## when is Financial system helpful or harmful for 'real economy'?

Interactions of complex systems means NO simple answer

**Financial system = Leverage * Economy**



how to deal with complexity?

- Liquidity

Liquidity is inversely related to volatility ( and tail risk of irreversible losses)
Liquidity spans from illiquid small business to very liquid financial markets (up to Treasuries). Liquidity is a map of feedback loops and complexity

- [Economics for the future – Beyond the superorganism](https://www.sciencedirect.com/science/article/pii/S0921800919310067) N.J.Hagens

## [The Financial Instability Hypothesis](http://www.levyinstitute.org/pubs/wp74.pdf) by Hyman P. Minsky