The Minsky Moment

A Minsky Moment refers to a sudden financial crisis that occurs after a period of economic stability and rising asset prices. It happens when too much borrowing and speculation create an unsustainable bubble. As confidence wanes, investors rapidly sell off assets, causing prices to plummet and leading to widespread financial distress. In essence, it's the tipping point where excessive risk-taking is abruptly unraveled, exposing vulnerabilities in the economy. This concept, rooted in economist Hyman Minsky's work, highlights how periods of growth can dangerously overshoot, ultimately resulting in a market correction or crash.