Attention Economy


Saturday, March 11, 2017

Economic Cycles – History Lesson

Predicting peaks and troughs in the business cycle is not easy:

Related:
Robert Samuelson observes:
“What history teaches is disquieting. It is that the quest for unending prosperity is doomed to fail. Indeed, it may backfire. Periodic recessions and bear markets perform a useful, if distasteful, function. They remind people of risk; they restrain inflation. Too many setbacks, of course, transform a desirable discipline into social tragedy. What is the optimal mix of recessions and expansions? This is a hard, perhaps impossible, question to answer, but economists ought to be trying and aren’t.
The trouble with thinking that expansions don’t die of old age is that they do — not on any predictable schedule but simply as a practical matter. Ignoring this holds out the false promise that some ideal set of policies can sustain economic expansion forever. It can’t.”

FRBSF ECONOMIC LETTER: Will the Economic Recovery Die of Old Age?
http://www.frbsf.org/economic-research/files/el2016-03.pdf