Hyman Minsky
American · 1919–1996
American economist known for his financial instability hypothesis, which argues that stability in financial markets inevitably leads to speculation, over-leveraging, and eventual crisis.
Wikipedia ↗“A fundamental characteristic of our economy is that the financial system swings between robustness and fragility and these swings are an integral part of the process that generates business cycles.”
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“Stability is destabilizing. The more stable things become and the longer things are stable, the more unstable they will be when the crisis hits.”
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“Success breeds a disregard of the possibility of failure; the absence of serious financial difficulties over a substantial period leads to the development of a euphoric economy in which increasing short-term financing of long positions becomes a normal way of life.”
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“There is no final solution to the problems of organizing economic life. There is nothing to do but to keep trying.”
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“In Ponzi finance, the cash flows from operations are not sufficient to fulfill either the repayment of principal or the interest due on outstanding debts by their cash flows from operations. Such units can sell assets or borrow. Borrowing to pay interest is Ponzi finance.”
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“The processes of a capitalist economy are essentially financial. Money is not just a veil. The financial structure is a central determinant of the behavior of a capitalist economy.”
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“The first theorem of the financial instability hypothesis is that the economy has financing regimes under which it is stable, and financing regimes in which it is unstable. The second theorem is that over periods of prolonged prosperity, the economy transits from financial relations that make for a stable system to financial relations that make for an unstable system.”
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