ShmoopTube

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Finance allah shmoop What is a business cycle Well here's

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a guy giving his cycle the business Yeah the bike

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moves forward in time but this little white mark on

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the tire while it keeps returning to the same place

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again and again and again So yeah that's the foundation

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of the notion of business as a cycle time continues

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but you know business gets hot then cold then hot

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then cold and yeah you get the idea Well why

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is this the case Well lots factors They mostly revolve

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around the wild pagan dance of greed and fear And

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they get exacerbated when governments actively monkey around with the

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cost of renting money otherwise known as the raising and

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lowering of interest rates And if you're new to this

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whole space if you lower interest rates and make money

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cheap to borrow you heat up the economy or at

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least you encourage it to get hot And if you

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raise the cost of borrowing money well then you're going

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to try to cool it off And the reason he

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might want to do that is if inflation is roaring

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right All right well in the us the business cycle

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Runs roughly every eight years for what is called the

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short cycle of business cycles for reasons only partly known

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to humankind the money cycle revolves around the presidential election

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cycle when historically every couple of terms the population gets

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sick of one process of messing up government and they

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choose to elect a new way to mess up government

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So that's The short cycle happens every seven or eight

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years and you see it in the stock market with

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generally meaningful corrections Along that pattern there's also ate a

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long business cycle that sees major shift about every quarter

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century World wars affected numbers Technology innovation affects the numbers

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and other exogenous factors like pollution and labor replacement by

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robots Yeah yeah it's coming and healthcare or disease changes

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and or big innovations that completely repaint the pavement such

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that the tire slipped and turn and twist trying to

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keep the bicycle upright The key goal Look outfor bollards

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