Macro N Cheese

Real Progressives recently created a series on fraud and the great financial crisis. To further understand the economic underpinnings of 2008 and other financial crises, Steve turned to Eric Tymoigne, inviting him on to talk about the book he co-authored with Randall Wray, The Rise and Fall of Money Manager Capitalism: Minsky's Half-Century from World War Two to the Great Recession. Alan Greenspan called the financial crisis a “once in a century tsunami,” a huge shock that occurred to the system that had been very unlikely, but, Oops, it happened! And we were not prepared.  The Minsky narrative is the opposite. It's a very tiny shock that blew up the entire system. And why? Because over time, the system becomes more fragile, weaker, less able to buffer against even small adverse shocks on the system. Minsky's theoretical framework is really not about the crisis, it's about the process that leads to the crisis. That's where financial fragility comes into play. As Tymoigne explains, the financial crisis