I just started to read Stabilizing an unstable economy by Hyman Minsky. In this book published in 1986, Minsky argues that the financial capitalist system is endogenously more prone to instability than stability and that we should reform to avoid “IT” (the Great Depression) to reproduce. In the 2008 preface, there is a summary of his agenda for reform that I found particularly relevant to the current financial situation.
- employment rather than welfare, with the government acting as employer-of-last-resort, because employment provides more opportunity and dignity than welfare and because welfare – paying people not to work – is inflationary
- universal child allowance
- payroll tax elimination
- policies encouraging greater equality of wages
- allow retirees to work without losing Social Security benefits
- tax policies encourage equity finance rather than debt finance
- policies encouraging small- to medium-sized banks, with less regulation the smaller a bank is.
- increase oversight of banks trough the use of the Fed’s discount window instead of FOMC
- zero reserve requirements with interest-earning positive reserve balances