Could soaring household debt be an even greater danger to the economy than government spending?
We worry all the time about government spending – we talk about the need to cut the deficit, ‘balance the books’, ‘live within our means’.
But what about household debt?
Even though this is much higher than government debt, it does not seem to be subject to the same level of scrutiny.
Steve Keen, professor of economics at Kingston University and author of Debunking Economics argues that household and consumer debt is the one to watch out for.
Nothing left: Professor Steve Keen argues that high levels of household debt are more of a concern than government spending
He explains how levels of household debt have risen, what we’re spending it all on, what it could take to get debt levels down again – and how some countries are now what he calls the ‘walking dead of debt’.
In this latest episode of the Big Money Questions, Steve also explains to presenter Rachel Rickard Straus how it could take some serious action to extricate us from the incredible debt pile we’ve built up.
Steve is one of just a handful of economists who saw the 2008 financial crisis coming – and has a book out in May entitled ‘Can we avoid another financial crisis?’