The ‘Imperial Dollar Milkshake Circle’

When returns to violence are high and rising, magnitude means more than efficiency. Larger entities tend to prevail over smaller ones.

Join the EU, obey the European Central Bank; which meant, obey Germany and France. As Germany’s economy was about twice the size of France’s, what people around Europe took all this to mean was that Germany had finally conquered them all, no matter what it had looked like at the end of World War Two. Just as America had conquered the world by way o

And for decades since then, the United States has had a current account deficit. It reached 3% of GDP in the mid-1980’s until the Plaza Accord purposely reduced the dollar’s strength, which helped fix the deficit briefly. Then it spiked to 6% of GDP but the self-correcting force of the subprime mortgage crisis reduced that back down a bit.

A central reason for policy intervention in this boom-bust process, Minsky emphasized, is the ever-present danger that the contraction will get out of control and spread into a system-wide debt-deflation. In this way, a normal business recession can become instead a deep and long-lasting depression, such as happened in 1929-1933 when debt deflation