Reply To: Full Employment, Cycles, Etc


Recovery from a bust does not occur until entrepreneurs return to normal investment activity. Longer, drawn-out recessions or depressions (like the Great Recession or Great Depression) are characterized by a dearth of investment and the build-up of cash holdings.

The Obama administration, like that of FDR, adopted policies that aggravated the problem. Take a look at the work of Robert Higgs:

The unprecedented policies of fiscal and (esp.) monetary expansion under Obama generated uncertainty that suppressed investment and retarded recovery. The official dating of the recovery to 2009 proved to be abortive (just as the “recovery” from 1934-1937) as GDP growth rates failed to cracked the 2% level for nearly a decade. In the so-called, slow-growth recovery the economy has been held back by a lack of investment.