Canary, in the hole

"Even more pointedly," Steve Keen writes,

unbeknownst to Hansen, a recovery had started just before he proposed the secular stagnation hypothesis

I love the irony. But why the recovery? For reasons that his supply-side theory did not contemplate, Keen says: A turnaround in the growth of credit.

I agree absolutely with Steve Keen on this. Absolutely. If credit was growing, the new money had to go somewhere. It went into the economy, and it created growth.

Hansen, quoted by Keen, said

Fundamental to an understanding of this problem are the changes in the "external" forces, if I may so describe them, which underlie economic progress—changes in the character of technological innovations, in the availability of new territory, and in the growth of population.

But those forces are inhibited if the money that lubricates them is insufficient. And the way we make money "sufficient", in this credit-based economy of ours, is by using credit. Think of credit growth as the canary in the coal mine. When credit dies, the economy dies.

Me, I have confidence in the entrepreneurial spirit; if credit is readily available, and if we've not got too much debt already, then I don't need to look at technology or territory or population. I can just look at the indicator -- credit growth. It tells me all I need to know.