Defationary collapse of a massive debt bubble != down-swing of the business cycle
They look pretty much the same from the perspective of July 2010. What's the big difference?
Re:Andy Grove Essay Commentary by Tyler Cowen
by SkyMarshal on Monday July 05, 2010 @11:41PM
(#1489870)
Routine business cycle downswings don't require over a trillion dollars to prevent the economy from tailspinning into another Great Depression.
If you add up the TARP and all the alphabet soup lending support programs, the stimulus package/s, and Fed's quantitative easing intervention, you're talking well over a trillion dollars, and we're still not out of it yet.
This was a speculative debt bubble followed by the inevitable financial crisis. See Rogoff & Reinhardt. Definitely not part of the business cycle.
Also, a quick look at just about every economic empire in history shows their decline was always associated with a massive negative trade balance. The theorists seem to ignore this though. If it's not codified in a dazzling formula, it's irrelevant.
Not that I'm for protectionism or anti-globalization, but it's certainly not beyond questioning, reconsidering, and/or re-engineering.