Minsky Goggles
“If you’re going to have a model of capitalism, your model must be able to generate a Depression as one of its potential states. …if you can’t model that, you’re not modeling capitalism.”
Via the Institute for New Economic Thinking, Steve Keen explains how Minsky’s work played a foundational role in helping him to see the financial crisis coming:
Later in the video, Keen starts talking about the “holy hell!” moment he had in 2005 when looking at private debt-to-GDP ratios (Keen notes the central role private debt plays in Minsky’s theory).
This (from Randall Wray’s Minsky-inspired policy brief) is the sort of thing he would have been seeing:
Sources: Census Bureau; National Income and Product Accounts
(NIPA); Federal Reserve Flow of Funds Accounts (from 1945)
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The link to the policy brief links to a whole list of policy briefs. Which one was the intended one?
(Does that government debt include “government internal” debt? You, debt within the government, so to speak? If yes, then the difference between govt and private debt would be even bigger. Not a big deal though, I can take a look myself.)
Link fixed. Thanks Hugo.