Uploaded August 2020 | Updated September 2026, 52 minutes ago
With each financial and/or economic calamity that passes, governments and central banks more strongly brand themselves as proverbial superheroes who are here to save the world from... well, the business cycle.
No matter what angle you choose to view this situation from, the "elephant in the room" in terms of issues boils down to two questions:
1) Are governments and central banks trying to beat/defeat the business cycle?
2) Can they?
The answer to the first question tends to be yes because modern-day economics from the perspective of financial/economic calamities revolves around not repeating the mistakes of the Great Depression, with governments and central banks perceived as excessively passive prior to let's say the New Deal.
While we now know that being too passive results in a devastating deflationary environment, the intellectually honest answer to question two is this: we hope governments/central banks can defeat the business cycle but realistically speaking, we just don't know.
While history doesn't repeat itself, it does tend to rhyme and "new paradigms" which one one way or another had to do with defeating the business cycle have manifested themselves more than one, with let's say less than stellar results. As such, while it makes sense not to want to repeat the mistakes which led to the Great Depression, we have to be honest about admitting that humans haven't (thus far at least) proven to be very good at beating the business cycle and that the situation we find ourselves in might prove to be one where there isn't a "right" answer that leads to a painless outcome :(
With each financial and/or economic calamity that passes, governments and central banks more strongly brand themselves as proverbial superheroes who are here to save the world from... well, the business cycle.
No matter what angle you choose to view this situation from, the "elephant in the room" in terms of issues boils down to two questions:
1) Are governments and central banks trying to beat/defeat the business cycle?
2) Can they?
The answer to the first question tends to be yes because modern-day economics from the perspective of financial/economic calamities revolves around not repeating the mistakes of the Great Depression, with governments and central banks perceived as excessively passive prior to let's say the New Deal.
While we now know that being too passive results in a devastating deflationary environment, the intellectually honest answer to question two is this: we hope governments/central banks can defeat the business cycle but realistically speaking, we just don't know.
While history doesn't repeat itself, it does tend to rhyme and "new paradigms" which one one way or another had to do with defeating the business cycle have manifested themselves more than one, with let's say less than stellar results. As such, while it makes sense not to want to repeat the mistakes which led to the Great Depression, we have to be honest about admitting that humans haven't (thus far at least) proven to be very good at beating the business cycle and that the situation we find ourselves in might prove to be one where there isn't a "right" answer that leads to a painless outcome :(
