By JR on Monday, September 26, 2011
THE global financial crisis, the latest episode of which boiled over last week, did more than destroy wealth and jobs, or embarrass the rating agencies. It exposed the malaise within the economics profession and the deep flaws in its orthodox theories.
George Soros, the billionaire financier and philanthropist, was among those who joined the search for new ideas.
Mr Soros funded a new organisation called the Institute for New Economic Thinking which for the past two years has handed out millions of dollars in grants, funding research projects that look at economics in fresh ways.
This month, the institute gave more than $125,000 to an Australian. Steve Keen, Associate Professor of Economics and Finance at the University of Western Sydney, has won a grant to turn his money-based model of the macro-economy - which draws on the theories of economists such as Hyman Minsky and John Maynard Keynes - into a computer program for students and economists.
Professor Keen says his program will make it easy to develop "dynamic" models of the economy that incorporate money and debt - something that orthodox models do not do.
Last year, Professor Keen had to walk from Canberra to Mount Kosciuszko after losing a bet with Rory Robertson, the then interest rate strategist for Macquarie Bank.
Professor Keen had bet in 2008 that Australian house prices would lose 40 per cent in value in the aftermath of the financial crisis.. [They showed only a slight fall overall]