Economic Cycles or Deception Cycles, Really ?

I remember reading about the inevitability Economic Cycles of Boom and Bust in a Laissez Faire Capitalistic System, as if these cycles are inherent weaknesses of the System and must be accepted as a necessary evil or imperfections as it is with Democracy as a System.

In my adult life, I have personally experienced at least 3 downturns: the early 1980s just as I was freshly graduated from Business School, the Great Asian Currency Crisis of the late 1990s and now, the Global Economic Crisis of 2008.

The classical theory behind economic cycles is the inherent mismatch of production to match consumption demand to the point of overproduction, not unlike the situation of cash crops demand and supply feedback phenomenon. When the supply of a certain cash crop cannot meet the existing demand due say to bad weather or diseases, many farmers jump into the bandwagon and start planting the same crop at the same time, and inevitably ripens, harvested and put on sale in the market at the same time, a glut in the market drives down prices, less planting, less supply and the next upward price spiral repeats the cycle.

The other modern theory is that if hot money is not put into the real economy, but merely into the financial market like stocks and shares, derivatives, real estate speculation, this drives the financial market bubble causing it to inevitable explode one fine day when the frantic music stops in a game of musical chairs.

Having gone through 3 cycles, I am beginning to doubt if there is going to be a 4th and subsequent cycles as the politicians, economists and all vested interested people have wanted us to believe and put our faith in Economic Cycles.

The seduction to have us believe that Economic Cycles are natural and inevitable reinforces our acceptance of assurance that whatever goes up must come down and in defiance of gravity, whatever that goes down, will rise up too.

My take of the situation is the creation of money and credit to stimulate aggregate consumption and drive economic growth is not sustainable for the simple reason that unless the real resources is there to support the man made monetarily and financially created wealth, any additional virtual wealth is only going to drive up prices as too much money chases after too few goods and services.

Another real threat to the survivability of homo sapiens lies in the ability to feed, clothe and heat ourselves given the past half decade of potential global famine in the later part of the 2oth Century was only avoid thanks to cheap fossil fuel.

The so called "Green Revolution" in food production was only sustainable not due exclusively to superior high yielding crops but also the application of petroleum based plants fertilizers.

As oil peaks, pollution sickens and climate change threatens the status quo, a new point of balance or homeostasis in world population versus sustainable resources would present itself.

Like mice in an overcrowded cage, Malthusian attrition is the inevitable prognosis, I am afraid.

Globally, we have reached the tipping point in population explosion.

The picture are happy healthy goldfishes swimming about in an overpopulated fishbowl and when the blackout cuts off the electricity that powers the aeration pump, we see fishes bellying up.

We are kept alive in all intend and purpose by past cheap oil and the time has come when no amount of money buy any commodities any more, because we have eaten our last fish and drank our last glass of fresh water.