December 23, 2019

ONE ECONOMY TO RULE THEM ALL:

Will there ever be another recession? (Allison Schrager, 12/23/19, Quartz)

Economic booms don't die of old age and studies show the odds of a recession don't increase over time. A recession is usually caused by some external shock. Past examples include a sudden increase in oil prices (in the 1970s), a collapse in housing prices (2008), or the US Federal Reserve suddenly and unexpectedly increasing interest rates by a few percentage points (1930s and early 1980s). And there are recession-causing candidates milling about now. The primary one is political uncertainty, with the outcome  of November's election--between an unpredictable president and a democrat who might raise taxes--a potential trigger. The possibility of a trade war is non-trivial, which could cause a recession. Economic instability in China could leak out. A hard Brexit could have spill over impact and rattle shaky markets.

The '08 credit crunch was likewise precipitated by rate hikes into the teeth of deflation, which exposed the securities fraud of bundling more subprime loans than were being revealed to investors.  Provided central bankers accept the fact of deflation, only Donald's policies can slow the boom that W and the UR restored for us.

Posted by at December 23, 2019 12:00 AM

  

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