In
years before modern regulatory controls, free financial markets
regulated themselves. Severe bubbles were rare, though economic
cycles were common, as they still are.
But
recessions were self-correcting, because they were market-oriented.
Every economic downturn was brief, self-repaired by inherent market
instincts.
There
were no strict regulatory powers around, with no artificial tinkering
and meddling by use of economic theories or any correcting stimulus.
Yet, the steeper the downturn, the faster and sharper the recovery in
every instance.
The
problem with a stimulus is that most are political and have no real
economic function. Moreover, they are usually the wrong kind. That
is, they are made to act too far into the future. They begin to work
after the actual economic recovery. Natural market repairs are much
faster than a political stimulus, which as we know it, is merely a
misnamed bait and switch device.
It
should instead be called what it actually often is, a political slush
fund. (See the Earl J. Weinreb NewsHole® comments and
@BusinessNewshole tweets.)
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