Finance Matters
Today in the New Yorker John Cassidy asks “where is the new Keynes”? Where, in other words, are the new ideas that have emerged from this historic economic crisis? While there is nothing, he insists, comparable to a new Keynesianism, there has been a rediscovery of some “important ideas.” The first:
1. Finance matters. This lesson might seem obvious to the man in the street, but many economists somehow managed to forget it. Two who didn’t were Hyman Minsky and Wynne Godley, both of who were associated with the Levy Institute for Economics at Bard College. Minksy’s now-famous “Financial Instability Hypothesis” can be found here, and one of Godley’s warnings about excessive household debt can be found here. (It is from 1999!)
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The LRB Blog also talked about Wynne Godley a day or two back
“As Wynne Godley observed in the LRB nearly twenty years ago, the current crisis in the EU, and governments’ inability to deal with it, were inevitable, given the terms of the Maastricht Treaty (yes, we’ve linked to the piece before, and may well link to it again):”
http://www.lrb.co.uk/blog/2011/10/24/the-editors/terminal-decline/
(Also, you may be aware that LRB has removed the paywall for “Maastricht And All That”)
Yes, that Maastricht piece is quite prescient (and one can’t help but appreciate the tight little bio they provide. You know you’re dealing with a special case when it starts out “Wynne Godley was a professional oboe player for some years in his twenties…”) Thanks Ramanan.
Lots of good stuff, thanks! Again, may come to use on the Wiki.