- 共 1 页/4 条记录
Credit/debt cycles cause swings around that productivity uptrend. The way it works is that providing credit provides buying power that fuels spending on goods, services, and investment assets (first), which causes stronger economic activity and higher prices of these things (next). Providing credit also creates debt, which creates the need to pay back in the form of debt-service payments (that comes later) which in turn lessens the spending on goods, services, and investment assets (later) which leads to weaker economic activity and weaker prices of these things (after). So, credit/debt boosts growth at first and depresses it later. Central banks provide it to put on the gas when the economy has lots of slack and is growing slowly, and restrict it to put on the brakes when there isn’t much slack and the economy is growing fast. For these reasons, the effects of credit/debt on the demand, production, and prices of goods, services, and investment assets are inherently cyclical, which is why we have credit/debt cyclical moves around the earlier-described productivity uptrend.
In other words, as I see it there are a number of analogous timeless and universal cause-effect relationships that are driving things now that drove things in the 1935-40 period and in a number of times in history, which we should be mindful of. That doesn’t mean that the future is destined to play out the way it did in the 1940s. There are certainly levers that can be moved to produce good outcomes. What matters most is whether there are skilled and wise people who have their hands on those levers.