Creative Destruction & The Minsky Moment

Published on
October 8th, 2019
49 minutes

Creative Destruction & The Minsky Moment

The Interview ·
Featuring Srinivas Thiruvadanthai

Published on: October 8th, 2019 • Duration: 49 minutes

Srinivas Thiruvadanthai, economist at The Jerome Levy Forecasting Center, joins Mike Green of Thiel Macro to explore some of the most famous phenomena in economic theory — looking at such ideas as creative destruction, the Minsky Moment, and other key macroeconomic concepts relevant to the post-crisis global economy. Does stability breed instability? How do interest rates interact with balance sheets? And, why are we so certain central bankers are getting it right? Thiruvadanthai and Green answer these questions and consider the challenges facing investors and policymakers right now. Filmed on September 9, 2019 in New York.



  • RH
    Robert H.
    22 October 2019 @ 03:40
    Interesting the point that real estate, balance sheets, electric motors, need a reset, and it'll happen sooner or later, like it or not. This is the only way I can understand market dynamics - from the top down. Much easier.
    • CL
      Claudio L.
      16 January 2020 @ 04:01
      I think 5G will speed up dynamism.
  • GH
    Ganesh H.
    28 October 2019 @ 18:08
    Bring on Eric Lonergan sometime to this show.
  • UJ
    Ulf J.
    15 October 2019 @ 06:30
    Great interview, I agree that China has a big problem with too many old people. Thanks, Mike and Srinivas
  • SW
    Scott W.
    8 October 2019 @ 13:35
    @Mr. Thiruvadanthai. You don't want to sound like an Austrian. Respectfully, why? What is missing or wrong in that framework?
    • TW
      Thomas W.
      9 October 2019 @ 17:20
      If you'll permit me my answer to you question ... nothing. You're more polite than I Scott. I would have said ... sarcastically ... "Oh my god, no, you wouldn't want to sound like an Austrian." Look, these are obviously good guys and were their thoughts to be taken to heart and their prescriptions followed by our so-called leaders, we'd all be in a lot better shape. They like the idea of allowing the system to self-correct ... to purge itself of its excesses, as a brush fire would burn off the fuel that, if left to accumulate, would create a more devastating fire down the line. Exactly. But they can't help themselves. They still believe in intervention, albeit to a more limited degree. They can't divorce themselves entirely from Hayek's :fatal conceit" ,,, the notion that the people in charge need to intervene ... either programmatically via the provision of a "safety net" or, presumably, via "fire fighting" by government authorities or the Fed in the case of something more serious than a brush fire. But guess what. Brush fires are never seen as not serious by those charged with the mission of fighting fires. It's why they exist. And a little intervention ALWAYS gives way to more and more and more intervention. Witness the evolution of the Fed's behavior from lender of last resort against solid collateral at a somewhat punitive rate of interest to a money gushing machine that supplies endless amounts of cash at roughly zero interest against seriously compromised mortgage backed "securities" to support the speculative adventures of their bankster sponsors. All to keep "Systemically Important (and serially criminal) Financial Institutions" alive and backstopped against any level of folly they choose to engage in, What we get in the end ... down that slippery slope of ever increasing intervention ... is the extraordinary and often manic efforts of the mandarins in charge of "maintaining stability" to maintain stability at all costs. And so, we cycle back to Minsky. This artificial maintenance of stability opens the door wide to a period of uncontrollable instability. The bottom line is you can give authority to a handful of the so-called best and brightest to pass laws and take executive action to try to mitigate the effects of excessive behavior and you can get away with it for a while, as long as the measures aren't too extreme and end up disturbing the ability of the system to return fairly closely to a state of equilibrium. But once you're at the bottom of that slope and you have nutty policies such as negative interest rates, QE as a permanent tool of monetary policy ... and eventually MMT / QE for the people ... you virtually guarantee yourself a wrenchingly catastrophic outcome. And the people you sought to insulate from the negative effects of a minor conflagration are now gonna be exposed to a true inferno so horrendous it represents an existential threat. The Austrians understood all this. Their problem is, by refusing to intervene at all and let the system self-correct, they appear unconcerned about the plight of those who will lose jobs and have trouble paying bills, feeding their kids, etc. They appear heartless. But they're correct. Better to accept some short term, relatively minor pain to keep from building up serious imbalances in the system that lead to major dislocations. Hands off. The French have a phrase for that approach that's fallen into disrepute among the chattering classes ... undeservedly so ... laissez faire. But most people aren't able to think, and more importantly, ACT in a hands-off way when the chips appear to be down, as is the the case with an economic slowdown or god forbid, an actual recession or depression. It's a flaw of human nature. DO SOMETHING! ... even if that something is idiotic and solidly counterproductive in the longer run. Hayek was right. Von Mises was right. Hazlitt was right. Rothbard was right. Ron Paul was ... and still is ... RIGHT. When one disparages them, especially with no explanation ... cheap shot style ... it's at the very least unbecoming ... smelling of arrogance. But, on the bright side, at least I'm under no illusions about know who I'm listening to.
    • SW
      Scott W.
      10 October 2019 @ 19:28
      @Thomas W. Thank you for your thoughts on this matter.
    • SS
      Shanthi S.
      14 October 2019 @ 01:54
      Thomas W, that was the best comment on RV ever (past, present and future).
    • TW
      Thomas W.
      14 October 2019 @ 21:35
      Thank you Shanthi. Makes it worth the effort.
  • SS
    Shanthi S.
    14 October 2019 @ 02:02
    Fantastic conversation! Love Sri, and Mike. The best brains on RV! Although I resent the disparaging remark about Austrian School economics, especially when most of what was discussed makes a great case for a non-interventionist approach. The love of interventionism and ever increasing state power is a disease. Thomas W’s comment below explains it beautifully.
  • AB
    Aditya B.
    13 October 2019 @ 18:49
    Love this ! Great conversation .. very insightful.
  • JO
    Joseph O.
    11 October 2019 @ 20:54
    This is great. Mike Green talks about Srini like I talk about Mike Green.
  • AA
    ALI A.
    10 October 2019 @ 13:05
    excellent conversation!
  • wj
    wiktor j.
    9 October 2019 @ 08:48
    This guys model makes me laugh a bit. He talks about bringing young people from another society who will contribute. It just came out that in 2015 162.877 people migrated to Sweden. From that number 94% is living off welfare. So how exactly does migration contribute?
    • dd
      david d.
      9 October 2019 @ 09:28
      you cant say the truth otherwise you are labeled a racist
    • MG
      Michael G. | Contributor
      9 October 2019 @ 23:00
      When you run a toxic welfare state with high levels of unionization, is this a surprise? It is not the immigrants or the color of their skin that produces the outcomes — it’s the rules, incentives and resources of the receiving state.
    • HM
      Hugh M.
      10 October 2019 @ 09:18
      @Michael G - such a good point.
  • HM
    Hugh M.
    8 October 2019 @ 13:54
    That was great from both. Anyone know Mike Green's twitter handle?
    • SS
      Stan S.
      8 October 2019 @ 14:06
    • HM
      Hugh M.
      10 October 2019 @ 09:14
  • DS
    David S.
    10 October 2019 @ 02:38
    This time it is different both in kind and degree! Lowering Fed interest rates will not reduce the risk of investment decisions enough to make any difference. IMHO there are at least three main reasons causing a major slowdown in corporate capital investment and profits. First - The internet allows most people to buy what they want at the cheapest possible price, thereby making margins razor thin until the market is controlled by a monopoly or oligopoly. Second - Companies are disrupting any innovation long before the initial capital and human investment can be recouped, thereby radically increase the investment risk. Third - Politicians around the world are putting all kinds of economically stupid obstacles in the way from political currencies like the Euro; Brexit; daily tariff changes; taking personal, corporate and church deposits from bank accounts in Cyprus and Malta to subsidize European banks' bad loans; etc., etc., etc. – the beat goes on. How can any corporation or person invest in an expected future outcome? There is money to be made in these financial markets, but you better be a lot smarter than I am. (Full disclosure. Lowering interest rates to zero will help me personally. Go for it.) DLS
  • PG
    Philippe G.
    9 October 2019 @ 22:50
    Phenomenal. More please!!
  • RG
    Roman G.
    9 October 2019 @ 22:10
    This was incredible.
  • TS
    Taranvir S.
    9 October 2019 @ 14:03
    India has the highest per capita consumption of mobile Internet data...think about what are they 'consuming' on the web besides the YouTubes that were mentioned above.
  • MN
    Maverick N.
    8 October 2019 @ 22:50
    Excellent. Thoroughly excellent! You see what the real genius of RealVision is? It is not they have the best minds speaking on this platform...... they have the best of the best interviewing them. This is what legacy financial media doesn't get - it is just about glorified anchors (wannabe celebrities) wearing great clothes talking giberrish, wasting the time of really smart people they have on and those that are watching at home.
    • AB
      Ash B. | Real Vision
      9 October 2019 @ 04:07
      Love it!
  • DH
    Dabangg H.
    9 October 2019 @ 03:11
    Mike Green FTW! Learn how interview people watching this guy.
  • DP
    David P.
    9 October 2019 @ 01:46
    One of the best interviews of the last six months. Little reitterated "opinion" of climate change or Brexit. Lots of questions and ideas expressed here that you will not find elsewhere...Solid argumentation too. More of this please, this is what made me love RV at the beggining and what i would expect to see more often.
  • TC
    Thomas C.
    8 October 2019 @ 21:12
    Good interview Mike and lots of excellent discuission. Just a comment - in your next meeting with Sri - I would have liked to see Sri being given more airtime and perhaps be a little more specific and concrete.
  • SS
    S S.
    8 October 2019 @ 18:47
    These two guys have great chemistry together, they could have their own separate show just discussing topics around the world. Mike Green you are the GOAT!
  • DH
    Dion H.
    8 October 2019 @ 12:35
    Amazing interview... but China is a paper tiger. Last 5 minutes was bullshit. Fuck China. #BandInChina #SouthPark
  • JH
    Jesse H.
    8 October 2019 @ 11:17
    Superb. Perhaps the best interview I’ve seen in 2019 (and I watch a lot of them). Thank you, Sri and Mike. Look forward to another insightful conversation in 6 months time. Two of the most original thinkers I’ve yet to come across in Macro.
  • PU
    Peter U.
    8 October 2019 @ 09:29
    Very very good
  • VS
    Valeriy S.
    8 October 2019 @ 09:07
    Oh my god! I was not expecting them so early here again. Thank you!
    • VS
      Valeriy S.
      8 October 2019 @ 09:15
      I think these two are the most smart and interesting people in macroeconomic twitter!
  • HK
    H K.
    8 October 2019 @ 08:48
    V. interesting perspectives 1. tariffs as % of value add 2. china/india as germany/france 3. land as emotional value
  • PB
    Pieter B.
    8 October 2019 @ 07:00
    This was absolutely brilliant and fun! Thanks a lot!