In Financial Studies


If Predator-Prey Economics existed as a field of study, it would address human economic interactions from the perspective of Resource Competition DynamicsPredator-Prey dynamics have been applied since at least 1967 to model the growth cycle and later, Debt vs Capital, its most intuitive use, considering the former feeds on the latter to survive. This use of the model is even more relevant when interest from Debt accrues at a greater Internal Rate of Return (IRR) than recurring income from Capital. In this case, their “predator-prey” dynamics produce an unstable feedback system. This is precisely the outcome that Graph 1 conveys and that Hyman Minsky’s 1985 Financial Instability Hypothesis foresaw: The leverage to income ratio grows exponentially in a wave of ever larger amplitude. Yet, in a world run by hard-core Keynesians (not Post-Keynesians!), it’s only fitting that neither the chart showcasing every stage of our generation’s super-Minsky cycle nor its dire prognosis for the future, shall surface until our true Minsky Moment arrives.

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