This page has been archived and commenting is disabled.

Can "It" Happen Again... Again?

Tyler Durden's picture


Many have talked about it. More have eschewed it. But Minsky's hugely important insight in asking the question "Can 'It' Happen Again?" regarding the Depression remains critical reading for any- and every-one who opines day-in and day-out on how much we need or do not need Central Bank money-printing. As Bill Gross put it:

Minsky, originator of the commonsensical “stability leads to instability” thesis; the economist with naming rights for 2008’s “Minsky Moment”; the exposer of the financial fragility of modern capitalism; probably couldn’t imagine the liquidity trap qualities of zero-based money, because who could have conceived 30 or 40 years ago that interest rates could ever approach zero per cent for an extended period of time? Probably no one.


Nor, more importantly I suppose, can Ben Bernanke, Mario Draghi or Mervyn King. In their historical models, credit is as credit does, expanding perpetually after brief periods of recessionary contraction, showering economic activity with liquid fertiliser for productive investment and inevitable growth.

For a long-weekend, the full 30 year-old must-read paper here:

Minsky_Can It Happen Again


- advertisements -

Comment viewing options

Select your preferred way to display the comments and click "Save settings" to activate your changes.
Fri, 08/31/2012 - 18:04 | 2753977 ShortTheUS
ShortTheUS's picture

The (empty chair)satan stands at the ready with his worn-out Ctrl+P button.

Fri, 08/31/2012 - 18:14 | 2754000 I think I need ...
I think I need to buy a gun's picture

Hyperinflation!!!! and not of the money supply,,,,,,no goods on the shelves circa argentina 2001


Bob pisani admitted on cnbc today that treasuries were in a bubble!!!!! Run for your lives!!!!!

Fri, 08/31/2012 - 18:43 | 2754042 MillionDollarBonus_
MillionDollarBonus_'s picture

As if doomer ZHers needed any more indication of the stability of the dollar and the US economy, the 10 year yield has closed down on the day yet again at 1.56% despite Bernanke’s QE disappointment. This is an indication that treasury yields are headed much lower. Treasuries are backed by the full faith and credit of our congress and the judicious monetary policy of our Federal Reserve, and they will remain the safe-haven of choice for investors around the world. Not everybody will benefit from the Treasury bull market however. Some people will only start buying when the yield is sub 0.5%. This will be the greatest wealth transfer in history, and it’s sad that doomer ZH investors don’t want to be part of it.

Fri, 08/31/2012 - 19:01 | 2754084 Pladizow
Pladizow's picture

Trillion Dollar Anus - This is the one comment of yours that I hope is right.

As long as rates drop, gold soars!

Fri, 08/31/2012 - 21:58 | 2754413 Pinto Currency
Pinto Currency's picture


Minsky's insight that people (the market) can lose their minds after not losing their minds is trite.

The real insight is that the consequences of loose monetary policy can appear in a sudden crash which is not very visible beforehand to the average (non monetary policy) observer.

All the more reason to end the Fed and fiat money.

Fri, 08/31/2012 - 22:43 | 2754475 AldousHuxley
AldousHuxley's picture

germany experienced hyperinflation after "investing" into world war 1, then losing it and owing lots of national wealth and productivity to winner of WWI.


US is already in debt yet ready to go to war with Iran supported by China and Russia. WHen US loses, you bet Russia and China is going to make US pay big time and only thing US can do would be hyperinflate debt owed. until US faces China/Russia directly in another war.


It ain't going to be pretty.



Sat, 09/01/2012 - 00:23 | 2754570 Silver Bully
Silver Bully's picture

'US is already in debt yet ready to go to war with Iran supported by China and Russia.'

The U.S. learned a long time ago to let other countries fight our wars for us. The designated proxy that will fight Iran is Israel. The United States will not go broke fighting that war . . . we're already broke, and have been for quite a long time. Meanwhile, the biggest pile of fiat money goes to China. We won't need a silly war to push the issue, merely a financial crisis. But don't worry! Ben will print more than enough Bernanke Bucks to reduce the actual size of ALL our debt. It will simply shrink to the size of a grain of sand (along with the savings of anyone foolish enough to put it all into dollars).

Its magic!

Sat, 09/01/2012 - 00:42 | 2754578 RockyRacoon
RockyRacoon's picture

Parallel worlds?  The similarity is interesting...

We might be broke but that hasn't stopped anybody from getting into a nice cozy war.

Sat, 09/01/2012 - 01:43 | 2754612 i-dog
i-dog's picture

Excellent essay, with the simplest explanation for "Lebensraum" that I've seen. Always good to see a different perspective. Thanks for posting.

However, it's not a parallel. America has added $20 trillion to the $2.5 trillion debt at 1990 by borrowing from China (and others) and handing that money to banks and welfare recipients. Though the MIC has also been a beneficiary, the massive buildup has been in an internal security apparatus rather than offensive weaponry.

Sat, 09/01/2012 - 03:31 | 2754652 AnAnonymous
AnAnonymous's picture

'Americans' love their WWI German debt story.

The accurate point in the article is that the US insisted on Britain and France to repay their debt immediately. The rest, the German debt being set too high, is just a convenient story to avoid facing, among other things, that nazism started in Germany, before 1919.

Actually, the US placed itself as a conduit to enable Germany re armament, taking British and German repayments of war debt and transfering them to Germany.

Un PC, un 'American' comments and indeed, the German war debt story is much more appropriate to satisfy 'American' taste for fantasy.

Sat, 09/01/2012 - 03:53 | 2754655 Svendblaaskaeg
Svendblaaskaeg's picture

Good read (link), thank you!

Sat, 09/01/2012 - 06:51 | 2754725 Element
Element's picture

Always a bit sus of people who call a country 'she' ... the fatherland to some.  Motherland and the Homeland are equally disturbing.

Interesting take though.

And a good example/argument of the overriding fascist philosophy that viewed violence is the first-resort for achieving state policy, and that the economy and resulting centralist corporatism was just the means to obtain the weapons to furnish for that primary motivator to state action.

Like the topic of this page, "Could it happen again?"

Did it ever really stop?  Seems the only thing that altered was mutual deterrence increased and held the fascist state in check ... until they could convince/delude themselves that a 'Star Wars' program and resulting 'missile shield' could work ... then they were off to the races again.

Sat, 09/01/2012 - 21:14 | 2755681 RiskAverseAlertBlog
RiskAverseAlertBlog's picture

And if rates rise?

Fri, 08/31/2012 - 19:01 | 2754085 Muppet Pimp
Muppet Pimp's picture

Excellent Point MDB, if only the doomer libertarians would see the light.  You can in fact print prosperity. /S

FWIW (IMO) Steve Keens work regarding the relevancy of Minsky is the more profound part of that so called 'Jubilee' speech (everyone refers to 'Steve Keen's jubliee' when obviously that is more biblical in origin and was a sidebar to his presentation).  His thoughts concerning calculating potential future cash flows of residential RE with regard to the size of allowable mortgages was good stuff IMO, as rents are relatively stable and that could be a good way for the GSE's (if they survive) to base things on in the future to avoid taxpayers being on the hook for RE that people are overpaying for.  

BTW, SK also said give everyone a million dollars to fire things up which is obviously cuckoo.

Fri, 08/31/2012 - 22:41 | 2754473 geekgrrl
geekgrrl's picture

I seem to recall that Sheila Bair suggested a $1M general bonus (I thought it was in jest), but I didn't see Steve Keen call for that. I did a search and I'm not finding evidence of this claim. Do you have a link?

Fri, 08/31/2012 - 22:46 | 2754480 AldousHuxley
AldousHuxley's picture

happy go lucky joos in Germany 1940 ended up in Germany

doomer joos moved to USA and now drive german made cars



Fri, 08/31/2012 - 23:45 | 2754527 geekgrrl
Sat, 09/01/2012 - 00:43 | 2754588 RockyRacoon
RockyRacoon's picture

In that case I'm going long strippers and blow.

Wed, 09/05/2012 - 21:57 | 2766703 geekgrrl
geekgrrl's picture

LOL. It's ironic that nihilism (or is it hedonism) makes so much sense these days.

Fri, 08/31/2012 - 20:57 | 2754319 holdbuysell
holdbuysell's picture

"judicious monetary policy of our Federal Reserve"

Now that's funny.


Having, showing, or done with good judgment or sense.

Fri, 08/31/2012 - 22:11 | 2754335 Michael
Michael's picture

Query MDB,

If I paid 90% in taxes on $100 billion I earned and got to keep $10 billion dollars, Would you come after the $10 billion I still will have in savings in the future?

Clint Eastwood

You'd think people in the entertainment industry would know what "Theatrical Property" is. Google it.

Fri, 08/31/2012 - 23:26 | 2754514 john39
john39's picture

endless war... no worries.  we can afford it, oh wait....    but "god" wants us to save the world, oh wait....     yeah, its all totally fucked up.  wake up people.

Fri, 08/31/2012 - 23:44 | 2754525 Michael
Michael's picture

The first reaction is the honest reaction. Look at the video and pause it there if need be. Does anyone know who those people are they took a camera shot of?

Sat, 09/01/2012 - 00:11 | 2754554 AldousHuxley
AldousHuxley's picture

dirty Romney money




a company that cleans up "medical waste" from abortion clinics....aka dead fetus.


yeeah, that wouldn't sit well with anti-abortion republicons, so don't report taxes on that investment.....but he can say he created those sick jobs!



Sat, 09/01/2012 - 00:51 | 2754566 Michael
Michael's picture

The Jewtub MSM and their twisted other media are going to tell you what to think about the Clint Eastwood speech, and not discuss any of the topics and actual words he used in that speech.
All the words in Clint Eastwood's speech were truth. Tell me which words and phrases were lies?
The Jewtube MSM and their minions just want more military industrial complex taxpayer money spending.

We call it Jewtube because there are all these Ashkenazi Jews on it because of nepotism.
I'm getting sick of looking at all those Ashkenazi Jews on MSM TV all day.

Whatever happened to Diversity? I guess it doesn't apply to them.

Sat, 09/01/2012 - 02:32 | 2754629 Ghordius
Ghordius's picture

then why don't you watch     Al_Jazeera

or you could try RT

though my advice would be: get rid of TV altogether

Sat, 09/01/2012 - 04:52 | 2754669 Michael
Michael's picture

Just one more thing;

Eastwood unseats Romney: Chair chat is meme of the moment.

This is a story about a man and his chair.

And how that chair became, for an explosive moment, the star of a presidential race.

Clint Eastwood's speech Thursday night at the Republican National Convention in Tampa was an amiable amble through the backroads of the flinty superstar's mind. No matter how high the weeds got, the crowd loved it. Scripted jests, ad libs, that throat-slice move, the off-color bits - the whole thing worked for them.

But Eastwood's speech (, much of it a chat between himself and an empty chair for an imaginary Barack Obama, touched off a Twitterversy that dominated post-convention conversation.

That chair became a proxy for the big party battle, the fight to frame the issues and the opposition.

It's the way politics is done now in the global living room of social media: Words and images stand as proxies for the larger, monumental clash of parties.

Even before man and chair quit the stage, thousands were cheering or mocking. Country singer Blake Shelton, a judge on NBC's The Voice, tweeted: "I. Love. Clint Eastwood." And country fiddle god Charlie Daniels jumped up on a hickory stump and tweeted that "Clint Eastwood made my day." Charleston, S.C., writer Charlet Faye tweeted that "Clint's depiction of @BarackObama MIA was dead-on . . . since absence from the 'seat' is what he's done best."

Read more;

Sun, 09/02/2012 - 10:24 | 2756168 supermaxedout
supermaxedout's picture

Al Jazeera is clearly a propaganda station of the Brits promoting US and UK oil interests in the Middle East.  Its pure propaganda definetely.

RT is the loudspeaker of Putins Russia.  And in comparison of these two stations RT is far better. Its of course promoting Putins policy but with a much better approach compared to Al Jazeera. RT is a station were one can find also opinions contrary to Putins sight of the world.  But in Al Jazeera only simple plain stupid war propaganda.

Sun, 09/02/2012 - 08:10 | 2756042 supermaxedout
supermaxedout's picture

Your Ashkenazy Jews bashing needs a bit more spice.  Why not saying German Jews since the Jews from Ashkenaz are the Jews from Germany which went from there to Poland, Russia etc appx 1000 years ago.  Ever wondered why Russian Jews have often so German sounding names ?  Appx 80% of the Jews nowadays are of Ashkenaz origin. In Southern Germany there are the three holy cities of the Ashkenaz, Speyer, Worms and Mainz the so called Shum cities.

Since German bashing is so popular as well as Jewsbashing it makes a lot of sense to bash them together, Saves energy and is more efficient or not?  Unfortunately  Ashkenazy heartland is  South Germany including the Alsace Lorraine region in France as well as in Nothern Italy stopping short in front o Rome.  The religion was decimted nearly completely erased by Hitler but the genes are there of course.



Sat, 09/01/2012 - 07:08 | 2754740 NoClueSneaker
NoClueSneaker's picture

I still don't understand why haven't they allowed the real guys talk: Chuck Norris & Ted Nugent .... Roundkick & Nukes r bullish ....

Fri, 08/31/2012 - 21:11 | 2754346 Shocker
Shocker's picture



Fri, 08/31/2012 - 23:55 | 2754536 sadmamapatriot
sadmamapatriot's picture

Million Dollar Bonus,

I take all your posts as sarcastic, humorous and full of wit. Am I mistaken? Are you serious?

Sun, 09/02/2012 - 09:59 | 2756137 Shatmadim
Shatmadim's picture

Trash MDB all you like. MDB is right...... Oh of course until MDB isn't... This can go on a lot longer... Or it can't... IMO there are fewer and fewer pulling the cart and at some point game theory overtakes monetary theory.

Fri, 08/31/2012 - 20:18 | 2754197 Zero Govt
Zero Govt's picture

Pradizlow  -  "Rickards destroys a Keynesian" which is quite easy if you've an ounce of common sense however Rickards is still wrong (and talking his book)

Money is a token of value, the problems begin and end for the economy when those tokens are in monopoly hands. Sticking your tokens to Gold or Silver with glue makes no fucking difference if the power to issue it is still held in monopolists hands

the correct answer is a Free Market (no rules, lots of market competition) in Money

anyone asking for anything else but a free market in money is part of the problem and no part of the solution

PS. the Keynsian in your Vid is clearly delusional about "price stability". The inflation rate may be flatlining (due to heavy massaging of the figures) but consider Oilì's gone from $40 a barrel to $140 back down to $40 and now we're up to $90 again. WTF is the twit talking about???

Fri, 08/31/2012 - 20:38 | 2754285 Pladizow
Pladizow's picture

Kindly point me to what statements of Rickards were wrong and exactly how he was talking his book.

On a gold standard there are no "tokens" - gold is money and money is gold. Hence there is no monopoly - its called "free coinage."

If redeemable reciepts are to be used, their issuance is limited to the quantity of gold, unless fraud is involved.

6000 years of free markets have chosen gold and silver to be money!

I do agree with your commets about the twit, but that was one of my reasons for posting the vid!

Fri, 08/31/2012 - 21:52 | 2754404 vast-dom
vast-dom's picture

a gold standard is, simply put, that which is missing today: A STANDARD. to have a central banker like bernanke do whatever he pleases for his owners the banks is anti-standards and anti-free market. so of course these sociopaths are terrified of a gold standard or any other standard. the rule of central banks is to defy any and all standards and to create money out of thin air which gold prevents and rightly so. call it gold. call it dirt, call it chicken. it's the standard that matters and it is relativly fixed and offers frame of reference which CNTRL+P into trillions inherently cannot and will not.

as Rickards said wisely: "so how many more trillions are needed to maintain this low level of inflation?" vs the natural tendency of deflation central planning is desperately trying to avoid? these are basic questions but when you have no standards you can say and do whatever the fuck you please. Keynesians are terrified of reality and facts and that is why they desperatly generate fake charts and fake reality based on nothing but unicorn dust and hopium gas. 

Sat, 09/01/2012 - 04:57 | 2754672 natty light
natty light's picture


thank you sir

Fri, 08/31/2012 - 20:40 | 2754292 Pladizow
Pladizow's picture

Double post!

Fri, 08/31/2012 - 22:24 | 2754432 lasvegaspersona
lasvegaspersona's picture

They both fail to mention and credit the bizarre effects of the gold exchange standard (as it was in effect in 1926) that allowed the USA to essentially double count its gold. Jacques Rueff said it was "a conception so peculiarly Anglo-Saxon that there still is no French expression for it." 

I agree with Rickards that gold should not be blamed for the errors of the Fed. A gold standard worked well for almost 500 years up to 1922.

Ultimately however I believe Fofoa has IDed the next use of gold in the monetary system. It functions best as a seperate store of value outside the system and unregulated by government. In this way savers are protected as their vehicle rises in value as the fiat in their zone falls (if it is managed as our dollar currently is and as most fiats have been). Since it exists outside the control of government it does not fall to  inflation as treasuries do. Fiat persists and if managed well sees a stable price of gold in that zone. Fiat currencies fail because they try to be both a medium of exchange which they do very well but also try to be a store of value which they always fail at in the long run.

Richards has been exposed to this concept but has yet to comment definitively. I suspect he has political reasons but I believe the system will ultimately triumph as it is a superior system that will occur naturally as we move along the dollar destruction path. The Euro is spectacularly set up to function in just this way.

Fri, 08/31/2012 - 23:29 | 2754516 traderjoe
traderjoe's picture

Freegold. United States Notes. No legal tender laws. No fractional reserve banking. No taxes for buying and selling gold and silver.

Fri, 08/31/2012 - 23:36 | 2754521 blunderdog
blunderdog's picture

If gold/silver are money, you CAN'T buy and sell them.  You save and spend them.

People can't auction "dollars" directly.  You need a proxy of some kind in order to sell money.

Fri, 08/31/2012 - 18:36 | 2754031 stocktivity
stocktivity's picture

OK...Jackson Hole can go back to being a hole in the wall for another year. A year from now, the world economy will hold it's breath again waiting to see if QE 4 or 5 is announced. It's all Bullshit!

Sat, 09/01/2012 - 00:13 | 2754556 AldousHuxley
AldousHuxley's picture

has it ever not been?


it has always been about the central bank. not the superior stock picking talent of your financial advisor.

Fri, 08/31/2012 - 18:56 | 2754075 bank guy in Brussels
bank guy in Brussels's picture

Hyman Minsky wrote above, in this 1982 piece - last page -

« ... big government virtually ensures that a great depression cannot happen again ... »

Ha! - He sure got that one wrong


Fri, 08/31/2012 - 20:23 | 2754259 JR
JR's picture

Spott – “We’re Being Lied To, Even the 1% Is Having Problems”

“Just as it was easy for me, back in 2007, to say the following companies are broke, GM, Fannie Mae, Freddie Mac, Citigroup, you just take a look at the balance sheet.  You can’t make it.  You’re beyond a Minsky moment, and most countries are in that situation today.  They (central planners) just keep printing more money all the time.

“I’ve been asked before, is there a solution to the problem?  There isn’t a solution to the problem.  There’s things that might happen.  There’s a default that could happen.  There’s hyperinflation that could happen, but none of those would be deemed as solutions to the problem.  But one or the other or both is going to happen.” – Eric Sprott June 29, 2012

He also stated, “...there is no plan, no formalized plan, no agreed to plan.  It’s all just vaporware.”,_Even_The_1_Is_Having_Problems.html

Sat, 09/01/2012 - 00:44 | 2754589 IridiumRebel
IridiumRebel's picture

"Hedge Fund Row"
Prices down almost 13% in a few months.
.....wait for it.....WAIT FOR IT.....

Fri, 08/31/2012 - 20:34 | 2754275 Monedas
Monedas's picture

Minsky says: "the government must spend for resource development, and not for consumption."   ....   that sure sounds like "shovel ready jobs" ?      This guy was a low grade Keynesian .... before the term Keynesian came into common use !

Fri, 08/31/2012 - 22:09 | 2754427 Confused
Confused's picture

Guess it depends on how you define consumption and resource development now doesn't it? 



Sat, 09/01/2012 - 00:17 | 2754561 AldousHuxley
AldousHuxley's picture

why consume at all?

government should save

and develop humans so they don't go waste their money on rap CDs and retarded hollwood DVDs.


Fri, 08/31/2012 - 22:09 | 2754426 mbarido
mbarido's picture

YEAH, he did and he seemed to talk in circles and promote debt instead of savings - not a good way to go in my peabrain!

Fri, 08/31/2012 - 22:24 | 2754445 FreedomGuy
FreedomGuy's picture

Personally, I think we are in a depression; a modern depression loaded with lots of checks for lots of people, especially the unemployed drawn upon empty government accounts. The difference in this depression is that there are lots of never ending unemployment benefits while the government sectors comprised of government workers and welfare recipients have relatively stable incomes. The government sector is huge now and the govenment dependent sector is about as large. I really only think about 1/3 of the economy is truly productive which is a sort of testament to how much we can produce in the West with so few.

The problem is that like the inexorable movement of the tectonic plates, these books are going to reconcile one way or another. In the end, we may have something worse than the depression. Classic finance, investing and economics are temporarily out of the window as governments enjoy this absurd perfect storm that gives them super low interest rates along side record eyeball bleeding borrowing. It cannot last.


Sat, 09/01/2012 - 00:16 | 2754560 Alexandre Stavisky
Alexandre Stavisky's picture

The USA is sort of following the script of Japan: deep depression masked with heavy deficit spending and circular bond/money creation/low interest rates.  But Japan was able to do so as the rest of the advanced economies SEEMED to be in rabid expansion and stable.  That, plus their MITI overseen export model assured positive balance of trade, kept them on the quiet side margins of the radar for some time.

However, when Europe and Japan imminently go KABOOM, will the USA be able to grind its circular bond/money pump higher?  Will negative interest rates keep all the suspended plates spinning?

No.  Everything will slowly begin to list, then heavily, then utter chaos.

Only options are Jubilee, crushing taxation and arbitrary confiscation, or hyperinflation.

No populace will submit to any form of slow payback in real terms which would erase a generation.  Step Function economics.

Hope the gov't survives even in its anti-liberty, totalitarian form.  Otherwise frame your bill of rights and constitution.

It'll make for great party convo over your open fire and No. 10 can of beans.  Bring a hanky.  We'll weep our eyes to raisins.

Sat, 09/01/2012 - 00:24 | 2754571 AldousHuxley
AldousHuxley's picture

This is a mental recession,” he said, noting that growth has held up at about 1 percent despite all the publicity over losing jobs to India, China, illegal immigration, housing and credit problems and record oil prices. “We may have a recession; we haven’t had one yet.”

We have sort of become a nation of whiners,” he said. “You just hear this constant whining, complaining about a loss of competitiveness, America in decline”


republican derivatives deregulator Phil Gramm in 2008....


vote for romney and get that guy back into power, so middle class stops whining.



Sat, 09/01/2012 - 12:27 | 2755057 FreedomGuy
FreedomGuy's picture

Alex, I think you nailed it pretty well. The modern socialist-collectivist-welfare state (which DOES now include the USA) always demands more than it is willing to pay for. To me, the deficit is the very nice marker of the difference between what we want in goods and services versus what we are willing to pay. Note, that virtually all countries run eternal deficits. It is the illusion that that the next generation or two will be much more willing to have less and pay more so that we can currently have more and pay less (law of borrowing). Funny how the next generation never seems more willing.

The end game is as you say and 9 out of 10 times will end with an autocratic government. The autocrats will forcibly extract payment, default a.k.a. Argentina, or impose austerity. Inflation is a form of default, as well, but wrecks an economy as it goes hyper.

I don't pretend to know how it will end up but I am hoping there is enough of a germ of liberty left in the USA and not beaten out by government schools and bureaucrats that the 1 out of 10 will come to pass and we will lurch rightward (libertarian) as a contrast to the rest of the world.

Sat, 09/01/2012 - 00:48 | 2754593 IridiumRebel
IridiumRebel's picture

My grandaddy used to say,
"We grow fat like the Romans."
I sense a hard core diet coming.

Sat, 09/01/2012 - 08:46 | 2754797 northerngirl
northerngirl's picture

I agree, but I would take your point one step further...We have been in a depression for years, and the financial collapse has already occurred we just can't see the pile of rubble through the smoke.

Fri, 08/31/2012 - 18:16 | 2754006 Future Tense
Future Tense's picture

The discussion over inflation vs. deflation is coming into the final moments. It's going to tip one way or the other. MISH argued this morning on his site that $50 trillion in printed money from the Fed tomorrow would not create hyperinflation. Here is a full counter argument against his post:

Fri, 08/31/2012 - 19:43 | 2754172 tictawk
tictawk's picture

The argument that the Fed could print money ($50 trillion) is flawed because any attempt by the Fed to monetize would collapse the bond market.  So long term and perhaps even short term borrowing would become impossible.  The markets would become cash and carry market.  Why would the Fed take such an action that would destroy its own assets?  If bonds are their assets of choice, why would the Fed want to destroy its own assets?  By doing this, it would also lose credibility.

Fri, 08/31/2012 - 21:33 | 2754383 Totentänzerlied
Totentänzerlied's picture

The Fed would simply become the bond market. It's called monetization.

Sat, 09/01/2012 - 00:18 | 2754567 centerline
centerline's picture

This is not new.  It has been going on for a long time.  Now just reaching maximum potential.  When no further yield can be derived, it is game over regardless.  The FED was built to be imploded at some point.  Any idiot here really thinks any central bank was built to last?  It is just part of the play.  Now that public opinion is swaying towards "end the FED" only tells us that the next chapter in a planned exercise is unfolding.



Sat, 09/01/2012 - 00:27 | 2754576 AldousHuxley
AldousHuxley's picture

that's how fed controls interest buying or selling....monetary supply. buyer of last resort....turned bailing out banksters everytime preventing regime change that is so desparately needed in the world.


no system lasts forever. however, in the interim, slaves will pay with blood and sweat.




Sat, 09/01/2012 - 06:51 | 2754642 Ghordius
Ghordius's picture

interesting discussion here, but please allow me to correct a recurrent misconception (btw it's fine for me if you would like to get rid of fiat money. count me in)

"...really thinks any central bank was built to last?"

The Swedish Central Bank is in operation since 1668, the Bank of England is functioning since 1694.

And the BoE did get in and out of the gold standard a few times (and was nationalized in 1946).

Even hyperinflation does not necessarily kill a CB. Zimbabwe's National Bank is still there, for example. After the German, Austrian and Hungarian hyperinflations in the 1920's the CBs were still there and issued new currencies.

Sat, 09/01/2012 - 21:56 | 2755723 RiskAverseAlertBlog
RiskAverseAlertBlog's picture

It's not a matter of the Fed wanting to destroy its own "assets." It's a matter of having no other choice, being they're in the business of maintaining an illusion insisting that, Greenspan's Fed was not the purveyor of a Ponzi scheme and, therefore, that status quo he endlessly rationalized can be regained. The bond market will be destroyed, as will the U.S. Treasury should QE continue indefinitely, as in fact it must. Many facets of today's environment, I suppose, Minsky could not foresee. So, although I quite agree with Minsky's conclusion (vague though it might be, as were other aspects of his presentation), the one thing he didn't touch was the matter of hyperinflation staring us squarely in the eyes and leaving central banks hopelessly trapped, thus explaining all their talk and yet no action. Once central banks go with "open ended" asset purchases, it's game over for the bond market and hello accelerated shutdown of the physical economy. The euro-zone periphery's decimation will become our own.

Fri, 08/31/2012 - 18:34 | 2754021 LMAOLORI
LMAOLORI's picture



Of course it can happen again it's already started it's just not as visible because of entitlements like food stamps, section 8, unemployment, etc.

Why Are the Big Banks Suddenly Afraid?


Fri, 08/31/2012 - 18:38 | 2754034 mrdenis
Fri, 08/31/2012 - 18:53 | 2754068 Silver Bug
Silver Bug's picture

It most certainly can and more than likely, it will.

Fri, 08/31/2012 - 19:59 | 2754213 Monedas
Monedas's picture

The 1930 Depression and this one are not failures of Capitalism .... they are triumphs of Socialism !

Fri, 08/31/2012 - 20:32 | 2754276 philipat
philipat's picture

How can I get some of this Zero interest rate money?

Sat, 09/01/2012 - 22:02 | 2755728 RiskAverseAlertBlog
RiskAverseAlertBlog's picture

Duh, buy a bank, then launder drug money and lend deposits to John Paulson. You'll be in desperate need in no time (although you might need plastic surgery to hide yourself from your oh-so-respectable depositors).

Fri, 08/31/2012 - 18:04 | 2753980 mjorden
mjorden's picture

Wasn't it Roosevelt who shut down the banks to get sh!t in order?

Okay back from searching,

Fri, 08/31/2012 - 18:06 | 2753982 Jam Akin
Jam Akin's picture

"IT" is alive!

Fri, 08/31/2012 - 18:10 | 2753988 A Nanny Moose
A Nanny Moose's picture

On that note....

Bartender! I'll have another.

Fri, 08/31/2012 - 18:10 | 2753990 Dr Benway
Dr Benway's picture

Thanks for posting, I just wish there was a more readable format as the text gives me headache..

Fri, 08/31/2012 - 18:47 | 2754051 Umh
Umh's picture

Click the little icon at the bottom right hand corner and go into full screen mode.

Fri, 08/31/2012 - 19:12 | 2754109 Dr Benway
Dr Benway's picture

Thanks, but it's still slanted and blurry in places. Or maybe it's just me, lol.

Fri, 08/31/2012 - 19:14 | 2754113 blunderdog
blunderdog's picture

Have another drink.  At some point it'll look fine.

Fri, 08/31/2012 - 19:28 | 2754150 Dr Benway
Dr Benway's picture

Like the drunk being the only guy walking straight during an earthquake?

Fri, 08/31/2012 - 20:57 | 2754321 blunderdog
blunderdog's picture

If nothing else, chronic intoxication is a treatment for cognitive dissonance.

Fri, 08/31/2012 - 20:16 | 2754240 IndicaTive
IndicaTive's picture

Maybe you dropped your ipad.

Fri, 08/31/2012 - 18:13 | 2753996 The Count
The Count's picture

The roots of this horrendous ponzi game date back to November 1910.  Senator Nelson W. Aldrich and Assistant Secretary of the U.S. Treasury Department A. Piatt Andrew, and five of the country's leading financiers (Frank Vanderlip, Henry P. Davison, Charles D. Norton,Benjamin Strong, and Paul Warburg) arrived at the Jekyll Island Club to discuss monetary policy and the banking system, an event that led to the creation of the current Federal Reserve. We as a county had been hoodwinked an no president afterwards had the guts to undo what was done.

Fri, 08/31/2012 - 19:01 | 2754087 Juan Wild
Juan Wild's picture

that's right, NO PRESIDENT! From Woodrow Wilson to Obama.....not a set of balls to be found. If Ron Paul was elected President they'd have to install a urinal for the first time since 1913 in the White House instead of the mangina bidet there now. Also you fuckers in Crystal City....BALL-LESS wonders! All our military can do is attack dark-skinned people in far off lands and terrorize civilians at home. POS's! The Corporations OWN YOUR FUCKIN ASSES. SHAME>>>>SHAME ON YOU!!!!!!!!!!!!!!Not one General or Admiral in our VAULTED ARMED FORCES has a set! IF I AM WRONG THEN END OUR FASCIST STATE and RESTORE AMERICA!!!!

Fri, 08/31/2012 - 22:28 | 2754451 mbarido
mbarido's picture


+10 - Where is our revolutionary army with balls when we need them?

Sun, 09/02/2012 - 03:15 | 2755930 Dr. Sandi
Dr. Sandi's picture

I blame dissolved plastics in the environment.

Sat, 09/01/2012 - 05:46 | 2754692 Disenchanted
Disenchanted's picture



The Count mentioned Benjamin Strong. Here's what Alan Greenspan had to say back in 2002 at the new HM Treasury building in London:


I am daily reminded of the special relationship the Federal Reserve has had over the decades with decisionmakers from the British government. Literally twenty feet from my desk are plaques commemorating the numerous World War II meetings in our Board Room between the combined military chiefs of the United States and Great Britain that in the words on one plaque, „... set the pattern for allied collaboration and the successful prosecution of World War II.“

But the Federal Reserve‘s association with Britain‘s monetary authorities goes back even further. The tie between the Bank of England and the Federal Reserve was cemented during the 1920s in that extraordinary relationship between Benjamin Strong, the President of the New York Federal Reserve Bank, and Montague Norman, the Governor of the Bank of England. Their correspondence yields quite fascinating insight into the way they interpreted events that are now important history. The ties developed then between the Federal Reserve and British monetary authorities endure to this day. ~ Alan Greenspan


That Greenspan quote is above an article by William Engdahl which you can read here: 

American Exceptionalism – Serious Distortions of the New Economic Era


Keeping in mind that the "British Government" and "Britain's monetary authorities" are two entirely different and separate entities.

Sat, 09/01/2012 - 06:03 | 2754702 Disenchanted
Disenchanted's picture



Further down in that Greenspan speech he says this:


The City has a long tradition of leading the world in foreign exchange trading and currently conducts twice the volume of New York despite the fact that the U.S. dollar is the leading traded currency by far in foreign exchange transactions. London is the world's center for over the counter derivatives trading--again with double the share of the trading in similar instruments conducted in New York. Moreover, a substantial share of the world's securities trading is channeled through the City.


"The City" aka "The Square Mile" and also "The Crown," which does not mean Queen Elizabeth and the Hapsburgs, is described in this 1944 book by E. C. Knuth:

The Empire of "The City:" The Jekyll/Hyde Nature of the British Government

In which you can read this on page 28 of the .pdf @ the Empire of "The City" link:


Of this concealed dual nature of the British Government, George Burton Adams, late Professor of History, Emeritus, Yale University, authoritatively develops in his "Constitutional History of England" that the members of the British Cabinet are strangely impotent; are not permitted to make any written notations of proceedings of the Cabinet; have no access to records of proceedings, if any, made by the Prime Minister; are not permitted to make reference afterwards to anything that had transpired at a meeting of the Cabinet (page 493). He further develops the utter lack of power of the House of Commons and of the House of Lords (pages 472-474); states "The House of Commons no longer controls the Executive; on the contrary the Executive controls the House of Commons." (Page 495.) There is a distinction between the Government of Great Britain, which is largely confined to the internal government of the British Isles, and the British Government which controls the British Empire.


Referring to "Great Britain, Banking In" in the Encyclopedia Americana, it appears that the Bank of England is not subject to any control by any governmental agency of Great Britain, and that it is above all government, despite the fact that it is privately owned and its directors are nominated by its proprietors. In the Encyclopedia Britannica of 1891 it is termed "a great Engine of Government." It is obvious that this privately owned foreign institution is now in grave financial difficulties with its loans and bonds and mortgages disavowed all over the world, and that it is being bolstered by huge funds being syphoned into it out of the treasury of the United States.


Then this is in a box below the previous:


The 1943 edition of the Encyclopedia Americana (Vol. 13) makes this stunningly significant statement of the Bank of England, that full partner of the American Administration in the conduct of the financial affairs of all the world: "... Its weakness is the weakness inherent in a system which has developed with the smallest amount of legislative control ... its capital is held privately, and its management is not in any way directly or indirectly controlled by the state. On the other hand, during its whole history, it has been more or less under the protection of the state; its development has been marked by successive loans of its capital to the state in return for the confirmation or extension of its privileges, and it still continues to exercise powers and owe responsibilities delegated by the state ... The bank of England is controlled by a governor, deputy-governor and a court of 24 directors who are elected by the proprietors on the nomination of the directors ..." (This is a description of a privately owned structure of government, sovereign in its own right, and over and above the laws of England. A status admittedly attained by bribing dishonest officials of the Government of the British Isles through the years to gradually extinguish the freedom and rights of the people.)


That the nature of this strange bank is actually that of a secret holding company of colossal size is indicated by a reference in "England's Money Lords Tory M. P.", by Simon Haxey, to (page 158) Lancastshire Steel Corporation, subsidiary of the Bank of England.

Fri, 08/31/2012 - 18:13 | 2753997 ebworthen
ebworthen's picture

Intervention in markets prevents correction (failure).

Preventing failure ensures failure when reality intercedes.

Fri, 08/31/2012 - 18:15 | 2754002 Hype Alert
Hype Alert's picture

"but to restore tranquil progress, the government must spend for resource development, rather than for consumption."


So I guess that EBT thing wasn't what he had in mind.

Fri, 08/31/2012 - 18:17 | 2754005 AldoHux_IV
AldoHux_IV's picture

Without reading it and looking forward to a read of it-- right away I'm going to opine: it's not so much about a moment minsky or otherwise, it's about how do we get beyond the current mess we're in.  The solution is not one that bondholders or holders of any debt are going to like, but may be inevitable.  The rub is how it's implemented not if-- odious debt jubilee bitches.

Fri, 08/31/2012 - 18:19 | 2754007 Joshua_D
Joshua_D's picture

"Can it happen again?"

Is that a rhetorical question?

Fri, 08/31/2012 - 20:10 | 2754230 Zero Govt
Zero Govt's picture

technically it's a question travelling in time between the future, "can it happen again?", with an historical ref. of a previous event recurring from the past... it's the Twillight Zone of questions

Fri, 08/31/2012 - 18:22 | 2754013 Juan Wild
Juan Wild's picture

Can "It" Happen Again? Not when the media DOES NOT acknowledge it. Not when unemployment numbers are lies. Not when gas and food prices are excluded from the cpi. Not when TRUTH has been cast aside as a relic of the past. What a fk'in hoot.

Fri, 08/31/2012 - 18:54 | 2754069 Umh
Umh's picture

Makes me think of our President lamenting that he hadn't sold the public on the stimulus.


Apparently the truth isn't nearly as important as suggestibility to hypnotism.

Fri, 08/31/2012 - 20:03 | 2754216 JR
JR's picture

Well said, Juan Wild.

If this isn’t the nail in the economic coffin of most Americans, what is? But I don’t call it a Minsky Moment (Minsky was a Keynesian, by the way). I call it a Fed Moment coupled with a media cover up.

Food stamps, the modern day version of soup lines and selling apples on the street corner, and unemployment are the marks of a Great Depression. We are there, and it’s getting worse. If you can’t find employment, you can’t eat, unless the government feeds you. If you no longer have cash enough to meet your underwater-house payments, its rising house insurance and increased property taxes and expensive repairs – blame it on a Fed-assisted Goldman Speculators’ Moment. Who woulda dreamed the Fed would turn a man’s home into a speculators’ market.

Now, the regime is giving massive amounts to food stamp recipients so they can buy groceries and keep the economy from tanking even further. Savers are starving on ZIRP, debt-saddled college grads have gone back home to live with their parents, independent truck drivers are going bankrupt on high fuel costs, fewer than 65 percent of all men have jobs...

And all the while the media and the Obama campaign are engaging in every kind of political distraction  -  from Bain Capital to Romney’s “shredding the social safety net” to pay for tax cuts for millionaires to Romney’s Swiss bank accounts -  in order to keep the talk away from the economy. Why? The economy is Obama’s re-election killer moment.

The United States today, now under threat of bankruptcy, would have been an even greater economic success story had it not been hijacked by the Fed in 1913. Instead, it’s now on the verge of becoming a Third World country.

Fri, 08/31/2012 - 21:06 | 2754336 death_to_fed_tyranny
death_to_fed_tyranny's picture

The US CORPORATION has been BANKRUPT since the Revolutionary War! The King of England bought the War Debt from France! We are still a Jewel in the Queens Crown. Therefore we are "tenants" on the land our house resides on. We pay a property tax! The 1040 tax form is a tribute to the Crown. Wake the fuck up! We are all chattel! MOOOOOOOOOOOOOOOO!

Sat, 09/01/2012 - 00:15 | 2754559 Juan Wild
Juan Wild's picture

This nation is based on the tacet consent of the governed.

Let it be known that I do not consent to be lied to. I do not consent to wars of conquest based on lies. I cannot in good conscience consent to lies and wars based on lies without losing everything that being an American is supposed to stand for. Therefore this government DOES NOT RULE WITH MY CONSENT!

so The Queen, BOE and Rothschild can




Fri, 08/31/2012 - 18:25 | 2754016 swabeyjw
swabeyjw's picture

So when do the bankers sit eye to eye with the politicians and say it is time lighten up on this greedy mess and create at least a bit of debt exempt money?

Fri, 08/31/2012 - 18:40 | 2754039 Juan Wild
Juan Wild's picture

when they are both swinging from a rope

Fri, 08/31/2012 - 18:27 | 2754018 kito
kito's picture

showering economic activity with liquid fertiliser.....


ha ha, diarrhea????...........

Fri, 08/31/2012 - 18:36 | 2754029 skipjack
skipjack's picture

I think Minsky forgot to check the devaluing of the money that was caused by the "smoothing" by the Fed and CONgress engaged in to "prevent" depressions - nice way to justify the theft from savers.


Minsky clearly did NOT learn anything from the 1920-1921 depression.  If any one would study those years, they would learn that there is nothing to fear from a depression...unless you are overleveraged. 

Fri, 08/31/2012 - 18:43 | 2754043 Umh
Umh's picture

Have you ever seen a boat tied in a very stable secure way to a pier? Have you ever seen the very stable and securely tied boat full of water after a storm comes through? It's even funnier when the tide goes out and the ropes break.

Fri, 08/31/2012 - 18:45 | 2754044 GoodMorningMr.V...
GoodMorningMr.VanRumpoy...'s picture

They'll just continue to redefine the word "depression". Change criteria, doctor statistics.  New buzz words will be created like "jobless recovery" and "green chutes". You'll watch the MSM say the recovery is going well while you stand in a soup line with the rest of your neighbors. A "depression" will never happen again because they'll just keep moving the goal posts. Tricks with language.

Fri, 08/31/2012 - 19:18 | 2754126 Juan Wild
Juan Wild's picture

QUESTION: When we talk about manufacturing of consent, whose consent is being manufactured?

CHOMSKY: To start with, there are two different groups, we can get into more detail, but at the first level of approximation, there's two targets for propaganda. One is what's sometimes called the political class. There's maybe twenty percent of the population which is relatively educated, more or less articulate, plays some kind of role in decision-making. They're supposed to sort of participate in social life -- either as managers, or cultural managers like teachers and writers and so on. They're supposed to vote, they're supposed to play some role in the way economic and political and cultural life goes on. Now their consent is crucial. So that's one group that has to be deeply indoctrinated. Then there's maybe eighty percent of the population whose main function is to follow orders and not think, and not to pay attention to anything -- and they're the ones who usually PAY THE COSTS.

Fri, 08/31/2012 - 20:42 | 2754296 gwar5
gwar5's picture

Thanks. Chomskytology again exposed as statistism masquarading as humanism.  Chomsky sees propaganda as his elitist duty as a substitute for facts. He's only a linguist, but continues to pretend as an expert on everything from economics to zoology because the ugly coeds dig it and have no where else to go.



Fri, 08/31/2012 - 21:42 | 2754397 Totentänzerlied
Totentänzerlied's picture

That excerpt was obviously Chomsky referring to a fact, not presenting his opinion. Chomsky is indeed a statist of sorts, and a socialist of sorts (the classical labor-proletariat variety), and he's no friend of the current sociopolitical institutions at all, I'd say he's done more than most to expose them.

That being said, one can't help but think he may be a gatekeeper of the statist-quo when one hears his rather terse dismissal of certain views at odds with his own, given his documented history of being very good at hearing and responding to challenges (and knowing his history).

Fri, 08/31/2012 - 23:59 | 2754542 Juan Wild
Juan Wild's picture

I don't agree with Chomsky's dismissals of 9-11 conspiracy or the JFK assassination. And as everyone here knows I am very critical of the Federal Reserve, something Chomsky refuses to even discuss. So you are right about him being sort of a gatekeeper protecting the MOST IMPORTANT TRUTH (the Fed) from discovery. But I think he is spot on about how the media guides the herd.

Sat, 09/01/2012 - 03:17 | 2754646 Ghordius
Ghordius's picture

I agree. In fact, Chomsky as a classical socialist is IMHO correct and says everything, including of course his defence of statism. I sometimes think that the political discourse in the US would be improved by a few classical socialists, but their most important talking points have been nearly annihilated by the neolibs. Which is astonishing, IMHO. A, well...

His quip about the 20% that "count" is true. Only that small part - a fifth - of any population is involved in the "change mode" of politics, society, customs, literature, fashion, religion, worldviews, and so on down to the new cool words teenager use.

Count it as a fact about humanity and how it forms groups. And in this fifth there is a fifth of it that is even more influential, and so targeting the fifth of the fifth is even more important for anyone that wants to be involved in the "change mode" of a very big group of human beings.

It works in a power-law (and this is funny, if you think about it) and Pareto made the first few discoveries on that.

Fri, 08/31/2012 - 21:28 | 2754374 Isotope
Isotope's picture

Moving the goal posts is easily done, since I don't think there is any formal, generally agreed upon definition of a depression.

Sun, 09/02/2012 - 03:18 | 2755931 Dr. Sandi
Dr. Sandi's picture

In my whole life, my personal understanding of "The Depression" was "When Life Really Sucked."

Depending on who you are these days, I'd say "The Depression" is already here for tens of millions of us.

Fri, 08/31/2012 - 18:47 | 2754050 Sofa King
Sofa King's picture

What's this Zero Interest Rate thing I keep hearing about. We common folk can't borrow at less than 10% unless we put out children down as collateral. It must be what the banks will give me if I give them my money, provided I can dodge all the parasitic fees. Life's become a Minski-Moment, mother-fuckers.

Fri, 08/31/2012 - 18:48 | 2754055 Renewable Life
Renewable Life's picture

"Can it happen again?"

IT IS HAPPENING AGAIN!  16 trillion federal debt, 4 trillion collectiove state debt, 58 million people on food stamps, 10's of millions more on LTD (long term disability) 100"s of trillions in unfunded liabilties that will be coming due in the next 1-10 years, military spending off the charts, interest rates almost negative, ....................etc etc

Can it happen again? LMFOA


Fri, 08/31/2012 - 18:53 | 2754064 sessinpo
sessinpo's picture

Just the fact that Minsky has to ask that question displays his hubris and makes him irrelevant. He is out of touch with reality.

Fri, 08/31/2012 - 19:04 | 2754091 bank guy in Brussels
bank guy in Brussels's picture

Dr Hyman P Minsky died in 1996 - born in 1919

Yes, he is 'out of touch' now


Minsky is famous again mostly for his main big idea, that capitalism is inherently unstable, because as things get successful there starts to be a lot of crazy financial innovation and then that threatens to bring down the whole structure ...

He seemed to somewhat predict the '00 decade and the current mess without living to see it

Fri, 08/31/2012 - 20:16 | 2754239 Monedas
Monedas's picture

How would he know .... we've never had a "Pure Capitalist Play" economy .... but we have had many almost "Pure Socialist Play" economies and they are crushingly stable and boring and hopeless !

Fri, 08/31/2012 - 21:53 | 2754407 Totentänzerlied
Totentänzerlied's picture

You mean state-capitalism - the choice of totalitarian fascist, communist, and socialist nations the world overtm - gee I wonder why!

It only threatens to bring down the whole structure because risk is obfuscated and hidden and distorted, creating a domino economy where one wrong move sets off a cascade of defaults - remember Russia, 1998?

That is what happens when humans try to alter the dynamics of a system they do not understand or control, again and again and again.

If his major contribution was that 'capitalism is unstable' he simply plagiarized Marx, Engels, & co, who likewise were technically correct but had misunderstood the subject of their statement and the referenced dynamic all the same, though I'd say less so than Minsky, who could not see beyond the horizons of his economic education.

Sat, 09/01/2012 - 00:27 | 2754575 centerline
centerline's picture

Minsky managed to guide us towards a critical concept.  That equilibirium is not our normal state.  Our normal state is that of constant imbalance and change.  This is a radical deviation from neo-classical economics which attempts to assert the opposite.  Go ahead ZH morons and place your bets accordingly... equilibrium or not?  It really boils down to simple things like this.

Sat, 09/01/2012 - 16:45 | 2755383 sessinpo
sessinpo's picture

Both equilibrium and change are relative, thus to pose a challenge or bets is ridiculous as there is no single hard answer.

Sat, 09/01/2012 - 16:42 | 2755375 sessinpo
sessinpo's picture

In which he was a victim of bad economic philosophy. The question "Can It Happen Again?" is only possible if you had thought, "It Can't Happen Again"

Fri, 08/31/2012 - 18:53 | 2754066 I_Rowboat
I_Rowboat's picture

There are a lot of words in that paper.

Can somebody please post the Twitter version?

Fri, 08/31/2012 - 18:55 | 2754073 I_Rowboat
I_Rowboat's picture

  Oh, wait, I found it:  "U R all fuqd"

Fri, 08/31/2012 - 19:17 | 2754118 bank guy in Brussels
bank guy in Brussels's picture

It is half pro-central banker, half a warning about huge increasing instability leading to giant crashes

Article talks about how 1948-1966 were somewhat a 'golden age' for American economics, with financial craziness kept in check by memories of the Great Depression

However in the 60s things get out of control, and there start to be rolling in-and-out economic crises, which are addressed both by the government running deficits and by central bank interventions as 'lender of last resort'

Tho Hyman Minsky is partly critical of 'Keynesians', he actually likes government deficits and says they help prop up profits in hard times. And he likes central bank intervention, he says that is how the US avoided a second Great Depression (article above is written in 1982 and Minsky, born in 1919, died in 1996).

But Minsky says there is a problem with these fixes and crises - each crisis tends to be worse than before, and the fixes have negative consequences. Moreover, 'financial innovation' continues, because there has been no Great Depression, which fuels more crises.

At the article end, Minsky criticises the economics of the Reagan era, not for deficit spending, but for spending that deficit on the wrong things, like the military ... he says the government should invest in things like education, infrastructure and other forms of capital that is business-productive.

And he thought, back then in 1982, a Great Depression couldn't happen again because of deficit spending always maintaining a sort of 'economic minimum' ...

So on the one hand, he talked about how financial innovation and 'Ponzi finance' de-stabilises the system, on the other hand, he thought Big Gubbamint will prevent anything too bad from happening

Obviously he underestimated the corruption and idiocy that would continue to grow, and how these 'destabilising' forces would get far worse than even he thought

Fri, 08/31/2012 - 21:56 | 2754411 Totentänzerlied
Totentänzerlied's picture

He failed to, I would say was incapable of, understanding the systematics of the institutions he was studying, if he had, his conclusions would instead have been premises for a larger body of more interesting work.

Sat, 09/01/2012 - 00:35 | 2754579 centerline
centerline's picture

+1.  Credit due for seeming to understanding the dynamics.  Credit lost for not taking the next logical step and "connecting the dots."  Typical though.  Makes one wonder why no one seems to dare cross that border.  Is it because you tossed of the wagon?  Lose your funding?  Don't get published anymore?  Inquiring minds want to know.

Maybe Krugman can answer this.  (holding breath...  lol... not).  

Fri, 08/31/2012 - 18:58 | 2754079 Squid Vicious
Squid Vicious's picture

cheers all... can't happen here right?

Fri, 08/31/2012 - 19:03 | 2754088 adr
adr's picture

Recessions are a period of reduced activity and production that can be alleviated through monetary policy. Lowering interest rates and extending credit can help to spur investment, allowing greater consumption to pull out of the recession.

The problem is that allowing too much investment, spurs too much consumption, and leads to an overflow of debt. The result of this is a depression. Monetary policy can not lead you out of a depression, only reinvestment of labor after the purging of debt can do that.

Depressions are a great cleansing that wipes out the filth of overzealous banks and oversized corporations. In essence an event that hands control back to the lower classes. That is what Bernanke set out to stop. He wasn't trying to prevent a depression to help the working class. He was trying to prevent the purge that would wipe out at least 95% of the wealth and power held by the people of the upper 1%.

We are not currently in a depression, because there has been virtually no failure of the institutions that caused the current condition. We are in something else. A perpetual purgatory for the working class, and a reprieve for the rich. Their lifestyle is propped up artifically by borrowing wealth from the future, reserved for the working class, and forcing earned incomes lower.

Had the purge been allowed to proceed, we would be exiting a depression now with a resurgence of local business and investment. Without the trillions generated from Wall Street, the power of the centrally planned Federal government would be diminished. Perhaps the entire publicly traded market would have failed, ending the Great Ponzi forever.

Instead life gets better for the few and the rest suffer. Eventually the masses will rely on the few for existence and freedom will be dead. There can be no mistake that is Bernanke's goal. He is the delivery boy for the package mailed by the elites. It was signed for you, even if you didn't want to take delivery.

Fri, 08/31/2012 - 19:13 | 2754112 blunderdog
blunderdog's picture

Nice to see this again.  I'm a bit surprised at how much faith Minsky apparently placed in Reagan's promises to reduce the budget. 

I also wonder at the distinction between GNP and GDP, and wonder if it amounts to any discernable sum.  What was going on in the late '70s/early '80s that they'd be concerned about expats' economic output?  Or perhaps: what changed between then and now so that we'd no longer want to measure the overseas citizens' economic contributions?

Sat, 09/01/2012 - 03:29 | 2754650 Ghordius
Ghordius's picture

I can assure you that Reagan sounded very, very believable, for the whole world. His party's standing was also completely different.

Hell, when he announced the "Star Wars" program, everybody believed it. Everybody was expecting huge clouds of Thor-micro-missiles capable to orbit the Earth and dip down and smash a tank everywhere or some shit like that.

Reagan pulled a few of the most spectacular bluffs ever done in history, and this utterly broke the resolve of the Sovjets.

Sat, 09/01/2012 - 12:05 | 2755024 blunderdog
blunderdog's picture

Uh, no.  There were MANY people who didn't believe in Star Wars.  Anyone with any grasp of our technical capabilities at the time knew it was a boondoggle.

We didn't have the lasers technology, nor would we have had the ability to aim them if we had had them, nor did we have the manufacturing capacity to build anything in adequate numbers. 

Remember "brilliant pebbles"?  It was comedy, at best.  They were grasping at straws.

The Soviet empire was brought down by a bunch of Muslim primitives, same as ours.

Fri, 08/31/2012 - 19:37 | 2754162 tictawk
tictawk's picture

The argument that the Fed could print money ($50 trillion) is flawed because any attempt by the Fed to monetize would collapse the bond market.  So long term and perhaps even short term borrowing would become impossible.  The markets would become cash and carry market.  Why would the Fed take such an action that would destroy its own assets?  If bonds are their assets of choice, why would the Fed want to destroy its own assets?  By doing this, it would also lose credibility.

Fri, 08/31/2012 - 19:57 | 2754207 Fix It Again Timmy
Fix It Again Timmy's picture

Save your time and effort.  All you need to know is that something is not right....

Fri, 08/31/2012 - 20:05 | 2754219 Monedas
Monedas's picture

The 1930 Depression can not happen again .... there is no way this total collapse will imitate that minor market fart ! 

Fri, 08/31/2012 - 20:18 | 2754243 gwar5
gwar5's picture

Argentina watch:  20% inflation, financial repression. Confiscation of private pensions, outlaw other currencies, and currency sniffing dogs at border crossings looking for contraband USDs done and done.

Now, surcharging 15% extra and tracking every credit card purchase by Args who travel abroad because some have learned to convert purchases into cash* outside the country.


*Note to self -- good one.

Fri, 08/31/2012 - 20:41 | 2754293 JR
JR's picture

Does the Current Financial Crisis Vindicate the Economics of Hyman Minsky?

November 27, 2007 by Frank Shostak, an adjunct scholar of the Mises Institute


“The current financial-market turmoil, which is believed to have been ignited by the collapse of the subprime mortgage market, has brought to prominence the ideas of the post-Keynesian school of economics and in particular of economist Hyman Minsky. Many commentators believe that Minsky's framework of thinking accurately anticipated the current financial crisis. The heart of Minsky's framework is that capitalism is inherently unstable and has self-destructive tendencies. An important mechanism for this destructive tendency is the accumulation of debt. Contrary to Minsky, our analysis shows that it is the existence of the central bank that makes modern capitalism unstable. It is this factor alone that is responsible for the current financial instability.”


Sat, 09/01/2012 - 00:25 | 2754574 kennard
kennard's picture


Fri, 08/31/2012 - 20:59 | 2754326 Monedas
Monedas's picture

What came first .... was Minsky a Keynesian or was Keynes a Minskian ?

Fri, 08/31/2012 - 21:16 | 2754357 Cabreado
Cabreado's picture

"Can it happen again?"

Strange question.

Debt/leverage, expectations, communication, and neglect of humanity are just about all you need to know...

but most of all... the rise of the Narcissist to points of Control.

It's Happening, and a grand fallout is underway ---
assuming you have expectations, communicate, and value humanity.


Fri, 08/31/2012 - 21:59 | 2754418 toomanyfakecons...
toomanyfakeconservatives's picture

Don't forget the looming MASS ARRESTS... they're coming soon to a government near you...

Fri, 08/31/2012 - 22:02 | 2754420 Pejorative Requiem
Pejorative Requiem's picture

Ok.. so I haven't read the whole thing. But I can give you the arguments I've heard against the Great Repeat: Environmental controls are better and no dust bowl images are created. Food Stamps or whatever they're called these days (Snap?) prevent pictures of the bread lines. And with the QE1 2 &3 keeping images of jumpers out of the news, well, it just isn't the same. What will be the new rue means of measure? Crime? Civil unrest? No, no they all say thcnology has taken us far, we have risen obove:  No repeat of the great depression is percievable, Whatever fall we will encounter, the planners have paced the cusions well. Just fall.............. and trust.

Fri, 08/31/2012 - 22:14 | 2754433 WAMO556
WAMO556's picture

You obviously have NOT been through the San Juaoquin valley. A congressionaly created dust bowl....all to save a stupid fish.

Fri, 08/31/2012 - 22:15 | 2754436 Oh-Globits
Oh-Globits's picture

'We know how the Universe ends,' said the guide, 'and Earth has nothing to do with it, except that it gets wiped out, too.'

'How-how does the Universe end?' said Billy.

'We blow it up, experimenting with new fuels for our flying saucers. A Tralfamadorian test pilot presses a starter button, and the whole Universe disappears.' So it goes.

"If You know this," said Billy, 'isn't there some way you can prevent it? Can't you keep the pilot from pressing the button?'

'He has always pressed it, and he always will. We always let him and we always will let him. The moment is structured that way.'

Fri, 08/31/2012 - 23:04 | 2754497 blunderdog
blunderdog's picture

Yeah, but so what?  There are plenty of OTHER moments when there's a universe.  We can just keep skipping around in those.

Fri, 08/31/2012 - 23:12 | 2754505 FRBNYrCROOKS
FRBNYrCROOKS's picture

When can we see the MAGIC UNDIES?

Do Mitt's undies smell, less, untoward than mine?

How about Mrs. Romney's MAGIC UNDIES?

Can we smell these, very, sacred UNDIES?

The, 199 million, disenfranchised, voters want to know?

Does Diebold have a 1-800 number?

Fri, 08/31/2012 - 23:53 | 2754531 Element
Element's picture

More news on the war with Eurasia.


Top US military commander: 'I don't want to be complicit' if Israel attacks Iran
Published: 31 August, 2012, 20:07
US Chairman of the Joint Chiefs of Staff General Martin Dempsey
The highest ranking officer in the United States military has announced that he is against American participation in any Israeli-led attack on Iran, even as pressure to destroy the Islamic Republic’s rumored nuclear program remain unrelieved.
Gen. Martin Dempsey, Chairman of the Joint Chiefs of Staff, told reporters in London on Thursday that an Israeli attack would “clearly delay but probably not destroy Iran’s nuclear program,” adding that he was against US cooperation in a unilateral assault.
“I don't want to be complicit if they [Israel] choose to do it,” Dempsey told reporters.
Iranian President Mahmoud Ahmadinejad has been adamant that the nation’s nuclear facilities exist solely for peaceful purposes and that the country is not in the market for procuring nuclear warheads, a sentiment echoed by Supreme Leader Ayatollah Ali Khamenei, who earlier this week told heads of state, "Our motto is nuclear energy for all and nuclear weapons for none."
So far, no foreign nations have been able to independently confirm or deny that claim. On Thursday, however, the United Nation’s International Atomic Energy Agency wrote that Iran has been uncooperative with attempts to investigate their facilities and suggested that they could be procuring nukes.
Israel, a close ally of the United States, has also claimed that Iran’s intentions are motivated by manufacturing of warheads. In May of this year, Israeli Defense Minister Ehud Barak stated, “Our position has not changed. The world must stop Iran from becoming nuclear. All options remain on the table."
From an executive standpoint, President Obama has also remained willing to strike if necessary, but has not pushed for pressure on Iran aside from the sanctions currently imposed by the United States.
"I also don't, as a matter of sound policy, go around advertising exactly what our intentions are. But (both) governments recognize that when the United States says it is unacceptable for Iran to have a nuclear weapon, we mean what we say,” President Obama said earlier this year to The Atlantic.
On Thursday, Gen. Dempsey commented that a strike against Iran over fears of their nuclear program, if conducted, could be without merit and might even erode the pro-Israeli alliance currently in place.
"International coalition" applying pressure on Iran "could be undone if [Iran] was attacked prematurely,” Dempsey said, adding that “Intelligence did not reveal intentions” to procure nukes.
Gen. Dempsey was in the UK to attend the Paralympic Games, where he is serving as the head of the U.S. delegation.


A guy with some balls ... finally.



Fri, 08/31/2012 - 23:52 | 2754535 Peter Pan
Peter Pan's picture

"Can it happen again?"

I'm sorry but I thought it IS happening right now.

Sat, 09/01/2012 - 00:43 | 2754587 KarlGDenninger
KarlGDenninger's picture

I am the lords messenger. Biff the unruly, gods angel, came to me in my sleep. He has told me the way....the truth. All must know the message of jehovah. Time is short my friends. We must hollow out the earth before the rapture. I need volunteers to help me. For this burden is too much for one man.

Sat, 09/01/2012 - 00:45 | 2754590 KarlGDenninger
KarlGDenninger's picture

I have begun excavation. Biff has promised me 44,000 faithful but I have only three. He has said seek those who seek gold. My Sermon will begin on Sunday. Join me via satelitte.


Shalom my brothers

Sat, 09/01/2012 - 00:57 | 2754597 IridiumRebel
IridiumRebel's picture


The implosion of Morgan Stanley is near. A Hat Trick Letter subscriber has a friend whose father is a fund manager inside Morgan Stanley. They are all talking about implosion internally at the MS firm. It is to happen soon. The father, along with many colleagues, sold his personal legacy MS stock holdings. They are abandoning ship. Something big is brewing. An internal disaster has also occurred, as the firm made a transition from state of the art technology with their software back to trading software that takes five times longer and is at least 10 years outdated. The move has caused chaos at the trading desks. The Facebook IPO was another disaster. My concern is whether the massive Interest Rate Swap application by Morgan Stanley in early 2011 has had repercussions, like the lead Wall Street giant banks trying to kill off Morgan Stanley, in order to bury the evidence of criminal derivative trading. Recall that a few months ago, Jim Sinclair shared information that over 600 accounting experts and financial analysts were poring over the the books of a major Wall Street firm, trying to determine if they were indeed dead meat. Many surmised it was Morgan Stanley. Perhaps the internal chaos is related. When the Jackass checked with a Central European banker who has shed light in the past, he wrote back, "Morgan Stanley is a small casualty in the coming chain reaction of things to unfold. We shall see Deutsche Bank and Credit Agricole in France each go through failures, taking everything down with it. The fraud and crime is so big that people cannot see the elephants in the room. The faster all comes crashing down, the faster we can start rebuilding." A second event much like the Lehman Brothers failure is coming, which will enable JPMorgan and Goldman Sachs to grow larger as last survivors. They must consolidate the control rooms, which will resemble bunker war rooms.

Morgan Stanley is in big trouble.

Sat, 09/01/2012 - 02:02 | 2754621 q99x2
q99x2's picture

Arrest Reagan

Do NOT follow this link or you will be banned from the site!