Inherent Instability (when BerBanke got it wrong)
alice wellintown
alicewellintown at gmail.com
Thu Jul 18 15:46:20 CDT 2013
Mr. Bernanke wrote, “argued for the inherent instability of the
financial system but in doing so have had to depart from the
assumption of rational economic behavior.” In a footnote, he added, “I
do not deny the possible importance of irrationality in economic life;
however it seems that the best research strategy is to push the
rationality postulate as far as it will go.”
It seems to me that he had both Minsky and Kindleberger wrong. Their
insight was that behavior that seems perfectly rational at the time
can turn out to be destructive.
http://www.nytimes.com/2013/07/19/business/economy/when-bernanke-got-it-wrong.html?pagewanted=all&_r=0
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