Does Minsky's story neglect purely financial operations, available to any firm, such as for example selling debt high to buy it back low? Or investing debt in derivatives that hedge inflation, for another example?
Isn't irrational, emotional, panic, spreading to otherwise perfectly safe assets the real problem? I.e., prices are arbitrary and funding cost inflation is easily solved by the Fed supplying liquidity from an infinite store?
Or maybe the CCP will try to forcibly put down the Evergrande panic by banning fire sales?
Minsky definitely does focus on capital investment by business, to the exclusion of purely financial operations. I argue that his work is based on a cash-flows understanding of finance, which means it is possible to adapt Minsky's work to that context. But it is an adaptation: some work is required.
The Evergrande panic seems to be well underway now--it will be interesting to see how it ends.
Does Minsky's story neglect purely financial operations, available to any firm, such as for example selling debt high to buy it back low? Or investing debt in derivatives that hedge inflation, for another example?
Isn't irrational, emotional, panic, spreading to otherwise perfectly safe assets the real problem? I.e., prices are arbitrary and funding cost inflation is easily solved by the Fed supplying liquidity from an infinite store?
Or maybe the CCP will try to forcibly put down the Evergrande panic by banning fire sales?
Minsky definitely does focus on capital investment by business, to the exclusion of purely financial operations. I argue that his work is based on a cash-flows understanding of finance, which means it is possible to adapt Minsky's work to that context. But it is an adaptation: some work is required.
The Evergrande panic seems to be well underway now--it will be interesting to see how it ends.