Friday, March 3, 2017

Lars P. Syll — Minsky matters!

Minsky explained what other economists, notably John Hicks, the originator of ISLM, got wrong about Keynes and missed the key points that Keynes was making as a consequence — cyclicality, the role of finance, and uncertainty.

Minsky observed that the "animal spirits" of which Keynes spoke were not just expectations, and certainly not completely rational expectations. Rather expectations are volatile and are driven across the financial cycle by fear and greed, with the stability provided by financial retrenchment in the trough giving way to instability toward the top owing to irrational exuberance in the Ponzi phase.

Lars P. Syll’s Blog
Minsky matters!
Lars P. Syll | Professor, Malmo University

1 comment:

Bob Roddis said...

Fiat funny money impairs honest pricing and distorts economic calculation. The Austrians have been pointing out this OBVIOUS fact since the 1920s. The Minsky "explanation" is merely a distortion, an attempt to take the irrefutable and very specific Austrian observation of fact and turn it into "under 'capitalism'*, things just go haywire and we can't understand why!". Minksy offers NOTHING.

*It's not "capitalism" when there's a fiat funny money system.