Financial Instability for Dummies

Zero Hedge produces a TON of material every day, and trying to read it all is like sipping from a fire hose. But, it’s my job to do that so you don’t have to.

Well, here’s another ‘sip’ from the Zero Hedge torrent of information. Here’s a quote from the article:

In a little under eight minutes, a plethora of today’s more outspoken realists, economists, and journalists provide a simple yet clear path through the financial crisis to critically explain how the so-called equilibrium that so many mainstream analysts and economists trusted as fact has been proven as simple fiction.

Yeah. That was just one sentence. But, it does offer an introduction to the video below. (You can read the rest of the article afterwards.)

Oh, and you might need to play the video more than once. It’s a short eight minutes – but, well worth your time.


Financial Instability For (Keynesian) Dummies

by Tyler Durden on 04/15/2012, Zero Hedge

In a little under eight minutes, a plethora of today’s more outspoken realists, economists, and journalists provide a simple yet clear path through the financial crisis to critically explain how the so-called equilibrium that so many mainstream analysts and economists trusted as fact has been proven as simple fiction. The hard-to-accept truth is that financial instability is in fact the natural state of our economic environments and that credit and banking lie at the very heart of that difference between Keynesian / Neo-classical dogma and the tough new reality that the world’s major economies now face. The political and economic elite have “blind-sided themselves to the role of rising debt in funding what is really the biggest ponzi scheme in human history” and that the “blind-faith in institutions and mechanisms has cracked post-2007”. From too-simple DSGE ‘economic models’ to ‘representative agents’ to the fact that financial systems are the cause of economic instability, a number of the new normal’s best thinkers (including Stiglitz, Keen, Kinsella, and Bezemer), courtesy of INETeconomics, provide a very layman’s guide to the (hopefully not so shocking to our readers) new reality of how critical credit and debt is in our brave new world and how entirely misrepresented it is in mainstream thinking. Must Watch, if for nothing else, the crushing conclusion for many neo-classicals that when you can’t tweak your models any more, you need to move on to some next paradigm.

Read the article here.

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