Last Sunday's Boston Globe included a feature article about heretofore unknown, and underappreciated economist Hyman Minsky.
Since the global financial system started unraveling in dramatic fashion two years ago, distinguished economists have suffered a crisis of their own. Ivy League professors who had trumpeted the dawn of a new era of stability have scrambled to explain how, exactly, the worst financial crisis since the Great Depression had ambushed their entire profession.
Amid the hand-wringing and the self-flagellation, a few more cerebral commentators started to speak about the arrival of a “Minsky moment,” and a growing number of insiders began to warn of a coming “Minsky meltdown.”
“Minsky” was shorthand for Hyman Minsky, a hitherto obscure macroeconomist who died over a decade ago. Many economists had never heard of him when the crisis struck, and he remains a shadowy figure in the profession. But lately he has begun emerging as perhaps the most prescient big-picture thinker about what, exactly, we are going through. A contrarian amid the conformity of postwar America, an expert in the then-unfashionable subfields of finance and crisis, Minsky was one economist who saw what was coming. He predicted, decades ago, almost exactly the kind of meltdown that recently hammered the global economy.
It's a wonderful historical piece that rightly depicts Minsky as an adherent to Keynsian principles while rejecting his New Keynesian contemporary colleagues. Instead, Minsky expanded on Keynes' ideas, resulting in his "Financial Instability Hypothesis" which implies that Capitalism, by its very nature, is unstable and prone to collapse.
Now, whenever I read or hear anything about Hyman Minsky, I immediately think of Steve Keen, the Aussie economist and author, who has been conducting research since 1995 to advance Minsky's hypothesis. He was also one of the "early warners", who proclaimed the coming Global Financial Collapse in December 2005.
Steve was on Max Keiser's show "On the Edge" this past Friday and had some interesting things to say about the crisis and where we stand today. His segment begins early in part 2 and runs through the end of the broadcast. Those of you unfamiliar with "Mad Max", may want to watch the entire show. It is worth catching weekly.
Anyway, Steve has a solution to the crisis, and it's one that Michael Hudson has been harping on for quite awhile. Personally, I think it is the ONLY solution. Unfortunately, I'm pretty sure it won't be implemented any time soon, or at least soon enough to matter to tens of millions of Americans who are and will be suffering. Enjoy the broadcast!!