Tuesday, February 24, 2015

On Recessions and Subsequent Recoveries

a) The 1907 recession - deep and with a sharp recovery (a sharp recovery being defined as one in which the real GDP growth exceeds "potential GDP").......b) The 1894 recession (which in reality was closer to a depression) - deep and with a sharp recovery.......c) The 1920 recession - deep and with a sharp recovery.......d) The 1982 recession - deep and with a sharp recovery.......And of course I could go on here; the point being that all throughout our history, sharp economic downturns have almost always been followed by equally sharp recoveries and that the only two times where this hasn't happened (the Great Depression of the 1930s and the current period) were when the government meddled in the affairs of the market (Hoover and FDR during the former example and Bush and Obama during the latter period). I mean, I know that economics isn't the hardest of sciences and all but this is rather compelling evidence, don't ya' think?

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