Safe Assets and the Evolution of Financial Information

Assets that are perceived as “safe” play a vital role in financial markets – serving, in particular, as high-quality collateral for transactions in repo and OTC derivative markets.  The global financial crisis and the problems in Europe have raised concerns that ongoing imbalances in the demand and supply of safe assets could have unhappy consequences for global financial stability and macroeconomic prospects.

Adair Turner: Escaping The Addiction to Private Debt Is Essential for Long-Term Economic Stability

Inflation targeting insufficient: central banks and governments must manage the quantity and mix of credit created

FRANKFURT, 10 February 2014 — Financial reforms introduced since the crisis have been valuable but still have not addressed the fundamental driver of economic and financial instability – continually rising levels of private debt, Adair Lord Turner, former chairman of the United Kingdom Financial Services Authority, said Monday in a speech at Goethe University. Lord Turner is a Senior Fellow at the Center for Financial Studies (CFS) at the university and at the Institute for New Economic Thinking, an economics research and education foundation based in New York. Read more

NYT Cites the Institute’s Fazzari, Cynamon on U.S. Middle Class Erosion

For the second time in a week, a national U.S. newspaper is featuring important recent work by two researchers from the Institute for New Economic Thinking, Barry Cynamon and Steven Fazzari. Read more

Steve Keen: A Computer Simulation of Monetary Dynamics

The financial crisis that ran from 2007 to 2009 has been called a "Minsky Moment," meaning it offered a much-needed reminder to all economists of Hyman Minsky's neglected dictum that "capitalism is essentially a financial system." 
 
But even with this reminder, it is hard to know what to do next, since it is difficult to express Minsky's vision using the standard equilibrium methods of economics. Arguably that is one reason that Minsky has remained a minority taste in economics.  
 

Washington Post Features Work By Institute Researchers Fazzari, Cynamon

The Washington Post has spotlighted important recent work by two researchers from the Institute for New Economic Thinking, Barry Cynamon and Steven Fazzari.

The Post story focuses on a Jan. 23 paper by Cynamon and Fazzari showing that economic inequality is harmful to overall growth and is a significant reason for the tepid recovery from the latest recession.

The paper by Cynamon and Fazzari can be found here Read more