Abstract
There is a deep paradox in the MMT analysis: on the one hand, key MMT theorists like Randall Wray are followers (and experts) on the work of Hyman Minsky. They have also written extensively on financial instability and financial regulation. Yet, in the context of their MMT macroeconomic policies, they fail to address the potential financial instability dangers that might arise from these policies. I call this the mystery of the missing Minsky. The explanation for the paradox is that they assume that sovereign money, by definition, solves the financial instability problems laid out by Minsky. In my view, this represents a misreading of both Minsky and reality, especially in the context of modern, globalized, financial market structures.
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They note this as a part of the process of “financialization”.
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Epstein, G.A. (2019). The Mystery of the Missing Minsky: Financial Instability as a Constraint on MMT Macroeconomic Policy. In: What's Wrong with Modern Money Theory?. Palgrave Pivot, Cham. https://doi.org/10.1007/978-3-030-26504-5_6
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DOI: https://doi.org/10.1007/978-3-030-26504-5_6
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