ABSTRACT
Chapter 4 presents Minsky’s evolutionary approach to macroeconomic policy. The cash dynamics of speculative and Ponzi units show that market economies are at best ‘conditionally coherent’. Governments should use counter-cyclical targeted deficits to put a floor on the decline of aggregate demand so as to stabilise profits. The use of ‘employer of last resort’ programs is an institutional means for capitalist economies to endorse tight full employment, income equality and social cohesion. Evolutionary central banking should target the detection and eradication of speculative and Ponzi leverage structures and apply qualitative monetary policy through discount window procedures and lender-of-last-resort interventions to smooth financing and funding of asset positions.
