This article records tradition as it has been passed down and reported. Its sources are not yet part of the atlas's verified catalogue.
Hyman Minsky spent most of his career, at Berkeley, Washington University in St. Louis and finally the Levy Economics Institute, arguing a claim mainstream macroeconomics of his era had no real place for: that financial crises are not external shocks that hit an otherwise stable economy, but the predictable, endogenous product of stability itself. His financial instability hypothesis, developed across the 1970s and 1980s and collected in his 1986 book Stabilizing an Unstable Economy, described three stages of borrower financing. Hedge finance covers both principal and interest from current income. Speculative finance covers interest but must roll over principal. Ponzi finance covers neither and depends on the asset's price continuing to rise.
Minsky's argument was that a long period of economic calm does not simply continue; it changes behavior. Success breeds confidence, confidence breeds leverage, and an economy that starts a boom dominated by cautious hedge financing drifts, borrower by borrower and lender by lender, toward speculative and eventually Ponzi financing, until some ordinary disturbance triggers what came to be called, decades later, a Minsky moment: a sudden collapse of confidence in which asset prices fall, lenders refuse to roll over debt, and borrowers who depended on rising prices to service their loans are forced to sell, pushing prices down further.
Minsky's work was marginal to mainstream macroeconomics for most of his lifetime; he died in 1996, more than a decade before the 2008 financial crisis made his description of subprime mortgage lending's slide from hedge to Ponzi financing look less like a heterodox curiosity and more like a field guide. Central bankers and financial commentators who had never read him began invoking his name within weeks of the crisis, a rare case of a school this atlas records as debated moving, briefly, close to consensus.