Minsky Goggles
by“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)