Hyman P. Minsky — The Financial Instability Hypothesis (1992)

“Stability is destabilizing.” The short paper that explains why booms turn into busts, from the economist whose name became shorthand for financial crises.

Hyman Minsky argued that financial crises are not accidents from outside the economy but are built into how capitalism works. During good times, borrowers and lenders grow confident and take on more debt. Finance moves from safe “hedge” borrowing, to “speculative” borrowing, to “Ponzi” borrowing that only works if prices keep rising.

When they stop rising, the whole structure unwinds. Largely ignored during his lifetime, Minsky’s ideas became famous after the 2008 crisis, when commentators spoke of a “Minsky moment.” This eight-page summary, published by the Levy Economics Institute of Bard College, is the best place to start.

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