Why Economists Ignore the One Chart That Predicts Every Crash | Prof. Steve Keen

Economic stability hinges on managing private debt levels, which act as the primary driver of boom-and-bust cycles in capitalist systems. Mainstream economic models fail by treating banks as mere intermediaries rather than creators of money, thereby ignoring the critical role of credit in aggregate demand. China’s economic success demonstrates a pragmatic integration of state-led infrastructure investment with competitive market forces, contrasting with the West’s over-financialization and reliance on speculative asset bubbles. High levels of private debt, rather than government deficits, pose the greatest threat to economic health, as speculative activity displaces productive investment. Ultimately, the financial sector must be reined in to serve the industrial sector, ensuring that capital is directed toward tangible value creation rather than gambling on second-hand assets.