Managing the Business Cycle


Last night, we had an interesting question & answer session in Stuttgart. One of the question that always comes up: Can the cycle be changed? The answer is no. The business cycle has been with us since the dawn of time. It is perhaps a combination of the universe, and how human nature responds to it. Our greatest problem has been the countless attempts to create Utopia that people define as killing the cycle to create the perfect world of perpetual growth without inflation or the boom and bust cycle.

The theories of Marx to kill the business cycle resulted in the killing of millions of people. So this is not a subject to be taken lightly. I do not believe we can alter the cycle, but we can influence the amplitude. Government effectively aggravates the entire cycle, and this is what we need to manage.