An economics, investment, trading and policy blog with a focus on Modern Monetary Theory (MMT). We seek the truth, avoid the mainstream and are virulently anti-neoliberalism.
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Tuesday, June 2, 2015
Barkley Rosser — On Missing Minsky
Lots packed in here. You want to read it. It's not long.
One of the problems I find with this kind of analysis -- in this, I refer specifically to Rosser, not so much to Krugman, who speaks in perfectly general terms -- is that it assumes crisis always, invariably, are the consequence of panics in the financial sector. Is that something we can just assume?
In these views, it's not that capitalism has intrinsically unstable properties, but that people are not perfectly suited to capitalism: against all theory, capitalism -- they seem forced to admit -- is not stable. Never mind, it's not capitalism; it's the people who goes bananas, every now and then.
But I don't think this latest crash was caused because people panicked. There were worries, alright, but that was a logical consequence of objective events. People were loaded with debt: we know that and we know, because of MMT, why that's the case. That had nothing to do with panic.
Bankers (particularly those at places like Goldman Sachs) coolly unloaded their toxic assets, when they saw those events. Does that sound like they were panicking?
I don't remember seeing people throwing themselves from the windows of skyscrapers, or anything like that. Were there any bank runs, like we see in "It's a Wonderful Life"?
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Rosser, I'm afraid, is making way too many assumptions: he should state them.
One of the problems I find with this kind of analysis -- in this, I refer specifically to Rosser, not so much to Krugman, who speaks in perfectly general terms -- is that it assumes crisis always, invariably, are the consequence of panics in the financial sector. Is that something we can just assume?
ReplyDeleteIn these views, it's not that capitalism has intrinsically unstable properties, but that people are not perfectly suited to capitalism: against all theory, capitalism -- they seem forced to admit -- is not stable. Never mind, it's not capitalism; it's the people who goes bananas, every now and then.
But I don't think this latest crash was caused because people panicked. There were worries, alright, but that was a logical consequence of objective events. People were loaded with debt: we know that and we know, because of MMT, why that's the case. That had nothing to do with panic.
Bankers (particularly those at places like Goldman Sachs) coolly unloaded their toxic assets, when they saw those events. Does that sound like they were panicking?
I don't remember seeing people throwing themselves from the windows of skyscrapers, or anything like that. Were there any bank runs, like we see in "It's a Wonderful Life"?
--------
Rosser, I'm afraid, is making way too many assumptions: he should state them.