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Financial Keynesianism And Market Instability

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Executive Summary

In this paper, the author will follows Hyman Minsky in arguing that the postwar period has seen a slow transformation of the economy from a structure that could be characterized as "Robust" to one that is "Fragile." While many economists and policymakers have argued that "No one saw it coming," Minsky and his followers certainly did! While some of the details might have surprised Minsky, certainly the general contours of this crisis were foreseen by him a half century ago. The author will focuses on two main points: first, the past four decades have seen the return of "Finance capitalism"; and second, the collapse that began two years ago is a classic "Fisher-Minsky" debt deflation.

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