Hyman Minksy was an economist at Washington University in St. Louis. His most enduring work was proposing hypotheses on how financial market instability was linked to speculative investment bubbles – work that went largely unnoticed until the 2008 financial crisis.

Minsky's hypothesis can be simplified as a cycle of disruption that leads to significant returns, lower volatility, and increased investment. Some have called it the Minsky Cycle.

There are five stages to the Minsky Cycle.

A new technology or policy disrupts the market. Outsized returns encourage more capital, and continued capital often lowers volatility. Seeing low volatility and great returns, there begin to be highly leveraged bets. The smart money knows that this exuberance can't last and takes their profits. Finally, panic strikes and there's a market selloff.

Minsky's hypothesis hasn't had much impact on real macroeconomic theory or financial policy, but it's a helpful mental model to view these events (and mental model only, Minsky never built an actual model). Sometimes a narrative is more important than it seems.