Whatever You Do, Don’t Say ‘Minsky Moment’: Zhou Xiaochuan Makes The One Mistake You Can’t Make

Let’s just be clear: if you are the Governor of the central bank in charge of shepherding the economy that serves as the engine of global growth and trade, and if you are also in charge of defusing what many people believe is the financial equivalent of a nuclear bomb manifested as an elephantine shadow banking complex that no one understands, the very last – and I mean the very last – thing you want to do is say “Minsky Moment” in public.

But that’s exactly what the PBoC’s Zhou Xiaochuan did overnight in response to a question at an event on the sidelines of the 19th Communist Party Congress in Beijing. Here’s what he said:

When there are too many pro-cyclical factors in an economy, cyclical fluctuations will be amplified. If we’re too optimistic when things go smoothly, tensions build up, which could lead to a sharp correction, what we call a Minsky Moment. That’s what we should particularly defend against.

Yes, “that’s what we should particularly defend against.” Of course before we get around to “defending against” that, what we should definitely do first is “defend against” talking about it in public and for God’s sake, we should “defend against” talking about it in public and calling it a “Minsky moment.”


I mean give me a break.

You’re sitting on top of countless trillions of yuan in pyramided leverage embedded into a labyrinthine shadow banking complex characterized by an absurdly complex web of cross-holdings between banks and NBFIs that SocGen once described as “mind-boggling,” and you’re out here talking about “Minsky moments” on the side lines of the year’s most important political event on the anniversary of Black Monday?

That’s like if the guy with the wire cutters turned around right before he clipped the “red wire”, looked up at all of the people standing over him sweating bullets, and said something like: “The first thing we need to do is make sure I don’t cut the wrong one.”

Cue the Xi side-eye…



One thought on “Whatever You Do, Don’t Say ‘Minsky Moment’: Zhou Xiaochuan Makes The One Mistake You Can’t Make

  1. Point taken but not a surprising statement given the PBOC is staffed with traders. Imagine any words of enlightened reality from the lips of the academic Yellen or the lawyer “we have a printing press” Powell? We can only dream. Tho the Fed loves theory so I wish they’d indulge in some Minsky theory a la the PBOC, which is nothing to be complacent about like the markets are.

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