At first, Minsky thought that this policy of brinkmanship might work, after a fashion,by periodically reminding market participants about uncertainty and so causing a return to more conservative financing structures (Minsky, 1969b). What actually happened, however, was almost the opposite. Market participants took the lesson that speculative finance could be sustained provided one was prepared to hold on until the Fed stepped in, as it inevitably would. As a consequence, crisis intervention only ensured that each successive push to fragility went even closer to the brink, with ever greater swings of interest rates and ever more ingenious mechanisms for stretching liquidity.
-- The vision of Hyman P. Minsky, Perry Mehrling
Journal of Economic Behavior & Organization, Vol. 39 (1999) 129-158
No comments:
Post a Comment