Saturday, December 22, 2012

Minsky on Recovery

"Pundits, politicians, and officials have proclaimed that the economy escaped the near crisis of 1974-75 as a result of the normal functioning of market processes. In truth, the braking of the downswing and the subsequent recovery were largely the result of strong fiscal measures and prompt lender-of-last-resort interventions. The fiscal measures were partly automatic because of massive entitlement (transfer payment) programs and a tax system in which receipts fell sharply when employment fell and were partly discretionary in the form of tax rebates, tax reductions, and extensions of unemployment insurance."

-- Hyman P. Minsky, from "Stabilizing an Unstable Economy"

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