Sublime

The argument of this book is that interest is required to direct the allocation of capital, and that without interest it becomes impossible to value investments. As

Unfortunately, the return of instability coincided also with the ascendancy of a new interventionist orthodoxy in economic theory which, extrapolating from the entirely unusual circumstances of the immediate postwar, attributed business fluctuations not to changing financial structures but rather simply to fluctuations in aggregate demand.

It is extremely important to note Bernholz’s conclusion. Hyperinflations are not caused by aggressive central banks. They are caused by irresponsible and profligate legislatures that spend far beyond their means and by accommodative central banks that lend a helping hand to governments.

Hyman Philip Minsky (b. 23 September 1919, d. 24 October 1996) was best known for his Financial Instability Hypothesis of the business cycle, which emphasized the dynamics of business investment finance as a recurring cause of macroeconomic instability (Minsky 1972, 1980). During a boom, the expansion of debt-financed investment spending causes

rabbit. So you can think of the economy as a series of shocks moving to an equilibrium, shock, moving to an equilibrium.

when the central bank loses its ability to produce money and credit growth that passes through the economic system to produce real economic growth.

Yet our modern monetary mandarins never stop to consider Bagehot’s warnings about the adverse consequences of easy money – how interest rates set at 2 per cent or less fuel speculative manias, drive savers to make risky investments, encourage bad lending and weaken the financial system. One wonders whether any of them has actually opened the pages

This squares solidly with the work done by Rogoff and Reinhart, showing that when the debt of a country reaches about 100 percent of GDP, there is a reduction in potential GDP growth of about 1 percent. As we wrote earlier, government debt and spending do not increase productivity. That takes private investment. And if government debt crowds out

It is his analysis of animal spirits and the possibilities of public spending that have made Keynes the economist of the moment.