L-Shaped Recovery

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

a guy giving his cycle the business Yeah the bike

moves forward in time but this little white mark on

the tire while it keeps returning to the same place

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

of the notion of business as a cycle time continues

but you know business gets hot then cold then hot

then cold and yeah you get the idea Well why

is this the case Well lots factors They mostly revolve

around the wild pagan dance of greed and fear And

they get exacerbated when governments actively monkey around with the

cost of renting money otherwise known as the raising and

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

whole space if you lower interest rates and make money

cheap to borrow you heat up the economy or at

least you encourage it to get hot And if you

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

to try to cool it off And the reason he

might want to do that is if inflation is roaring

right All right well in the us the business cycle

Runs roughly every eight years for what is called the

short cycle of business cycles for reasons only partly known

to humankind the money cycle revolves around the presidential election

cycle when historically every couple of terms the population gets

sick of one process of messing up government and they

choose to elect a new way to mess up government

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

years and you see it in the stock market with

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

long business cycle that sees major shift about every quarter

century World wars affected numbers Technology innovation affects the numbers

and other exogenous factors like pollution and labor replacement by

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

and or big innovations that completely repaint the pavement such

that the tire slipped and turn and twist trying to

keep the bicycle upright The key goal Look outfor bollards