I was actually trained as an economist but the U.C. Berkeley econ department was so Marxist that I was saved from the misery of becoming a PhD econ professor. My special interests were the definition of capital and business cycles aka Wesley Mitchell.
In earlier blog posts I’ve pointed out that the current inflation was caused by the Biden suppression of American oil production on his first day in office. The current inflation (and the one in the 1970s) had nothing to do with deficit spending, the classic economic theory to explain inflation.
Since the beginning of the Biden inflation the Federal Reserve has been trying to fight it using the classic econ model of raising the core interest rate. In theory raising the interest rate is intended to suppress capital investment (return on investment is supposed to be tied to base interest return) which will lead to a recession. Since this is a wrong analysis it isn’t working.
In fact we have had the longest economic expansion in the history of the world, fourteen years.
The reason for this is not understood by anyone in economics. The cause is simple. America is the recipient of much of the computer and Internet revenues of the whole planet. The cell phone networks, the computers, and everything related to them create money that pours into the American economy. This money is of such great magnitude that it swamps the ebbs and flows of the traditional American economy.
The longest previous economic expansion was from 1991 to 2001, ten years. That long expansion was due to the end of the Cold War and the transfer of capital spending from military to civilian investments.
The current expansion is from 2009 to the present, fourteen years so far. Don’t pay attention to the dip in 2020 due to the economic freeze of the Covid interruption. It had nothing to do with economic forces; it was a government-induced suppression of business.
We get to watch the longest economic expansion and see how incredible it is.