Stabilizing an Unstable Economy, Part 4 - Institutional DynamicsThis chapter comes from Stabilizing an Unstable Economy, the seminal work by Hyman Minsky. It reveals his groundbreaking financial theory of investment, one that is startlingly relevant today. He explains why the American economy has experienced periods of debilitating inflation, rising unemployment, and marked slowdowns--and why the economy is now undergoing a credit crisis that he foresaw. |
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bank assets bank liabilities bank reserves bank’s bankers Big Government book value borrowing capital assets capitalist economy capitalization rate cash flows central bank commercial banks commercial paper commitments constrain consumption-goods contract construction debt deflation demand deposits demand for consumer demand for financing demand price depends discount window employee employment equity expansion Federal Reserve System finance companies financed investment financial markets financial structure funds government deficits government spending hedge finance increases in money inflation barrier instability interest rates investment output labor costs leverage ratio lines of credit loans markup member banks ment Milton Friedman monetary money supply money wage increases nonmember banks open inflation owner’s investment percent Post-Keynesian Economics price of investment price-deflated production of consumer profits rate of growth rate of increase relative result retained earnings spendable weekly earnings supply of finance supply price taxes technologically determined trade unions transfer payments unemployment rate validate WCNC workers