In 1992, I built a model of Minsky’s ‘Financial Instability Hypothesis’ that simulated the debt-induced breakdown he argued could happen in a capitalist economy. But it also had an unexpected feature: the breakdown was preceded by a period of apparent stability. Initial volatility gave way to a period of tranquillity, which was then followed by increasing volatility and finally a breakdown (see Figure 1: the two variables are the employment rate and the wage share of GDP):
Read more: http://www.businessspectator.com.au/article/2013/6/3/economy/calm-deathly-debt-storm#ixzz2V7oG1C7R
