Hyman Minsky's financial instability hypothesis assumes that it is financial markets themselves creating financial panics and market sell-offs. Inflating bubbles first, investors' herd mentality then results in those bubbles bursting violently and chaotically.
This monograph by Michal Paulus portraits the train of thought behind and eventual inception of Minsky's hypothesis, and demonstrates its persisting relevance by applicating it to the Great Recession. Paulus shows that individual rationality can have calamitous effects when aggregated to the macroeconomic level, akin to the concept of John Maynard Keynes describing the pitfalls of rational individual saving aggregated to the national level.
Minsky's is one of the most pertinent analyses of financial markets of all time, yet his name lingers in relative obscurity and is generally recognised by economists and financial market hacks only. His insight that perfectly rational behaviour on the individual level can trigger financial crises in and of itself when enacted by a mass of people simultaneously was a milestone in economic history, and yet even today many economists tend to believe that financial markets are perfectly information efficient (the so-called Efficient Markets Hypothesis) and therefore never create crises without an exogenous trigger.
Speculative bubbles are at the centre of Minsky's analysis, demonstrating that the former are a recurring feature of markets in general, much like other hypes in socio-economics, too. But once a certain level of mass hysteria is reached (think Dutch tulips, Neuer Markt equities, or the Internet Gold Rush leading up to the year 2000), a self-reinforcing, herd-like stampede results, obliterating wealth and asset valuations in its path and thus triggering a recession in general.