L-Shaped Recovery

  

Categories: Econ

See: W-Shaped Recovery. See: V-Shaped Recovery.

Lots of shapes that economic recoveries come in. Here, the economy suddenly and precipitously falls. And then it just continues apace at that lower level of productivity. Oh w'L.'

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Finance: What is a Business Cycle?3 Views

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Finance allah shmoop What is a business cycle Well here's

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a guy giving his cycle the business Yeah the bike

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moves forward in time but this little white mark on

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the tire while it keeps returning to the same place

00:15

again and again and again So yeah that's the foundation

00:18

of the notion of business as a cycle time continues

00:22

but you know business gets hot then cold then hot

00:25

then cold and yeah you get the idea Well why

00:27

is this the case Well lots factors They mostly revolve

00:30

around the wild pagan dance of greed and fear And

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they get exacerbated when governments actively monkey around with the

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cost of renting money otherwise known as the raising and

00:42

lowering of interest rates And if you're new to this

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whole space if you lower interest rates and make money

00:48

cheap to borrow you heat up the economy or at

00:50

least you encourage it to get hot And if you

00:52

raise the cost of borrowing money well then you're going

00:55

to try to cool it off And the reason he

00:57

might want to do that is if inflation is roaring

00:59

right All right well in the us the business cycle

01:02

Runs roughly every eight years for what is called the

01:05

short cycle of business cycles for reasons only partly known

01:08

to humankind the money cycle revolves around the presidential election

01:13

cycle when historically every couple of terms the population gets

01:17

sick of one process of messing up government and they

01:20

choose to elect a new way to mess up government

01:23

So that's The short cycle happens every seven or eight

01:25

years and you see it in the stock market with

01:27

generally meaningful corrections Along that pattern there's also ate a

01:31

long business cycle that sees major shift about every quarter

01:35

century World wars affected numbers Technology innovation affects the numbers

01:40

and other exogenous factors like pollution and labor replacement by

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robots Yeah yeah it's coming and healthcare or disease changes

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and or big innovations that completely repaint the pavement such

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that the tire slipped and turn and twist trying to

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keep the bicycle upright The key goal Look outfor bollards

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