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If the natural cycle of laissez faire capitalism
revolves between risk and aversion,
what should happen if government intervention perverts the process?
Ponzi finance units must increase outstanding debt
in order to meet financial obligations.
A transition occurs over the course of an expansion
as increasingly risky positions are validated by the booming economy
that renders the built in margins of error superfluous,
encouraging adoption of riskier positions.
Eventually, either financing costs rise, or income comes in below expectations,
leading to defaults on payment commitments.
Hyman Minsky
Believed excessive debt causes financial crises
