In the last three decades the implementation of the neoliberal agenda all around the world resulted in a new accumulation regime that rested on speculative finance and submitted economies to the caprices of myopic markets behavior. In the “consensual” vein, money-neutralization policies (independent central banks) and anti public-deficit policies (sound finance) let the public debt be mainly financed on speculation-oriented financial markets and gave rise to a kind of dysfunctional finance. After several crises in emerging economies in the 1990s, the neoliberal wave of globalized capitalism reached its sustainability shore and threw itself into a worldwide financial crisis in 2007-08, when markets suddenly froze and trapped the advanced economies. To mitigate the subsequent depression, public authorities have massively intervened through monetary quantitative easing policies and large budget deficits. Public spending policies have been implemented in several countries to support the economic activity damaged by the effects of the crisis without being able to stop the rapid descent into the abyss. These policies sought to reduce depressive pressures in liberalized markets without any long-term restructuring and recovery plan, while the nervousness of markets and the rise of unemployment have not been calmed. �uch a disarray involved governments in large defi - cits that prevented public policies from using sustainable growth-oriented functional finance as public expenditures were caught up in the rescue of market failures. After the subsequent increase of budget deficits and public debt beyond what is considered an acceptable level as regards the power of speculative flows, financial markets put pressure on the financing of public debts and incited numerous European countries to reduce their stimulus measures to regain market confidence without having strengthened fragile financial structures. The search for new macroeconomic policy principles in order to guarantee a sustainable and stable accumulation regime seems to be lost in transition from the ongoing crisis to the (yet unreached) recovery. �uch a situation gives economists and policy makers a dilemma: implementing reflationary policies to revive the economic activity by taking on more and more deficits on an unknown horizon or returning to conservative policies that feed unemployment by hoping that markets could find suitable means to catch up as fast as possible by the “magic” of liberal mechanisms. Therefore, the

question which worries economists is to know whether it is necessary to support economic activity by means of public deficits (and steadier interventionism) or whether it would be more suitable to let markets “invent” spontaneous solutions (without recalling the principles of liberalism). Yet this debate does not seem relevant as its “original sin” lies in the implicit assumption that public spending is harmful to economic activity in the long run. Furthermore, this assumption does not provide consistent analysis of the malfunctioning of financialized and weakened economies. Another alternative, which is suggested in this chapter, is to consider the arguments of the functional finance (FF ) of Abba �erner and the fi nancial instability hypothesis (FIH) of Hyman Minsky for an integrated analysis of relevant public interventions. It then seeks to bring together FF and FIH in order to point to some principles of an alternative macroeconomic stabilization framework able to support job-creating productive activities and to prevent disequilibria-fueling speculative finance. The first section points to major theoretical and policy stakes in the aftermath of the ongoing worldwide crisis. The second section states the common theoretical grounds of FF and FIH which underline the weaknesses of free markets’ self-adjustment mechanisms and call for public intervention. The third section presents the general principles of a financially stable anti-austerity policy framework and sheds light on the links between public finance and financial stability in the process of macroeconomic stabilization. The last section concludes that economic policies must aim at preventing growth-reducing financial crises and sustaining employment-creating activities.