Tag Archives: minsky

  • Insider

    A Better Model For Predicting What Happens Next

    Only by understanding clearly can we avoid the carnage ahead
    by Chris Martenson

    Saturday, July 15, 2017, 3:39 AM


    Executive Summary

    • The dangerous shortcomings of the world's dominant 'Neoclassical' economic models
    • The predictive advantage of understanding the Overton Window
    • The alternative (and very likely better) models of Keen and Minsky
    • The critical improvement to ALL models of tying economics to energy/resources

    If you have not yet read Part 1: Bad Models Result In Terrible Outcomes available free to all readers, please click here to read it first.

    So let’s see if we can understand the model errors for the central banks.  Again this is important because if they’ve got it wrong, then we all will pay a very heavy price — with Venezuela, Argentina, and Zimbabwe all providing vivid examples of what happens when the social contract of money is ruined.  

    To begin, the current crop of monetary practitioners at the world’s central banks are all devotees and advocates of the neoclassical branch of economics.  It’s an odd dogma for them to hold because its track record at explaining or predicting what has either happened or might yet happen is utterly dismal.

    As Steve Keen explains:

    [Economics as understood by the central bankers] has always been grounded in the beliefs that (a) capitalism is inherently stable, (b) that the financial sector can be ignored—yes that’s right, ignored—when doing macroeconomics, and (c) that the Great Depression was an anomaly that can also be ignored, because it can only have been caused either by an exogenous shock or bad government policy, both of which cannot be predicted in advance.


    The main flaw in the neoclassical approach to economics is that it completely ignores, or rather assumes away, any and all trends in debt creation.  In this bizarrely incomplete system of thinking, the financial system is considered to be, essentially, a self-correcting zero-sum entity (that balances itself out nicely with a little help now and then). 

    So such things as carefully tracking GDP increase per new unit of debt, overall indebtedness ratios and understanding that crises are bred from complacency are of no practical concern to a neoclassical economist, such as those fully occupying the halls of power currently.

    One way to understand the dogma that infects the central banking halls of power lies in what Jim Kunstler recently surfaced in a piece he wrote on the Overton Window, which, importantly…

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  • Blog

    Daily Digest – September 26

    by Davos

    Saturday, September 26, 2009, 1:38 PM


    Hello all,

    After 10 months of doing this daily, without a break or a day off, I’m experiencing economic burn out; my symptoms are exhaustion, terseness, and grumpiness.  I need to prioritize my world a bit.  Mostly I want to begin the Zero-Carbon Car conversion of our 10-year old Subaru (she has 150k miles on her and one very tired engine). Marsh has some painting for us to do in the house we built together.

    It has truly been a pleasure to contribute to this fine community that Chris has created. I often wish there were a Martenson Island as opposed to a Martenson Cyberblog.

    I landed on Chris’s site over a year ago from a link to the environmental chapters of the “Crash Course,” which I received in an email from Buffett’s original investor.  It was followed by an email from an ex-governor who also spoke highly of CM’s work on the environment.

    The Crash Course was, for me, like a key to the stereogram: putting the picture of the economy hidden below the picture painted by the media into crisp focus. Most of all it explained and then underscored the 3 E’s.

    Wednesday, September 30th will be my last day manning the Daily Digest.  I offer today’s DD as a “Best Of” from my spreadsheet of almost 5,000 posts.  At the bottom are my sources for all the blogs I follow.  The mainstream sites on my RSS reader are so I can see what the herd is being fed.

    Take care,

    • Grayson: Has the Fed Ever Tried to Manipulate the Stock Market? (AMAZING Video, H/T JAG)
    • Gold and Economic Freedom
    • 60 Minutes (CBS) Wave 2 AltA’s and Option Arms (Video)
    • 19 Million Vacant Homes
    • Real Estate 1890-2009 (Chart)
    • The Shallowest Generation
    • Naked Short Selling (Video)
    • Soros: Period of wealth destruction
    • 7 Stages of a Bubble
    • Minsky Ponzi Credit
    • Central Bank of Zimbabwe, Quantitative Easing of Zimbabwe, the United Sates and the UK
    • US Debt Clock
    • iGoogle RSS Reader of sites I visit daily

    Read More »

  • Blog

    The Recovery Cost Too Much

    by Chris Martenson

    Wednesday, September 16, 2009, 9:03 PM


    Now that Bernanke is taking victory laps for electro-shocking the economy back into an upright position, inquiring minds want to know what this statistical recovery has cost us.

    The concern here is that a few hundreds of billions in temporary growth have been achieved at the cost of several trillions of dollars of stimulus and thin-air bailout money.

    The calculations and the implications are explored below.  Here are the quotes around which this piece was written:

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  • Blog

    Daily Digest – September 16

    by Davos

    Wednesday, September 16, 2009, 2:46 PM

    • Ron Paul on CNN: Fed IS the Source of the Problem
    • D.C.: “The Commercial Version of the Subprime Situation”
    • Stiglitz Says Banking Problems Are Now Bigger Than Pre-Lehman
    • Minsky, “bubbles”, and gold
    • Blogs vs Mainstream Media
    • Debt
    • Ghost Towns in Ireland
    • US Credit Shrinks at Great Depression Rate, Prompting Fears of Double-Dip Recession

    Read More »

  • Blog

    Daily Digest – July 23

    by Davos

    Thursday, July 23, 2009, 3:00 PM

    • The Dollar is Overvalued… But Against What? (Chart)
    • When $3 Trillion Seems Like Small Potatoes (Chart)
    • Suburban Suvilaist, Economic Preparedness (MSNBC Video)
    • Q&A of Fed Reserve Chair Bernanke by Alan Grayson (Video)
    • Morgan Stanley Pays Damages For Precious Metals Fraud
    • Elizabeth Warren on Consumer Financial Product Agency
    • Feldstein: Risk of Double Dip
    • Minsky: Turning Neoclassical Economics On Its Head
    • 180 Degrees Off Target
    • Whalen On Banking (Video on page)
    • CNBC Attempts Assasination on Barofsky (Video, Repost)

    Read More »