Is it possible to keep the ecomomy at constant growth or are we always doomed to a recession?

I believe everything in life is cyclical so there will always be recessions. The difference is the way we approach them to determine how long they will last.

Well, clearly past history shows that it is not possible. Factors that predictors have not taken into account, such as the collapse of the housing market lending instruments which led to the last great recession, occur.

It’s impossible because among other factors collective human psychology involves volatility. But we are no longer doomed to experience a real depression. The tools are in place to avoid this.

The market has always gone up and down, regardless of what it was primarily trading on.

That will never change.

Its one of the downsides of capitalism.

Basic thermodynamics dictates that nothing can continue perpetual growth on a finite planet. Not even an economy based on highly fictionalized numbers.

Constant growth in any economy is unsustainable. Sooner or later a country’s progress will be affected either short term or long by the actions of its goverment plus any significant event that takes place abroad. Recall the Earth is Flat terminology?

You might say we are always doomed to a recession, yes. Simply for the fact that men easily lose sight of maintaning discipline and common sense when it comes to investing and trading. In short, greed shall always bring forth chaos after a while. But then it will self correct, only for the fact that this“casino” no matter how vulnerable and imperfect needs to stay open for the “gambling” to continue.

as @mattbrowne mentioned, but there is resistance to the use of those ‘tools’ he mentions. ‘Regulation’ seems to be a dirty word in a system that prefers the ‘Bigger Fool’ theorist mentality.

While constant growth is assumed in some (theoretical) models in economics and finance, this is not possible in practice, as others have said before, and because of the reasons listed here.

If you’re interested, you can read more about it here.

Our current system requires constant growth. People get upset if the GDP is not increasing. I have seen proposals for steady-state systems. They claimed that they were possible, but that the level of production might have to be reduced from what we are used to. Unfortunately, I don’t recall where I read this.

@cazzie – I get the feelings that new bubbles are being created right this minute. Every minute. With investment banks generating profits like hell. Like in the good ol’ days. What part of the real economy correlates with this “boom”? Or is it just our “imagination”?

@mattbrowne exactly….. ‘Intrinsic value’ has lost all meaning.

Great question, thanks for asking. My gut impulse is that slower, wisely controlled growth would reduce both bubbles and recessions. But as @mattbrowne alludes, these are more the result of human sociology. Who can put the brakes on times of prosperity to decrease the likelihood of an eventual recession at an undetermined time?

Economics is still a pretty high stakes dark art.

The only thing that doesn’t change is change itself. Change is the constant. That’s true not just in the economy, but every other form of natural and human behavior. There is too much chaos for humans to be successful in creating uniform growth.

I wonder, though—is it even desirable to have constant growth? I think that human success depends on stress. With no stress, we will become soft and set in our ways. We will lose our adaptability which enables us to survive things like recessions.

Recessions and depressions are a natural part of Capitalism.

Although economies go up and down naturally, what many people don’t understand is that putting money into the economy actually helps simulate it, an idea F.D.R understood and put into good use. That’s how I understand it anyway.

Realy appreciate the great answers guys. I have always been fasinated by this topic of trade cycles and agree with all these factors explined above which all contribute to a definate yes to the question.

A great point to put across laureth regarding capitalism. Thank you