Recessions should be easy to remember because they hit so hard and so often. How many recessions do you remember? 2? 10? 20?
There have been hundreds of recessions and a number of depressions throughout history. In the United States, there have been 47 recessions since 1790.
The causes for recession are war or greed or both. The biggest culprits are private bankers speculating irresponsibly with other people’s money, as can be seen in the list of recessions. Economists Hyman Minsky and Richard Koo point the finger to debt accumulation by the non-government sector. Minsky put these culprits into three types: hedge borrowers, speculative borrowers, and Ponzi borrowers.
John Cassidy of The New Yorker describes the five basic stages in Minsky’s model of the credit cycle: displacement, boom, euphoria, profit taking, and panic. In short, a bubble. And when it bursts it is a mess. Here is a short list of economic bubbles:
Can an economic bubble be prevented? Can the carbon trading bubble be prevented? Of course it can. If you can eliminate greed.
Video: Jonathan Jarvis explains the 2007 housing bubble