There's no need for complex models to understand what's hap…
There's no need for complex models to understand what's happening in the economy. For 13 years, and really 22 years, the Federal Reserve has kept interest rates artificially low. There was a housing bubble, then an everything bubble.
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Renovating homes was always a business, renting out properties was always a business, but now it's common to hear about individuals with dozens of homes or corporations with 100s of thousands because of cheap credit. Businesses relying on cheap credit are bubbles.
Since everything in the economy is affected by the price of money, artificially low interest rates fool people into believing a business or project is profitable, when at the natural rate it will fail. It also causes people who aren't fooled to engage in short-term speculation because they know it won't last.
A recession always happens when a distortion is removed because people engaged in unsustainable businesses shift to sustainable ones. That transition period causes unemployment for a time. The mistake was creating false price signals, not in correcting them.