Share this page!

Enter URL or ID to Unroll

You can paste full URL like: https://x.com/threadreaderapp/status/1644127596119195649
or just the ID like: 1644127596119195649

How to get URL link on X (Twitter) App

  1. On the Twitter thread, click on or icon on the bottom
  2. Click again on or Share Via icon
  3. Click on Copy Link to Tweet
  4. Paste it above and click "Unroll Thread"!
  5. More info at Twitter Help
Zero Equilibrium Profile picture
Zero Equilibrium
@Zero_Analyticz
Macroeconomics || Markets || Fixed Income || Commodities. Views are Independent and Intellectually Genuine. DM for Academic & Non-Academic Research Assistance
May 6 • 21 tweets • 4 min read
Liberal and Doctrinaire Socialism: The Difference.
Response to @PerBylund II.

One common misconception about Keynes is that he had a socialist ideology. This is ra half-truth.

There's a difference between liberal socialism and doctrinaire socialism. Back to the paper;
1/21 On the "declaration" 119 days after the publication of the General Theory that;
"Until recently events in [Soviet] Russia were moving too fast and the gap between the paper professions and the actual achievements was too wide for a proper account to be possible."
2/21
May 6 • 17 tweets • 3 min read
Re: Was Keynes a Socialist?
Reasons to @PerBylund

Keynes obviously had an admiration for the Bolsheviks, that can't be denied. But did that make him a Socialist by the traditional definition? No.

To understand why I said know you'd have to look at his home politics,...
1/17 ...and policies he advocated for, but more importantly why.

Keynes was a pragmatist politically and a realist, in his economics. He'd obviously seem the merits ND demerits of both systems —the begining of the evolution of his thought process.
2/17
May 4 • 25 tweets • 4 min read
Chapter 6 Financial Instability Revisited The Economics of Disaster 🧵 4/6:

Financial Instability and Asset Prices/Valuation:

Here Minsky explains the role of uncertainty and liquidity preferences in asset pricing and by extension income determination.
1/25 Keynesian Economics and Uncertainty:

"The essential difference between Keynesian and both classical and neoclassical economics is the importance attached to uncertainty." The Keynesian proposition with respect to money,...
2/25
May 2 • 11 tweets • 2 min read
Chapter 6 Financial Instability Revisited The Economics of Disaster 🧵 3/6:

Cash Flows:

Financial crises, he says, occurs "because units need or desire more cash than is available from their usual sources". They then "resort to unusual ways to raise cash".
1/18 Minsky examines various types of cash Flows, the relationship among them and with other characteristics, in this section.

The "varying reliability of sources of cash flow is a well-known phenomenon in banking theory".
2/18
May 1 • 14 tweets • 2 min read
Chapter 6 Financial Instability Revisited: The Economics of Disaster 🧵 2/6;

Financial Institutions as both Demanders and Suppliers of Capital:
Minsky points that Financial Institutions are "simultaneously demanders in one and suppliers in another set of financial markets."
1/13 Once euphoria sets in, they accept liability structures of borrowers they would not have accepted in "a sober expectational climate".

Money and Treasury bills become expensive to hold (ie have a high opportunity cost), in relation to riskier higher yielding...
2/13
May 1 • 22 tweets • 4 min read
Can It Happen Again Chapter 6:
Financial Instability Revisited: The Economics of Disaster 🧵 1/6

Here the repeated occurrences of financial crises is discussed and analysed in detail. He looked to answer the questions whether; the fundamental changes...
1/22 ...in the US economic system can prevent another great depression or whether "our knowledge and power is still inadequate as that crises and deep depressions are still possible."

Minsky argues here that, "fundamentals are unchanged" and "sustained...
2/22
Apr 25 • 6 tweets • 1 min read
Chapter 5: The Financial Instability Hypothesis: A Restatement 🧵 4(b)/4:

It's been established that the government intervention could lead to instability blurring the the lines between growth and crisis.

1/6 Minsky ends with a note that;
"the "foolishness" of bankers, businessmen, and government guarantors is floated off by massive government deficits that lead to profits which validate aggregate past investment and overall business liabilities,...
2/6
Apr 25 • 25 tweets • 4 min read
Chapter 5: The Financial Instability Hypothesis: A Restatement 🧵 4(a/b)/4:

The Wall Street Economy:
Rooted in the analysis of two sets of Pricing. Current output, which reflect short-run expectations and capital assets reflecting long-run expectations.

1/25 But it also goes beyond that, by integrating the liability structure and debt payment commitments into the analysis of capital assets price determination.amrcicioated cashflows from businesses activities determine the...
2/25
Apr 24 • 21 tweets • 3 min read
Chapter 5: The Financial Instability Hypothesis: A Restatement 🧵 3/4

Conceptualizing and differentiating Keynes' Theory:

The main issue of Keynes's theory was to "construct a theory that enables us understand the behavior of a capitalist economy",...
1/21 Minsky points. For understanding how the economy behaved will provide knowledge "that will enable us to control and change it so that the most perverse characteristics are either eliminated or attenuated".

2/21
Apr 23 • 19 tweets • 3 min read
Chapter 5: The Financial Instability Hypothesis: A Restatement 🧵 2/4:

Focal Points of Difference of Post-Keynesians and Keynes's Rebuttal of Neo-Classical Synthesis;

Another focal point of the Post-Keynesian theory is the rejection of...
1/19 ...the liquidity preference function of the neo-classical synthesis interpreted as the demand for money function and dependent on interest rates.

Keynes's argument in his Rebuttal to Viner's review was that "with a given set of long run expectations,...
2/19
Apr 23 • 20 tweets • 3 min read
Can it Happen Again Chapter 5: The Financial Instability Hypothesis:A Restatement 🧵 1/4:

Now it's already been established that Minsky puts forward "salient features of an economic theory that is alternative to today's (modern)...
1/23 Image ...standard theory"—"financial instability hypothesis".

The theory is based on the premise that certain behavior of the market (in a downturn) is not an anomaly, as "these economies have been behaving in that way capitalist economies...
2/23
Apr 20 • 14 tweets • 3 min read
Chapter 4 Capitalist Financial Processes and the Instability of Capitalism 🧵 4/4

Financial Markets Evolution and Economic Effects:
The evolution of financial markets affects investments through pricing of capital assets and the financing option...
1/14 ...or instruments available for investment. And normal functioning —or stability— of the financial markets is a "necessary condition for investment to be sustained so that profits are forthcoming.

These profit would enable the validation of debts and induce further...
2/14
Apr 20 • 17 tweets • 3 min read
Hyman Minsky Can it Happen Again? Chapter 4: Capitalist Financial Processes and the Instability of Capitalism 🧵 3/4:

Asset Prices, Investment and Financing:
Economic theory must be based upon a perception that there are two sets of prices to be determined.
1/17 One of current output and one of capital assets needed for production.

These prices are determined in different markets and respond to different factors. "A relation of these prices—say the ratio—varies, and the variations affect human behavior."
2/17
Apr 19 • 8 tweets • 2 min read
Oil Traders wary of High Volatility and Economic Risks (per Bloomberg @business ):

Traders who prior complained about tight margins in the range bound low volatility ranges. Now complain of the new volatility, which is makes it impossible to...
1/8 ...play due to the current economic climate—tarrifs, and OPEC+ plans to boost output.

This dual shock sent crude down about 7% on the biggest decline since the Russian - Ukraine Invasion. Volatile prices making forecasts impossible given...
2/8
Apr 19 • 20 tweets • 3 min read
Hyman Minsky Can it Happen Again? Chapter 4: Capitalist Financial Processes and the Instability of Capitalism 🧵 2/4:

The Role of Expectations and Historical Data in Financing Investment Activity:
Since borrowing and lending take place in the basis of margins of safety...
1/20 ...the expected returns is always matched with and should surpass near term contractual payments. When Simmons argued for limitations on short-term financing "he was rallying against arrangements in which...
2/20
Apr 19 • 20 tweets • 3 min read
Hyman Minsky Can it Happen Again? Chapter 4: Capitalist Financial Processes and the Instability of Capitalism 🧵 1/4.

A Return to Keynes and a bit of Simmons:
Here Minsky begins with Henry Simmons view of money which recognizes its endogenous nature,...
1/20 ...and "the impossibility of managing money by trying to control the quantity of some specific set of debts".

He advocated strict limitations of liability of enterprises and binding constraints in the permissible activity of financial institutions.
2/20
Apr 18 • 19 tweets • 3 min read
Can it Happen Again Chapter 3: The Financial Instability Hypothesis: An Interpretation of Keynes & an Alternative to "Standard" Theory 🧵 3(a)/(b)/3:

We pick up from Minsky's Financial Instability Hypothesis, based on Keynes Rebuttal.

1/19 The Financial Instability View of our Economy:

The first few years post WWII were tranquil, with no "serious threat of a financial crisis or debt deflation process". But three threats of a financial crisis occured that required the...
2/19
Apr 3 • 11 tweets • 2 min read
Can it Happen Again Chapter 3: The Financial Instability Hypothesis: An Interpretation of Keynes & an Alternative to "Standard" Theory 🧵 2/3:

Keynes View of Financial Rupturing:

Keynes' viewed financial rupturing of these coherence as originating from...
1/11 ....financial usages (of money), by way of investment activity. To explain this the neoclassical "village fair" exchange paradigm has to be discarded
and the definition of money as merely an exchange medium.

He instead adopts a City or "Wall Street Paradigm".
2/11
Apr 3 • 15 tweets • 3 min read
Can it Happen Again Chapter 3: The Financial Instability Hypothesis: An Interpretation of Keynes & an Alternative to "Standard" Theory 🧵 1/3

In this chapter, Minsky differentiates between neoclassical and standard interpretation of the General Theory (GT), drawing from..
1/15 Image ... Keynes's rebuttal to Viner's critique of the General Theory. He then builds from the new theory or interpretation to his "Financial Instability Hypothesis".

Professor Viner of Chicago wrote an extensive review on Keynes's General Theory (GT),...
2/15
Apr 1 • 22 tweets • 4 min read
Chapter 2: Finance and Profits The Changing Nature of American Business Cycle 🧵 5 (b)/b)/5:

The level and distribution of income and the validation of the Financial Structure:

Debts are validated when maturing commitments are fulfilled and expectations that...
1/22 ...future commitments will be fulfilled in maturity through the life of the debt contract.

Debt financing organizations however operate on the expectations that a small percentage of debtors will not fulfill their commitments (loan loss provision if you will).
2/22
Mar 31 • 23 tweets • 4 min read
Chapter 2 Finance and Profits The Changing Nature of American Business Cycle 🧵 5(a)/(b)/5:

This section deals with household and government financing and a Summation of the entire chapter.

Households:
The flow of income relevant to this unit is the difference between...
1/23 Image ...the disposable income and cash payment commitments on household debt. This is the first household financial relation.

The second is that which involves asset contracts and is a relationship between values of the asset and the face value of the outstanding debt.

2/23