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Hyman Minsky, an economics scholar whose research showed how lending patterns and mood swings drive economic booms and busts, has died at 77.

Minsky died Thursday of pancreatic cancer in Northern Duchess Hospital in Rhinebeck, his family said.

For the last six years, Minsky was a professor and distinguished scholar at the Jerome Levy Economics Institute of Bard College, in Annandale-on-Hudson.

In one of his final papers, he argued that the U.S. economy needs a national debt of $2 trillion to $3 trillion. The debt allows cautious lenders, like the Social Security Administration, to park money in safe, government-issued Treasury bills and bonds, he said.

Minsky did his best-known work as a professor at the University of California at Berkeley and at Washington University in St. Louis in the late 1960s and early 1970s. He was the first economist to explain unstable financial markets and how they interact with the economy.

In prosperous times, Minsky said, excess corporate profits fuel overheated speculation. Soon, borrowers are overextended, leading to a crisis and reduced lending, and the economy contracts, he said.

"A fundamental characteristic of our economy is that the financial system swings between robustness and fragility, and these swings are an integral part of the process that generates business cycles," Minsky wrote in 1974.

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