Very interesting. This accords with Steve Keen's work looking at the rate of credit growth - the acceleration of bank credit creation - as it accelerates the rate of growth in asset prices. Of course, asset prices ramp up nicely with accelerating credit, but they don't go down the same way. In a double entry accounting view, the whole financial sector adds up to zero, until suddenly it doesn't.
Minsky gave us the answer, in a very short paragraph in The Financial Instability Hypothesis: nationalise the banks. The only other option is the Chinese one, using state control and intervention - and we know it works because they managed to deflate a real estate bubble without crashing everything. However, state intervention itself would only work in the short term unless accompanied by either state ownership or communist government, as it is now clear that private banks are capable of manipulating "democracy" to get what they want.
And if we can’t get the 99% to understand that neo liberal capitalism and the state’s role in promoting wealth inequality through the next / forthcoming
Minsky correctly observed that economies experience speculative booms followed by painful busts. Where he went wrong was blaming capitalism itself.
Speculation isn't the disease; it's the symptom. The disease is a monetary system that allows central banks and politically protected banks to expand credit far beyond real savings.
In a genuine capitalist free market, banks that overextend themselves fail. Under modern central banking, losses are socialised, money is created out of thin air, and reckless speculation is rewarded with bailouts and cheap credit.
The instability Minsky described is real—but it is an instability of state-managed finance, not of free market capitalism. Blaming capitalism for crises created by monetary intervention is like blaming the compass after someone deliberately changed the map.
Very interesting. This accords with Steve Keen's work looking at the rate of credit growth - the acceleration of bank credit creation - as it accelerates the rate of growth in asset prices. Of course, asset prices ramp up nicely with accelerating credit, but they don't go down the same way. In a double entry accounting view, the whole financial sector adds up to zero, until suddenly it doesn't.
Minsky gave us the answer, in a very short paragraph in The Financial Instability Hypothesis: nationalise the banks. The only other option is the Chinese one, using state control and intervention - and we know it works because they managed to deflate a real estate bubble without crashing everything. However, state intervention itself would only work in the short term unless accompanied by either state ownership or communist government, as it is now clear that private banks are capable of manipulating "democracy" to get what they want.
And if we can’t get the 99% to understand that neo liberal capitalism and the state’s role in promoting wealth inequality through the next / forthcoming
FYI typo: 'new customers bare no (or very little) additional cost' -> 'new customers bear no (or very little) additional cost'
Thank you!
Minsky correctly observed that economies experience speculative booms followed by painful busts. Where he went wrong was blaming capitalism itself.
Speculation isn't the disease; it's the symptom. The disease is a monetary system that allows central banks and politically protected banks to expand credit far beyond real savings.
In a genuine capitalist free market, banks that overextend themselves fail. Under modern central banking, losses are socialised, money is created out of thin air, and reckless speculation is rewarded with bailouts and cheap credit.
The instability Minsky described is real—but it is an instability of state-managed finance, not of free market capitalism. Blaming capitalism for crises created by monetary intervention is like blaming the compass after someone deliberately changed the map.
An excellent demonstration of the point I was making in the final section. Thank you.