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“Mr. Minsky long argued markets were crisis prone. His 'moment' has arrived.” -The Wall Street JournalIn his seminal work, Minsky presents his groundbreaking financial theory of investment, one that is startlingly relevant today. He explains why the American economy has experienced periods of debilitating inflation, rising unemployment, and marked slowdowns-and why the eco “Mr. Minsky long argued markets were crisis prone. His 'moment' has arrived.” -The Wall Street JournalIn his seminal work, Minsky presents his groundbreaking financial theory of investment, one that is startlingly relevant today. He explains why the American economy has experienced periods of debilitating inflation, rising unemployment, and marked slowdowns-and why the economy is now undergoing a credit crisis that he foresaw. Stabilizing an Unstable Economy covers: The natural inclination of complex, capitalist economies toward instability Booms and busts as unavoidable results of high-risk lending practices “Speculative finance” and its effect on investment and asset prices Government's role in bolstering consumption during times of high unemployment The need to increase Federal Reserve oversight of banks Henry Kaufman, president, Henry Kaufman & Company, Inc., places Minsky's prescient ideas in the context of today's financial markets and institutions in a fascinating new preface. Two of Minsky's colleagues, Dimitri B. Papadimitriou, Ph.D. and president, The Levy Economics Institute of Bard College, and L. Randall Wray, Ph.D. and a senior scholar at the Institute, also weigh in on Minsky's present relevance in today's economic scene in a new introduction. A surge of interest in and respect for Hyman Minsky's ideas pervades Wall Street, as top economic thinkers and financial writers have started using the phrase “Minsky moment” to describe America's turbulent economy. There has never been a more appropriate time to read this classic of economic theory.


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“Mr. Minsky long argued markets were crisis prone. His 'moment' has arrived.” -The Wall Street JournalIn his seminal work, Minsky presents his groundbreaking financial theory of investment, one that is startlingly relevant today. He explains why the American economy has experienced periods of debilitating inflation, rising unemployment, and marked slowdowns-and why the eco “Mr. Minsky long argued markets were crisis prone. His 'moment' has arrived.” -The Wall Street JournalIn his seminal work, Minsky presents his groundbreaking financial theory of investment, one that is startlingly relevant today. He explains why the American economy has experienced periods of debilitating inflation, rising unemployment, and marked slowdowns-and why the economy is now undergoing a credit crisis that he foresaw. Stabilizing an Unstable Economy covers: The natural inclination of complex, capitalist economies toward instability Booms and busts as unavoidable results of high-risk lending practices “Speculative finance” and its effect on investment and asset prices Government's role in bolstering consumption during times of high unemployment The need to increase Federal Reserve oversight of banks Henry Kaufman, president, Henry Kaufman & Company, Inc., places Minsky's prescient ideas in the context of today's financial markets and institutions in a fascinating new preface. Two of Minsky's colleagues, Dimitri B. Papadimitriou, Ph.D. and president, The Levy Economics Institute of Bard College, and L. Randall Wray, Ph.D. and a senior scholar at the Institute, also weigh in on Minsky's present relevance in today's economic scene in a new introduction. A surge of interest in and respect for Hyman Minsky's ideas pervades Wall Street, as top economic thinkers and financial writers have started using the phrase “Minsky moment” to describe America's turbulent economy. There has never been a more appropriate time to read this classic of economic theory.

30 review for Stabilizing an Unstable Economy: A Twentieth Century Fund Report

  1. 4 out of 5

    Vivian

    Hyman Minsky huh Minsky, who taught at Washington University in St. Louis, was a marginalized figure throughout his professional life, and died, still marginalized, in 1996. And to be honest, Minsky’s heterodoxy wasn’t the only reason he was ignored by the mainstream. His books are not, to say the least, user-friendly; nuggets of brilliant insight are strewn thinly across acres of turgid prose and unnecessary algebra. And he also cried wolf too often; to paraphrase an old joke by Paul Samuelson, Hyman Minsky huh Minsky, who taught at Washington University in St. Louis, was a marginalized figure throughout his professional life, and died, still marginalized, in 1996. And to be honest, Minsky’s heterodoxy wasn’t the only reason he was ignored by the mainstream. His books are not, to say the least, user-friendly; nuggets of brilliant insight are strewn thinly across acres of turgid prose and unnecessary algebra. And he also cried wolf too often; to paraphrase an old joke by Paul Samuelson, he predicted around nine of the last three major financial crises. these days many economists, yours truly very much included, recognize the importance of Minsky’s “financial instability hypothesis.” And those of us, again like yours truly, who were relative latecomers to Minsky’s work wish that we had read it much earlier. Minsky’s big idea was to focus on leverage—on the buildup of debt relative to assets or income. Periods of economic stability, he argued, lead to rising leverage, because everyone becomes complacent about the risk that borrowers might not be able to repay. But this rise in leverage eventually leads to economic instability. Indeed, it prepares the ground for financial and economic crisis. this book is a must read

  2. 5 out of 5

    Nick Klagge

    As with any classic, it's hard for me to gauge my feelings about this book now, and they may well be different several months on. But I'm very glad to have read it. For those who are not econ nerds, Minsky was an economist in the second half of the 20th century who was non-mainstream but whose views came back into vogue after the financial crisis, which appeared to validate his theories. The only math in this book is algebra, mostly to do with simplified national accounting identities. In this se As with any classic, it's hard for me to gauge my feelings about this book now, and they may well be different several months on. But I'm very glad to have read it. For those who are not econ nerds, Minsky was an economist in the second half of the 20th century who was non-mainstream but whose views came back into vogue after the financial crisis, which appeared to validate his theories. The only math in this book is algebra, mostly to do with simplified national accounting identities. In this sense Minsky is the forebear to modern MMT types. I like this style of argument: asserting the simple identities, then generating theory around "what adjusts." In a nutshell, Minsky's argument is that capital goods are not amenable to the same equilibrium-welfare arguments that consumption goods are, due to uncertainty (as opposed to "risk") regarding the future. This leads to a fundamental and endogenous instability, which brings about financial crises. I think this is a productive line of argument, which reflects the real possibility of crashes without resorting to some hand-waving about irrationality the way some behavioral economics does. I have recently discovered the work of Roman Frydman (a current economist) and think his ideas have some similar good qualities. Finally, I have to note that this is one of the worst-edited books I've read recently! Come on, guys!

  3. 4 out of 5

    Steve

    Stabilizing An Unstable Economy is a comprehensive analysis of the post World War II supposedly capitalist system, written in 1986 just following America's bout with stagflation. Mr. Minsky goes to great lengths to explain the misappropriation of Keynesian concepts, indeed the general (neoclassical) misunderstanding of Keynes, done largely for short-term political purposes. Mr. Minsky sees Big Government as the comfort blanket for today’s society; here I agree. He sees the largest risk, however, Stabilizing An Unstable Economy is a comprehensive analysis of the post World War II supposedly capitalist system, written in 1986 just following America's bout with stagflation. Mr. Minsky goes to great lengths to explain the misappropriation of Keynesian concepts, indeed the general (neoclassical) misunderstanding of Keynes, done largely for short-term political purposes. Mr. Minsky sees Big Government as the comfort blanket for today’s society; here I agree. He sees the largest risk, however, being inflation; here I disagree, as the recent record demonstrates. The instability in our economy, he says, arises from the financial services industry, specifically the profit motive embedded within those organizations; here, too, I agree. Interestingly, Mr. Minsky fails to mention the rating agencies, those fools, those most imperfect governors of financial flows, once in his volume; perhaps they even deserve their own dedicated excoriation. I now believe economists see the world with a rearview mirror and are heavily influenced with recency bias. The field, therefore, does a pretty good job describing yesterday’s phenomena, a damned poor job describing tomorrow’s. Despite Mr. Minsky’s inflation warnings and despite years of mammoth central bank interventions, inflation in leading economies is unseen. Mr. Minksy appears wrong. Rather, we now seem to have entered a realm where central banks are enablers to an extended family of drug users, all addicted to cheap money. What happens if and when those enablers decide to impose some tough love? That seems an impossibility now. Where are the economic models that describe zero and negative interest rates combined with long-term anemic economic growth and low inflation? To get some idea of the economic dilemma we’re in, I selected three public companies off the top of my head: 3M, Pepsi and Procter & Gamble. Let’s take a peek at their revenues for the past five years. 3M's and Pepsi’s revenues are down 3% over that time. P&G’s revenues are down 11%. And how has the stock market rewarded those limp results, a woeful record for which I’m sure the managements were perversely, amply rewarded? Pepsi’s stock moved from $98 to $133, while 3M moved from $159 to $173 and P&G moved from $88 to $120. How is this possible? Do we really believe that endless cost cutting and financial engineering, especially stock repurchases, can permit this state of affairs to continue, even with our drug pushing, enabling Big Daddy central banks? The dead elephant on the living room carpet is the global central banking system. I’m at a loss to point to the economic theory that fully explains today’s environment, providing the pathway to an understanding of future likely consequences. We appear to be in an era where the US government can issue unlimited amounts of debt at historic low interest rates, yet where the actions of our central bank are bounded by the intoxication of the financial markets to cheap money and by the unprecedented accommodative policies of the European and Japanese central banks. There’s talk of something called “Modern Monetary Theory,” long-term stagnant wages in the US, a real mess of things in European finance, declining populations in several major economies, an apparently insatiable international demand for US dollars, exchange rates, and this teenage dragon called China, among other issues. Where will this lead us? No one really seems to know. Why do I have this feeling we're being led toward a mirage?

  4. 4 out of 5

    Paul Ducard

    A very difficult read in many spots but I think I got most of his arguments. I found it entertaining how much of what he wrote 20 years ago seems all together familiar and applicable today.

  5. 4 out of 5

    John Stelwagon

    Some interesting ideas that are certainly timely but the writing style killed any sense of thematic momentum. I think I will find myself reading commentary and analysis of Minsky's ideas.

  6. 5 out of 5

    Gregg Wingo

    This work of Minsky focuses on his Financial Instability Hypothesis and is a direct challenge to the market efficiency assumptions of the Neoclassical synthesis. It is also a reflection of the cost of Fordism through Keynesian mechanisms or inflation. But chiefly the book is an indictment of financial capitalism and continues a line of economic thought from Smith to Marx to Keynes. Minsky is a critical link in the Smith-Marx-Keynes-Sraffa-Schumpeter-Minsky synthesis. Minsky recognizes the dynami This work of Minsky focuses on his Financial Instability Hypothesis and is a direct challenge to the market efficiency assumptions of the Neoclassical synthesis. It is also a reflection of the cost of Fordism through Keynesian mechanisms or inflation. But chiefly the book is an indictment of financial capitalism and continues a line of economic thought from Smith to Marx to Keynes. Minsky is a critical link in the Smith-Marx-Keynes-Sraffa-Schumpeter-Minsky synthesis. Minsky recognizes the dynamic nature of the business cycle and identifies the inherent inconsistencies that result from investor behavior in the course of financial relations. He also explains the relationship between Big Government and the use of Keynesian tools to stabilize fluctuations in the economy, maintenance of corporate profits, and inflation. Most importantly Minsky warns of the danger of capitalism in fields of critical importance to society such as education, transportation, and utilities. With the dawning of the Great Recession economists were faced with the necessity of acknowledging the Minsky Moment and searched for the first edition of this book. In response, McGraw-Hill released this new edition and provided an opportunity for all of us to learn the lessons previously not learned. It is well worth your time to read this book that explains the times we live in.

  7. 4 out of 5

    Andi

    I’ve never admired Minsky. It explains why I didn’t dig deeper once he said turbulence in an economy is inherent and endogenous. First time I read that line, I threw the book away from my lap. Why? Well, I read this book during the pandemic. In the beginning of January 2020, once 44 respiratory issues were identified as disease caused by Coronavirus in Wuhan, I started to delve into this book deliberately to seek for Minsky “advices” in terms of stabilizing economic turbulence caused by geopolit I’ve never admired Minsky. It explains why I didn’t dig deeper once he said turbulence in an economy is inherent and endogenous. First time I read that line, I threw the book away from my lap. Why? Well, I read this book during the pandemic. In the beginning of January 2020, once 44 respiratory issues were identified as disease caused by Coronavirus in Wuhan, I started to delve into this book deliberately to seek for Minsky “advices” in terms of stabilizing economic turbulence caused by geopolitical tension, oil issue in Arabia related to drone attack, riots in Hong Kong and southern America, killing of Iran’s army general, and trade wars between The US and China, as well as Japan and Korea. Did I get “advices” from Minsky, one that I expected? None, but “endogeneity” as the root of the economic turbulence. That is to say, turbulence is neither a result of external/internal shock nor government failure, but it’s more a natural cycle as a result of embedded inherent factor in the system. In other words, turbulence is not a big deal for traditional fiscal and monetary policy are more than enough to stabilize it. I sensed a classical economics theory revisited, here actually. He’s like saying that everything is gonna be alright just like Bob Marley have said in No Woman No Cry. Well, is it really gonna be alright? Answer is absolutely NOPE! NOPE! and NOPE! The truth is everything are paralyzed. Demand, supply, global supply chains, commodity price, investor and consumer confidence, affect heuristic has been rising, social crisis has been escalating and incrementally awaken the sleeping giant of financial crisis and angry mob. This pandemic shows that Minsky did make a fatal fallacy by saying that shock should not to be blamed for a crisis. This is exactly why I threw the book away to the floor and got disappointed.

  8. 4 out of 5

    Yuni Amir

    Personally, I think this is the one book you need to read to understand how and why our economy at its current state. He explained the whole process of the economic activities, with more weight on lenders, rather than central banks - like almost every other econ books.

  9. 4 out of 5

    Alex

    the pricing section kicks ass

  10. 4 out of 5

    Kayce Basques

    Fascinating analytical framework. Difficult to read... Lots of passive voice.

  11. 4 out of 5

    Daniel Arges

    Difficult to read due to the technical language. The book was written in 1980's decade, but still valid today to understand the present flaws of capitalism.

  12. 4 out of 5

    Andrew

    Stabilizing an Unstable Economy, by Hyman Minsky, is a wonderful, but complex book on macroeconomic theory. Minsky examines the United States of the post WWII era (up to the 90's) and dissects the inherent instability in the system. His book is widely credited with "predicting" the crash of '08, although this is mostly through economic modeling and prediction on credit swapping and a growing "small government" movement within the US Federal Reserve. Minsky's book was highly interesting, and very Stabilizing an Unstable Economy, by Hyman Minsky, is a wonderful, but complex book on macroeconomic theory. Minsky examines the United States of the post WWII era (up to the 90's) and dissects the inherent instability in the system. His book is widely credited with "predicting" the crash of '08, although this is mostly through economic modeling and prediction on credit swapping and a growing "small government" movement within the US Federal Reserve. Minsky's book was highly interesting, and very complicated. It focuses much more on Macro-Financing at the National level, as opposed to actual macroeconomic stabilization theory. It is very technical, and I would recommend a solid grasp of algebra, economics and finance/accounting to fully grasp the recommendations Minsky offers on correcting the imbalance he saw in the US economy at the time. Although complicated, this is a great read for those interested in US macro-financial theory and a history of US federal financing. Minsky was an advocate for Keynesian style Big Government financial controls, and disagreed with small government or market led mechanisms for overall financial control of an economy. He goes into great detail on how market led forces can cause instability, and great detail on important financial and monetary policy schemes a government could enact to encourage financial stability mechanisms are in place. All in all, a classic economics read from a man who understood macro-financing and banking and how these factors effect overall social justice, efficiency of state and market mechanisms, and the liberty of democratic citizens.

  13. 5 out of 5

    Diego

    Una versión alternativa de las crisis desde la gran depresión, partiendo de una visión post-keynesiana. Un muy buen libro para entender algunas características y fallas del sistema capitalista en el siglo XX con algunas ideas interesantes sobre como fortalecer el sistema y eliminar sus inestabilidades endogenas. Muy recomendando para los interesados en Macroeconomía y Economía Política.

  14. 4 out of 5

    P

    The Financial Instability Theory is one of the most important economic ideas of the last 50 years, but the length and dry style makes this best-suited for people truly interested in economics.

  15. 5 out of 5

    Marta

    A must read :)

  16. 4 out of 5

    A Reader

    It is remarkable that this book, 25 years since its publication it more relevant than ever.

  17. 4 out of 5

    Darrel Pfingston

    written in 1986. reasonably describes the dot.com bubble/crash and the sub-Prime mortgage bubble/crash. proposition has credibility.

  18. 5 out of 5

    Barry Scatton

    Finally got around to finishing this. I enjoyed reading Minsky's analysis even though I disagree with his ideas on monetary policy. If financial markets are your thing it's worth reading.

  19. 5 out of 5

    !Tæmbuŝu

    KOBOBOOKS KOBOBOOKS

  20. 5 out of 5

    Parashar B.

    This book is really technical, but a very good read.

  21. 4 out of 5

    Deniz Kabaağaç

    It is difficult but eloquent. It is different and meaningful. It certainly deserves a detailed second reading

  22. 5 out of 5

    George Jankovic

    One of the best economics books. It explains how bubbles form and why in economic, and not just psychological, terms.

  23. 5 out of 5

    Emre

  24. 4 out of 5

    Alberto Garzón

  25. 5 out of 5

    Sebastian

  26. 4 out of 5

    Edwin

  27. 5 out of 5

    Ann Marie

  28. 4 out of 5

    Mickael GAUTIER

  29. 5 out of 5

    Kourosh Afrashteh

  30. 4 out of 5

    Clark

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