Public Policy Brief No. 93 | January 2008

Minsky’s Cushions of Safety

Systemic Risk and the Crisis in the U.S. Subprime Mortgage Market

In this brief, Senior Scholar Jan Kregel reviews Hyman P. Minsky’s concept of financial fragility—in short, that the structure of a capitalist economy becomes more fragile over a period of prosperity—and concludes that the current crisis is in fact the result of insufficient margins of safety based on how creditworthiness is assessed in the new “originate and distribute” financial system.

Associated Program:
Jan Kregel

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