Please join StudyMode to read the full document. Barkley Rosser, Jr. One is when price rises in an accelerating way and then crashes very sharply after reaching its peak. Another is when price rises and is followed by a more a similar decline after reaching its peak. The third is when price rises to a peak, which is then followed by a period of gradual decline known as the period of financial distress, to be followed by a much sharper crash at some later time. All three patterns occurred during the financial crisis of
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Hyman Minsky : A Relatively Unknown Economist - Words | Bartleby
A Minsky moment is a sudden, major collapse of asset values which marks the end of the growth phase of a cycle in credit markets or business activity. According to the hypothesis, the rapid instability occurs because long periods of steady prosperity and investment gains encourage a diminished perception of overall market risk , which promotes the leveraged risk of investing borrowed money instead of cash. The debt-leveraged financing of speculative investments exposes investors to a potential cash flow crisis, which may begin with a short period of modestly declining asset prices. In the event of a decline, the cash generated by assets is no longer sufficient to pay off the debt used to acquire the assets.
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 s, "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.
Hyman Minsky was a relatively unknown economist. Minsky was not some child prodigy growing up, unlike some of the historical figures we meet this semester. Instead he had humble beginnings, Minsky was born in Chicago in