[eru]

Doesn't have to happen. If central banks would start targeting nominal GDP level, we would have bubbles bursting without economy wide recessions.

See eg http://www.economist.com/blogs/freeexchange/2011/10/monetary...

[partiallypro]

That assumes the Fed can make the economy grow with the flip of a switch, and that it could contain contagions. I'm all for taking away the Fed's discretionary powers, I think that would smooth the business cycle, but it would not eliminate it. Recessions can occur naturally.