How a Minskyan Supercycle Ends. Theoretical Analysis and Empirical Evidence from North-Atlantic economies (France, Germany, US, UK), 1980 to 2024

Rapport Working paper How a Minskyan Supercycle Ends. Theoretical Analysis and Empirical Evidence from North-Atlantic economies (France, Germany, US, UK), 1980 to 2024 eng 2025-07-08 author Durand Cédric 0000-0002-1279-4966 916198 Service enseignement, recherche, administratif et technique (SdS) (SCSPS) Cédric Michel Durand author Alfageme Ramirez Ayoze 919131 Services communs de GSI (GSIA) author Grothe Simon 401700 31 This contribution examines the limits to financial expansion relative to the real economy, analysing the substantial growth of financial assets from the 1980s through the 2020s. We document how policymaking activism sustained financial expansion beyond the 2008 GFC, creating a puzzle given theoretical expectation of periodic deleveraging. The early 2020s inflation outbreak provides a crucial test case for understanding monetary constraints on financial system support. Drawing on Minsky’s financial instability theory, BIS financial cycle analysis (Borio), and the Marxist concept of fictitious capital, we develop a comprehensive framework for analysing these dynamics. We document the Supercycle’s evolution from 1980-2024 across four North Atlantic economies using a fictitious capital indicator and principal component analysis. Our analysis reveals three distinct phases: long neoliberal expansion (1980-2007), state-sponsored General Ponzi (2008-2019), and inflation-constrained retreat (2020-2024). Contrary to expectations, no shrinkage occurred during the 2010s as central banks sustained expansion through asset purchases and balance sheet growth. However, the post-COVID inflation period marks a decisive halt, with financial assets contracting relative to GDP. We theorize these constraints through the Non-Asset Busting Interest Rate (NABIR) framework, which formalizes the tension between price stability and financial stability objectives. When inflation forces interest rates above what leveraged financial systems can sustain, monetary authorities face impossible trade-offs. Our findings suggest that financial repression through controlled inflation may enable orderly downsizing of oversized financial systems, with implications for the future of finance-led accumulation regimes. Financial Supercycle Minsky Instability Inflation Fictitious Capital Borio Dewey 330 123 Département d'histoire, économie et société T5 false defd4459-6d4f-4930-a5a7-81b30d3a6760 Appendix Public APPENDIX-How_ends_a_Minkskian_super.docx 355643 application/vnd.openxmlformats-officedocument.wordprocessingml.document 62bde310e3ca6b03cd3b73dc1561e882e94c5151a4e2507cef9e51c43b465734 9fac8366-15d7-483b-b6b6-538560416274 Supplemental data Public DATA_SET_How_Minskiyan_Supercycle-j.xlsx 943787 application/vnd.openxmlformats-officedocument.spreadsheetml.sheet 691af35fd649c859810dc7ceecc55e93ed703aa2657d2388bcc99c949af3e11a 9f414526-5fba-4b76-8877-6469522b5d44 Working paper Public durand_alfageme_grothe_wp_2_2025.pdf 1428092 application/pdf 236bbe287d76653af4659ded97130098f49da4b43b9da05a245e29cc3bb44700 openAccess Faculté des sciences de la société / Département d'histoire, économie et société

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How a Minskyan Supercycle Ends. Theoretical Analysis and Empirical Evidence from North-Atlantic economies (France, Germany, US, UK), 1980 to 2024				2025	330	327

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Grothe, Simon

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