Minsky Moment


Minsky Moment
When a market fails or falls into crisis after an extended period of market speculation or unsustainable growth. A Minsky moment is based on the idea that periods of speculation, if they last long enough, will eventually lead to crises; the longer speculation occurs the worse the crisis will be. This crisis is named after Hyman Minsky, an economist and professor famous for arguing the inherent instability of markets, especially bull markets. He felt that long bull markets only ended in large collapses.

The phrase "Minsky moment" was coined by Paul McCulley in 1998 while referring to the Asian Debt Crisis of 1997, in which speculators put increasing pressure on dollar-pegged Asian currencies until they eventually collapsed. These types of crises occur because investors take on additional risk during prosperous times or bull markets. The longer a bull market lasts, the more risk is taken in the market. Eventually, so much risk is taken that instability ensues.

For example an investor might borrow funds to invest while the market is in an upswing. If the market drops slightly, leveraged assets might not cover the debts taken to acquire them. Soon after, lenders start calling in their loans. Speculative assets are hard to sell, so investors start selling less speculative ones to take care of the loans being called in. The sale of these investments causes an overall decline in the market. At this point, the market is in a Minsky moment. The demand for liquidity might even force the country's central bank to intervene.


Investment dictionary. . 2012.

Look at other dictionaries:

  • Minsky moment — A Minsky moment is when over indebted investors are forced to sell good assets to pay back their loans, causing sharp declines in financial markets and jumps in demand for cash.[1][2] In any credit cycle or business cycle it is the point when… …   Wikipedia

  • Hyman Minsky — (Hyman Philip Minsky; * 23. September 1919 in Chicago; † 24. Oktober 1996 in Rhinebeck, N.Y.) war ein US amerikanischer Wirtschaftswissenschaftler. Er gilt als Postkeynesianer.[1] Inhaltsverzeichnis 1 Leben und Werk …   Deutsch Wikipedia

  • Hyman Minsky — Hyman Minsky, Ph.D. (September 23, 1919, Chicago, Illinois ndash; October 24, 1996), was an American economist and professor of economics at Washington University in St. Louis. His research attempted to provide an understanding and explanation of …   Wikipedia

  • Hyman Minsky — (23 septembre 1919, Chicago ; 24 octobre 1996) est un économiste américain s inscrivant dans le courant de pensée post keynésienne. Il est connu pour ses études portant sur les crises financières et leur lien avec le cycle économique. Sans… …   Wikipédia en Français

  • Marvin Minsky — in 2008 Born Marvin Lee Minsky August 9, 1927 …   Wikipedia

  • The Night They Raided Minsky's — Infobox Film name = The Night They Raided Minsky s caption = Theatrical release poster (artwork by Frank Frazetta) director = William Friedkin producer = Norman Lear writer = Rowland Barber (book) Norman Lear Sidney Michaels Arnold Schulman… …   Wikipedia

  • Мински, Хайман — В Википедии есть статьи о других людях с такой фамилией, см. Мински. Хайман Мински Hyman P. Minsky Дата рождения: 23 сентября 1919(1919 09 23) Место рождения: Чикаго Дата смерти …   Википедия

  • Austrian Business Cycle Theory — The Austrian business cycle theory is the Austrian School s explanation of the phenomenon of business cycles (or credit cycles ). Austrian economists assert that inherently damaging and ineffective central bank policies are the predominant cause… …   Wikipedia

  • Мински, Хаймэн — Хаймэн Мински (англ. Hyman P. Minsky; 23 сентября 1919, Чикаго  24 октября 1996, Ринебек, шт. Нью Йорк)  американский экономист, представитель монетарного посткейнсианства, автор гипотезы финансовой нестабильности. Бакалавр (1941) Чикагского… …   Википедия

  • Мински Х. — Хаймэн Мински (англ. Hyman P. Minsky; 23 сентября 1919, Чикаго  24 октября 1996, Ринебек, шт. Нью Йорк)  американский экономист, представитель монетарного посткейнсианства, автор гипотезы финансовой нестабильности. Бакалавр (1941) Чикагского… …   Википедия


Share the article and excerpts

Direct link
Do a right-click on the link above
and select “Copy Link”

We are using cookies for the best presentation of our site. Continuing to use this site, you agree with this.