that a system built on ever-increasing private debt is mathematically destined to fail. You can delay the math, but you can’t delete it.
How to Apply Keen’s Logic to Your Own Life
If you’re trying to navigate the mess of 2026, Keen’s work offers a few very practical, if sobering, takeaways:
✨ Don't miss: Why UC Hrishikesh Vinayak Bhide Professor Roles in Marketing are Reshaping Consumer Science
- Watch Credit, Not Just GDP: If the rate of debt growth slows down, the economy will probably stall, regardless of what the "official" numbers say.
- Differentiate Between Debt Types: Debt used to build a factory is "good" because it creates value. Debt used to bid up the price of an existing house is "Ponzi" debt. Avoid the latter.
- Understand Money Creation: Realize that when banks stop lending, the money supply actually shrinks. That’s how depressions start.
- Question the "Equilibrium": Don't assume things will "return to normal." In a complex system, "normal" is often just a transition state between two crises.
The best way to get a handle on this is to stop looking at the economy as a series of stock tickers. Start looking at it as a system of pipes and buckets. If the debt bucket gets too heavy, the pipes are going to burst.
To dig deeper, you can actually download the Minsky software for free or check out his latest course on his website. He’s spent 50 years trying to fix a broken science; the least we can do is look at the blueprints.
Next Steps for the Realistic Investor
- Audit your own "Debt-to-Income" ratio through the lens of a Minsky model: is your debt producing income, or just consuming it?
- Read the 2011 edition of Debunking Economics for the foundational arguments against neoclassical theory that still hold up in 2026.
- Monitor the "Credit Impulse": Track the change in the rate of new private lending in your local economy as a lead indicator for the next 12 months.