An introduction to… navigating Boom and Bust Cycles: Riding the Roller Coaster

Ever felt like you’re on an economic roller coaster, riding high one minute and plummeting the next? Welcome to the wild world of boom and bust cycles, where the economy’s mood swings make your ex’s look like a chill yoga instructor.

Image via: coast to coast magazine

What’s the Buzz with Boom and Bust?

So, what’s the deal? 

Boom and bust cycles are unpredictable and dramatic - and bound to make you scratch your head. The boom is the glory days, the fat stacks, and the ‘good’ times. People are spending, businesses are booming, and life is all rainbows and unicorns.

But then, cue the bust. Suddenly, it’s like the DJ dropped the beat too hard, and everyone’s left holding their empty wallets. Businesses go bust, unemployment skyrockets, and we’re all stuck in an economic hangover, wondering what the hell just happened.

Riding the Highs and Lows:

Boom and bust cycles are basically the stock market’s way of saying, “hold my beer”. It’s a cycle as old as time itself—well, as old as the stock market, at least. The Roaring Twenties? Classic boom. The Great Depression? Classic bust. The 2008 financial crisis? Boom, boom, bust. 

Think of it like this: during the boom, everyone’s throwing cash around like they just won the lottery. Real estate prices go through the roof, and your neighbor’s grandma is probably day trading. But just when you’re sipping your artisanal avocado smoothie, the bust hits, and suddenly that smoothie budget becomes your “emergency fund.”

So why are house and rent prices so high even in a bust ie: in the present moments? Put simply; house prices tend to rise if more people are able to borrow money to buy houses. The more lending banks and building societies are willing to provide, the more people can buy a house and prices rise. The Bank of England also affects house prices through setting the key interest rate in the economy.

Lessons from the Economic Mosh Pit:

Sure, riding the boom wave is a blast. You’re making it rain and living your best life. But don’t get too comfy in that VIP section, because the bust is lurking around the corner, ready to crash the party.

1. Diversify your portfolio:

Just like you wouldn’t put all your trust in one Tinder match, don’t throw all your money into one investment. Diversify and spread the risk. The more opportunities you’re looking for, the higher the likelihood of a return. 

2. Save for a Rainy Day:

You know that feeling when you’re caught in a downpour without an umbrella? Yeah, it sucks. Same goes for not having an emergency fund when the economy decides to take a nosedive. Save up, because the financial forecast can be unpredictable.

3. Stay Informed, Not Just Instagrammed:

Put down the selfie stick and pick up a newspaper. Stay informed about economic trends, because while that influencer might be flaunting their latest Gucci, you need to know if it’s time to tighten your belt. Infographics on social media are not a reliable news source - always fact-check. 

Here are some useful sites for fact checking when it comes to economics: 

The Economist, Financial Times, Bloomberg Business Week, Reuters, Forbes, and of course, Wall Street Journal. 

The Future of the Economic Dance Floor:

So, where are we heading, economically speaking? It’s like trying to predict the next viral TikTok dance—no one really knows. But understanding the rhythm of boom and bust cycles can help you navigate the economic mosh pit like a pro.

In this crazy world of highs and lows, all we can do is ride the wave, diversify our moves, and be ready to adapt when the DJ changes the track. Boom, bust, repeat. It’s the economic dance we never asked for, but it keeps life interesting. 📈💸🎉

Late stage capitalism and boom-and-bust cycles are interconnected in a way that reflects the volatile nature of the economic system. 

Now that we’ve learned the basics of boom and bust cycles, we need to understand what late stage capitalism is: 

Late stage capitalism, according to critics, is like a wild roller coaster with a broken track, where the rich get richer, the poor get poorer, and the middle class is stuck clinging on for dear life.

Picture this: You’re in a game of Monopoly, but unlike the board game, there’s no end. The players with the most properties and money keep buying up everything in sight. Meanwhile, the rest of the players struggle to pay rent, facing the risk of bankruptcy. The rules are rigged, favoring the top players, and there’s no escape for the underdogs.

In late stage capitalism, giant corporations hold the reins, calling the shots in the economic circus. They’ve mastered the art of paying workers the bare minimum while charging customers top dollar. It’s a profit party for the elite, leaving workers with crumbs and CEOs with golden parachutes. Imagine a society where Amazon is the puppet master, controlling not just what you buy but also how you work. Workers are treated like disposable commodities, forced to endure exhausting hours, precarious job security, and meager wages, all while the big bosses bask in luxury.

Late stage capitalism is the era of extreme inequality, where the top 1% sits comfortably in their golden thrones, while the rest of us scramble for the leftovers. It’s a system that prioritizes profits over people, where the pursuit of endless growth comes at the expense of basic human needs like healthcare, education, and affordable housing.

In this game, the environment is just collateral damage. The relentless pursuit of profit often leads to environmental degradation, climate change, and a planet that’s gasping for breath. It’s like throwing a never-ending party and trashing the venue with no regard for the consequences. This is further demonstrated through wars which have recently been rumbling and erupting, all in the name of resources and money - with a total lack of humanity and regard for not just the quality of; but actual human lives. 

Late stage capitalism has its critics raising their voices, demanding a fairer system. They argue for a society where the wealth gap is bridged, workers are treated with dignity, and the environment is given a chance to heal. It’s a call to rethink the rules of the game and create an economy that works for everyone, not just the chosen few. 

Is late-stage capitalism sounding familiar yet? 

So, now that we’ve covered that, allow me to breakdown the relationship between ‘boom and bust cycles’ and late stage capitalism:

1. Inherent Instability:

Late stage capitalism often experiences increased economic instability. The system tends to favor short-term gains and speculative activities, leading to exaggerated boom periods followed by severe busts. The pursuit of immediate profits without sufficient consideration for long-term sustainability contributes to this instability.

2. Financialization:

Late stage capitalism is characterized by a shift towards a more financialized economy. This means that financial markets play a significant role in shaping economic activities. During boom periods, speculative bubbles may form as investors chase quick returns. These bubbles eventually burst, leading to busts and economic downturns.

3. Income Inequality:

Late stage capitalism tends to exacerbate income inequality, concentrating wealth in the hands of a few. During boom periods, the wealthy accumulate even more wealth through financial instruments and investments, widening the wealth gap. When the bubble bursts, the effects are disproportionately felt by the majority, leading to economic downturns that impact the less affluent more severely. 

4. Corporate Practices:

Large corporations, which often dominate late stage capitalism, contribute to the boom-and-bust cycles. Their pursuit of short-term profits may involve risky financial maneuvers, unsustainable business practices, and a focus on shareholder value over long-term stability. When these practices unravel, it can trigger economic downturns.

5. Policy Responses:

Governments *should* respond to economic downturns with measures such as interest rate adjustments, fiscal stimulus, or bailouts. These interventions can influence the severity and duration of boom-and-bust cycles. Bad news is: in late stage capitalism, the effectiveness of these policies may be limited due to entrenched power dynamics and resistance to systemic change.

6. Globalisation Impact:

Increased globalization is often associated with Late stage capitalism . While this can lead to economic growth during boom periods, it also exposes economies to global shocks*. A crisis in one part of the world can quickly reverberate globally, contributing to the bust phase of the cycle.

*key example: oil prices.

In simple and brief terms: late stage capitalism and boom-and-bust cycles are intertwined because of the economic system’s emphasis on short-term gains, financialization, income inequality, and corporate practices. The result is a cyclical pattern of economic expansion and contraction, with the negative consequences of downturns disproportionately affecting the majority.

If you’re at all aware of politics and our shifting society, this probably rings a bell. These cycles are becoming more and more extreme, and the people with power seem to have a deep commitment to keeping working and lower class tucked away in a locked box where the key has been thrown away. And if you want to protest this? Forget about it, those rights have been stripped too. 

Something needs to change before the world forces a reset to compensate for the economic, humanitarian and ecological damage which has become entirely disastrous, and when it happens - it won’t be pretty. The earth has a habit of reclaiming itself when the organisms on it become too harmful. But that’s an article for another day…