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Lessons We Should Have Learned from the Global Financial Crisis but Didn't

  • L. Randall Wray

In this paper, I first quickly recount the causes and consequences of the global financial crisis (GFC). Of course, the triggering event was the unfolding of the subprime crisis; however, I argue that the financial system was already so fragile that just about anything could have caused the collapse. I then move on to an assessment of the lessons we should have learned. Briefly, these include: (a) the GFC was not a liquidity crisis, (b) underwriting matters, (c) unregulated and unsupervised financial institutions naturally evolve into control frauds, and (d) the worst part is the cover-up of the crimes. I argue that we cannot resolve the crisis until we begin going after the fraud. Finally, I outline an agenda for reform, along the lines suggested by the work of Hyman P. Minsky.

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Paper provided by Levy Economics Institute in its series Economics Working Paper Archive with number wp_681.

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Date of creation: Aug 2011
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Handle: RePEc:lev:wrkpap:wp_681
Contact details of provider: Web page: http://www.levyinstitute.org

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  1. L. Randall Wray, 1998. "Modern Money," Macroeconomics 9810002, EconWPA.
  2. Ferri, Piero & Minsky, Hyman P., 1992. "Market processes and thwarting systems," Structural Change and Economic Dynamics, Elsevier, vol. 3(1), pages 79-91, June.
  3. Dimitri Papadimitriou & L. Randall Wray, 1998. "The Economic Contributions of Hyman Minsky: varieties of capitalism and institutional reform," Review of Political Economy, Taylor & Francis Journals, vol. 10(2), pages 199-225.
  4. Hyman P. Minsky & Charles J. Whalen, 1997. "Economic Insecurity and the Institutional Prerequisites for Successful Capitalism," Journal of Post Keynesian Economics, M.E. Sharpe, Inc., vol. 19(2), pages 155-170, January.
  5. L. Randall Wray & Stephanie A. Bell, 2004. "The 'War on Poverty' after 40 Years: A Minskyan Assessment," Macroeconomics 0404034, EconWPA.
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