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Finance allah shmoop What is economic cyclicality All right Well

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if you looked at the history of growth and decline

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in the u s economy you think it was run

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by a bunch of knuckleheads Meat would poop and poop

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all in congress Now surprisingly o r maybe not In

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fact economic cyclicality is a reflection of resource glut and

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then scarcity and the willingness of buyers Teo you know

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buy stuff that is when times were good consumers and

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businesses by things hire workers consume commodities at office space

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and factories until there is a shift in tastes and

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sentiment You know like the horse industry before henry ford

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came along anyway Sometimes the shift that triggers an economic

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cycle comes from the government like when times air too

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good there's usually rampant inflation People in companies will simply

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choose to just pay up the extra two bucks a

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foot to a rent office space The company can pass

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on that extra cost by raising its prices to customers

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from eighty dollars a year to ninety dollars and nobody

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will notice until they do Yeah the government wanted desperately

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to cool inflation in the nineteen seventies so the fed

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raised short term borrowing rate costs dramatically from somewhere in

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the three to four percent range to closer to like

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ten percent And the cost of renting money became so

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expensive And because companies were highly leveraged borrowing money to

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build factories and hire workers and expand that well then

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everything contracted with leverage right So they had all this

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debt and revenues went down They still to pay the

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dead and well that was a bad scene So inflation

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was contained at the cost of a vastly cooler economy

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So things contract then like a scared turtle or a

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you know like when it do jumps in a cold

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ocean and all right But then eventually one brave alligator

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emerges to see if it concrete's back up under the

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top of the food chain and eat some chickens or

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dear Whatever alligators eat what do they eat anyway And

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the consumer starts buying things adding risk rever been reducing

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it and the cycle takes off again gets picture You

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know it's the circle the circle of life round and

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round It goes where it stops Well actually we do 00:02:15.523 --> [endTime] know Circle of economy

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