It’s been remarked (too often) that the recent financial crisis and the Great Recession have renewed interest in the work of John Maynard Keynes. I’m not sure how true that is; people who are interested in economics tend to be interested in Keynes, and the reflexive Keynes-haters usually are ideologues. Less remarked upon (though only a little less) is the renewed interest in the work of Hyman Minsky, who is my kind of economist (meaning, one who doesn’t require much math). Minsky gave us the “Financial Instability Hypothesis,” arguing that financial stability leads, paradoxically, to financial instability, because it encourages the extension and the overextension of credit.

A related idea, which I explore a little bit today over at our new debt-and-deficits blog, Exchequer, is Triffin’s Dilemma, named for the economist Robert Triffin. Triffin’s Dilemma is a kind of concentrated version of Minsky’s instability hypothesis. The short version is this: Because the U.S. dollar is so safe, it has become the world’s chosen reserve currency, which encourages the United States to run a large trade deficit, which makes the dollar less safe — i.e., the dollar is so safe that it’s dangerous. Read more here.