In the winter of 1933, the American financial and economic system
collapsed. Since then economists, policy makers and financial analysts
throughout the world have been haunted by the question of whether "It"
can happen again. In 2008 "It" very nearly happened again as banks and
mortgage lenders in the USA and beyond collapsed. The disaster sent
economists, bankers and policy makers back to the ideas of Hyman
Minsky - whose celebrated 'Financial Instability Hypothesis' is widely
regarded as predicting the crash of 2008 - and led Wall Street and
beyond as to dub it as the 'Minsky Moment'.
In this book Minsky presents some of his most important economic
theories. He defines "It", determines whether or not "It" can happen
again, and attempts to understand why, at the time of writing in the
early 1980s, "It" had not happened again. He deals with microeconomic
theory, the evolution of monetary institutions, and Federal Reserve
policy. Minsky argues that any economic theory which separates what
economists call the 'real' economy from the financial system is bound to
fail. Whilst the processes that cause financial instability are an
inescapable part of the capitalist economy, Minsky also argues that
financial instability need not lead to a great depression.
This Routledge Classics edition includes a new foreword by Jan
Toporowski.