I’m no economist, and I’m not even very strong with the fundamentals (that would make me an economist, I suppose). But I am starting to pay more attention.
Out of all the explanations and models that I hear, this one laid out below encapsulates my current understanding the best.
A great quote from the piece:
Consider a different view of cause and effect. If the recession is a correction to an overly pumped economic boom, matters change. The recession, then, is not an aberration crying out for correction; it is itself the correction for the unsustainable economic bubble that preceded it. It should be welcomed in the same way we welcome a sober day after a drunken evening, or the detoxification of an addict after a period of addiction.