[ajross]

Well, yeah, in fact the point is stronger. Economies are feedback systems and oscillate. Recessions are inevitably predicted every few years because recessions simply are inevitable every few years. And yeah, it seems likely (though obviously not certain) that we're due for another.

There's nothing particularly notable here. Speculation markets got overheated[1], now they're correcting and as a side effect money ends up more expensive to do "normal" activity too. Then we'll do it all over again until 2030 or whenever when we come back to write this kind of stuff as if it was a surprise.

[1] For lots of interacting reasons, I'm sure. There's good economics to be done to understand this stuff, but "ZOMG Recession" coverage is just tiresome.

[xapata]

I'm not sure oscillation is a good metaphor. It could be a random walk, which might appear periodic, but is not.

[imtringued]

It is not a metaphor if you think the Fed is applying control theory to regulate the economy.

But some people take it too far and think if there was no Fed there wouldn't be any oscillation. That is not true. Bitcoin also "oscillates".

Oscillations happen because of a time lag that leads to an overshooting of the target which then leads to overshooting on the way back and so on.

The economy never becomes perfectly stable but there is no rule that the oscillation can't be smoothed out until it is no longer a problem. We aren't that far yet.

[xapata]

Calling it an "oscillation" means that you know the causal mechanism has a spring-like behavior, which is a more complex model than a random walk. A random walk can easily appear to be an oscillation, but is not one.

[ajross]

Virtually all feedback systems[1] have oscillatory modes in their solutions. Calling something a "random walk" doesn't tell you how the choices of direction are made, but in economics (and electronics) that's something that's subject to analysis. So I like mine better.

[1] Which an economy is, almost by definition: spending makes the people who sold you stuff richer, who then spend; tight purses mean the producers are poorer too.

[xapata]

An autoregressive system with a positive coefficient is a feedback system, yet it is not oscillatory. Any appearance of such is an illusion, like seeing faces in clouds.