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Financial stability is the absence of system-wide episodes in which a financial crisis occurs and is characterised as an economy with low volatility. It also involves financial systems' stress-resilience being able to cope with both good and bad times. Financial stability is the aim of most governments and central banks. The aim is not to ...
Thomas I. Palley, "The Limits of Minsky's Financial Instability Hypothesis as an Explanation of the Crisis," Monthly Review, Volume 61, Issue 11 (April 2010). Thomas I. Palley, "A Theory of Minsky Super-Cycles and Financial Crises," Contributions to Political Economy, 30 (1), 31 – 46.
Economic instability can have a number of negative effects on the overall welfare of people and nations by creating an environment in which economic assets lose value and investment is hindered or stopped. This can lead to unemployment, economic recession, or in extreme cases, a societal collapse.
In particular, inflation has put some Americans at higher risk for financial instability. With this in mind, SmartAsset ranked U.S. states according to where residents are struggling most financially.
Paul Krugman argued that a regime that by and large lets markets work, but in which the government is ready both to rein in excesses and fight slumps is inherently unstable, due to intellectual instability, political instability, and financial instability.
The more general concept of a "Minsky cycle" consists of a repetitive chain of Minsky moments: a period of stability encourages risk taking, which leads to a period of instability when risks are realized as losses, which quickly exhausts participants into risk-averse trading (de-leveraging), restoring stability and setting up the next cycle.
Obviously, a lack of financial stability is one reason many retirees are having a hard time, with the National Council on Aging reporting that around 80% of older adults either have money troubles ...
2025 will be dominated by currency volatility that could lead to a "sharp" correction, KKR said. Trade wars, fiscal instability, and geopolitical tensions will spur FX volatility.