Economic crises are an element of political economy, so this section is related to that one, but here the focus is much more on specific historical crises and the future prospects of the next one. Often economic crises are treated as if they are caused by specific mistakes of governments. This is seldom the case. In fact, the boom-and-bust business cycle has always existed as an inherent element of capitalism. It is caused by strategic competition between bears and bulls over the direction of asset prices by means of the expansion and contraction of private credit. Rapidly expanding credit causes economic booms. Tightening credit causes recessions and crashes. My brand of political economy explains how financiers strategize about expansion and contraction of credit based on my research in the papers of leading bankers and extensive study of business history. Elements of my approach were anticipated by economist John Maynard Keynes in portions of his work (especially A Treatise on Money) largely overlooked ever since. Hyman Minsky also includes part of my argument in his financial instability theory, but, unlike Keynes, he appreciates only the bulls, not the key role of bears. Today we are nearing the end of one of the longest and largest debt booms in world history, which is likely to result in a worldwide financial crash in the near future.
What Finally Ended the Great Depression?
Based on an answer submitted on Quora There were two stages of President Franklin Roosevelt’s New Deal. The first stage, 1933–35, involving devaluing the dollar […]