Exactly. This is why I don't follow the hypothesis that we're witnessing a crash due to unhealthy economic indicators/behaviors (debt ratios, QE, interest rates, etc). Of course those things matter, and they certainly suggest the economy is in bad shape (or at least on some pretty intense life support), but they don't seem to trigger crashes by themselves - the indicators and alarm signals have been painfully obvious for years now, and the market should have already taken them into consideration (at least to some degree).

As you say, we can't predict future crashes or the circumstances that trigger them, and I'm not entirely sure we've seen the trigger for a crash now. Perhaps we've set ourselves up for one, but it's doubtful that the indicators themselves will "pop the balloon".

In personal finance, you can use a variety of tricks to hide your bad finances for a while, but it's not usually your debt-to-income ratio (or any other technical indicator) that triggers bankruptcy; more often than not, people keep digging themselves deeper until the bank actually knocks on the door to repossess the house. Governments have historically shown that they can keep the game going far longer than any bank might allow (there are no real terms attached to their debt when they can literally print their own money).

We probably won't know the trigger this time (or any other time) until a collapse is already well underway, if it's indeed happening.

Maybe this doesn't matter, but how did you leave out the long history of market crashes prior to 1929 [1], and how did you leave out the S&L crisis [2]? That is some really selective reading of history.

> a crash could only come about from a set of new circumstances we couldn't have predicted before (or else it wouldn't have crashed)

This claim isn't actually correct. Economic history is full of crashes and recessions where nothing new happened.

[1] https://en.wikipedia.org/wiki/List_of_recessions_in_the_Unit... https://en.wikipedia.org/wiki/List_of_stock_market_crashes_a...

[2] https://en.wikipedia.org/wiki/Savings_and_loan_crisis

The crash (or correction) of 2015 might be because of student loans & labor participation rates of recent graduates. The load is such that many of them could not grow into the consumer role to the degree that the economy needed of them in order to grow. And reducing growth/recovery even further, stagnant wages further hold back consumption.

2008 and 2015 are economic events which feel to me like they're based in inequality manifesting in different ways.

New graduates are a relatively small slice off the overall workforce and they have a long time to pay of their loans. I don't see any mechanism there which would cause a crash. We've seen quite clearly that over-subsidising their debt burden simply causes them to take on larger loans - it doesn't help.

The problem for those younger people entering the market is not that they don't consume - in fact, they consume readily - but that they can't afford property and don't receive adequate pensions or other benefits.

It's not that they don't consume, it's that that don't consume to the same degree of past demographics (they simply can't). That consumption would have worked its way through many hands (businesses & employees) causing a multiplier effect vs going to pay back a loan. So larger scales of student debt, aren't just larger numbers on the balance sheets, it pulls money out of the active economy.

If they can't afford to buy a property, a whole cascade of secondary 'new place' purchases don't happen.. it's a symptom of not enough circulating money at the center of society to sustain the economy.

The crash part comes when investors look at falling activity in China, and falling commodity prices as strong indicators that global demand is falling.

"Second, those fluctuations will be unwittingly used as a Rorschach test by everyone with a political axe to grind."

https://news.ycombinator.com/item?id=10110809

The difficult part of arguing economics is that it's a feedback loop - not even a clean loop but a messy cyclic network. One can point a myriad of direct relationships between elements of the network which are true, yet completely miss why the overall network is moving one way or another. It's not just political axe's being ground (and dismissing arguments as political is itself political), but schools of economic theory and social values. If we actually knew what to concentrate on as the root drivers of crashes - we wouldn't have crashes.

That's a ridiculous assertion. The trivialities may differ, but fundamentals are generally pretty close. Crashes happen when reality catches up to people's perceptions.

The phenomenon where lots of cheap capital causes junk companies to do dumb things fueled by debt isn't a new one.

So whats the cause now? China being a big bubble??