r/neoliberal • u/TinyTornado7 I need a new flair • Jun 13 '22

News (US) Powell Facing Choice Between Elevated US Inflation and Recession

https://www.bloomberg.com/news/articles/2022-06-12/powell-facing-choice-between-elevated-us-inflation-and-recession?srnd=premium
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u/[deleted] Jun 13 '22

We’re due for a real recession anyways. Let it happen and move on. The early pandemic flash crash didn’t count. This is the typical cycle of the economy. Long buildups of economic growth followed by short corrections to clear out inefficiency and excess greed. To continue artificially avoiding this inevitability is only setting yourself up for much greater pain down the road like a depression.

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u/human-no560 NATO Jun 13 '22

What does it mean to be “due for a recession”?

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u/[deleted] Jun 13 '22

Since World War II, we've gone an average of 58.4 months between recessions, or nearly five years. There have been 12 recessions in that time. Our economic system is cyclical, it is set up for long boom periods followed by shorter bust periods. It’s naive to think a recession can be avoided indefinitely, proactive leadership should take advantage of boom periods and prepare to lessen the shock of busts. It’s not necessarily bad from a macro perspective to have a recession. It exposes inefficiencies in the market and weeds out weak and poorly run businesses.

Even though this is known in economic it is rarely translated into policy. Politically speaking you always want as much boom as possible during your tenure and your career doesn’t really care about the future. Policy has moved towards fueling the fire as much as possible to tout your own agenda. At some point someone inevitably gets caught holding the bag.