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Comment by carsongross | Hacker News Reader

The whistling past the graveyard is hilarious.

We are going into a 2008-style financial crisis, with the Fed already zero bound and China heading into a deflationary collapse. The banks, at least, have better balance sheets on paper this time around, but the carnage is going to be breathtaking.

How many cycles of "things are amazing -> a new, permanent plateau -> I see no evidence of a bubble -> soft landing for sure -> no one could have seen this coming" do we have to go through, folks?

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What's nice about doomsaying is when you're wrong no one cares and when you're right that one time, you get that useless fleeting feeling of self-satisfaction

Is it really doomsaying when it's occurring at somewhat regular intervals? 1990, 2000, 2007...

Yes. The human tendency to find patterns where none exist makes the whole thing feel more compelling than it is

There is an obvious pattern. The Fed is intentionally inflating asset bubbles to fake economic recoveries. Those asset bubbles inevitably must implode because they're not supported by fundamentals (such as the extremely slow GDP growth the prior six years). They did it in response to the 2001 recession, and they did it again in response to the 2009 recession. They openly admitted they were attempting to inflate assets this time around.

The business cycle is a thing. Everyone knows the business cycle is a thing. Half the people on Hacker News have been calling bubble for the past 2-3 years.

The business cycle remains a thing.

For the sake of argument I will state the efficient market interpretation: What we call the business cycle is actually just good and bad runs in a series of independent random events. I don't really believe it, but would nevertheless enjoy it if you argued against that position.

I don't think the efficient market hypothesis argues that there are no business cycles, only that stock market prices anticipate recessions coming so you can't make a profit by selling when it looks like things are going to tank.

behavioural economics: there are positive feedback loops (things get better => people/companies earn more money => they can borrow more => they spend more => things get better) in both directions (things get worse => people/companies earn less => they can borrow less or go bankrupt => they spend less => thing get worse), so even if the underlying events (the external input into the system) are independent and uniformly distributed, the characteristics of the system produce cyclical effects.

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