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Chapter 14. Dire Consequences > Creating a New Business Cycle

Creating a New Business Cycle

The bursting of the Internet bubble has now played a major role in tipping the world economy into recession, and there is the danger that this is merely the first of a new series of such recessions. The world is building a new business cycle via financial market instability. The business cycle cannot be considered tamed until the financial manias that now regularly threaten the world economy are reined in.

We have tamed the old business cycle, driven as it was by inflation, overheated labor markets, excessive investments in certain sectors, inventory overbuilding, and extreme variability in housing finance. The business cycle then caused swings in capital markets. The 1929 stock market crash, for example, followed the descent of the world economy into recession.


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