Five times in a decade not yet completed, financial markets have floated to the edge of a whirlpool; in October 1998 they were about to drown when Alan Greenspan threw them a piece of string that, surprisingly, turned out to be a lifeline. The causes for this financial instability lie deep--in...

A year and a half after the collapse in the financial markets, the debate about necessary "reforms" is still in its early stages, and none of the debaters seriously claims that his solution will in fact prevent a new crisis. The problem is that the proposed remedies deal with superficial matters...

A dozen years ago, Randall Kroszner, soon to be one of George W. Bush’s economic advisors and a Governor of the Federal Reserve, could comment in a Levy Institute seminar, without fear of contradiction, that there was no evidence to back the "public interest rationale" for the separation of...

Asia presents a cumulation of apparently rational decisions that produced disastrous results - a textbook illustration of financial instability developing from the economics of euphoria. A combination of factors produced the crisis as enormous capital inflows were drawn to the Asian...

The causes for the instability that has marked the financial system over the past decade lie deep in the economic theory that urges easy and efficient substitution of one piece of paper for another, in the technology-driven tight articulation of receipts and payments, and in the growth of...

Five times in a decade not yet completed, financial markets have floated to the edge of a whirlpool; in October 1998 they were about to drown when Alan Greenspan threw them a piece of string that, surprisingly, turned out to be a lifeline. The causes for this financial instability lie deep—in...

The Asian crisis is a textbook case of the "financial instability hypothesis" first expressed in 1966 by the late Hyman Minsky. It began with what Minsky described as "the economics of euphoria:...The confident expectation of a steady stream of prosperity gross profits [produces a]...

The Asian crisis is a textbook case of the "financial instability hypothesis" first expressed in 1966 by the late Hyman Minsky. Minsky's "hypothesis" was proposed to explain instability in a large, insulated, developed economy. Despite its intuitive appeal, it was not widely accepted among...