Summary
American economist Hyman Minsky died in 1996, but his theories offer one of the most compelling explanations of the 2008 financial crisis. His key idea is simple enough to be a t-shirt slogan: "Stability is destabilising". But TUC senior economist Duncan Weldon argues it's a radical challenge to mainstream economic theory. While the mainstream view has been that markets tend towards equilibrium and the role of banks and finance can largely be ignored, Minsky argued that in the good times the seeds of the next crisis are sown as the financial sector engages in riskier and riskier lending in pursuit of profit. In the aftermath of the financial crisis, this might seem obvious - so why did Minsky die an outsider? What do his ideas say about the response to the 2008 crisis and current policies like Help to Buy? And has mainstream economics done enough to respond to its own failure to predict the crisis and the challenge posed by Minsky's ideas?
Producer: James Fletcher.
Transcript
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| 0:00.0 | Just before this BBC podcast gets underway, here's something you may not know. |
| 0:04.7 | My name's Linda Davies and I Commission Podcasts for BBC Sounds. |
| 0:08.5 | As you'd expect, at the BBC we make podcasts of the very highest quality featuring the most knowledgeable experts and genuinely engaging voices. |
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| 0:35.4 | Sounds. |
| 0:36.4 | Thanks for downloading analysis from the BBC. |
| 0:39.0 | This week, Duncan Weldon looks at the ideas of the late Hyman-Minsky. |
| 0:43.0 | Minsky was an outsider in the world of economics, |
| 0:46.0 | whose work was largely ignored in his lifetime, |
| 0:49.0 | but he's now required reading for Central Bankers bankers and regulators after the global financial crisis |
| 0:55.2 | proved many of his ideas right. |
| 0:58.7 | Cast your mind back to the time before 2008. |
| 1:02.1 | US Federal Reserve Governor Ben Bernanke could be heard praising the depth and |
| 1:06.3 | sophistication of financial markets. |
| 1:09.4 | Nobel Prize-winning economist Robert Lucas claimed that the central problem of depression |
| 1:14.3 | prevention had been solved and here in Britain Gordon Brown returned again and |
| 1:19.9 | again to a favorite theme. |
| 1:21.8 | And I have said before, Mr Deputy Speaker, |
| 1:24.8 | no return to Boom and Bass. |
| 1:28.6 | And we all know what happened next. |
... |
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