Godley Got It Right

Abstract

The Queen of England famously asked her economists why ‘no one saw it coming’ – referring, of course, to the global financial collapse that began in early 2007. In fact, many economists, market participants, and even policymakers did recognize problems. Since the beginning of the crisis, I have been arguing that Hyman Minsky had been studying the transformation of the economy toward fragility since the late 1950s, so in some sense he had seen ‘it coming’ a half century ago. I have also argued that we should not try to locate the origins of the crisis in the subprime-lending-fueled housing bubble since 2000; rather, it should be viewed as resulting from the long-term trends over the entire post-war period. In that sense, I claimed that we should see this not as a ‘Minsky moment’ or even a ‘Minsky crisis’ but rather as a Minsky ‘half century.’ I will not repeat any of those arguments here (see Wray, 2009).