Minsky had realised that – counter-intuitive though it sounds – when it comes to finance, stability breeds instability. Why? Because of
reinforcing Feedback Loops
]], of course. During good economic times, banks, firms and borrowers all gain in confidence and start to take on greater risks, which pushes up the price of housing and other assets. This asset price rise, in turn, reinforces borrowers’ and lenders’ confidence along with their expectations that asset values will keep on rising. In Minsky’s own words, ‘The tendency to transform doing well into a speculative investment boom is the basic instability in a capitalist economy.’2 Book - Doughnut Economics by Kate Raworth
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