( Economists, so-called, talk about 'economic cycles' as if they were a law of nature. In fact, economic cycles are simply the story of how financial elites maintain their wealth and power in a capitalist system. It's a two-part game that I refer to as Bubble & Burst. It's a game that's been played for centuries, and the last big session most of us know about was the Great Depression of the '30s. )
The first part of the game starts when credit is loosened up by the big banks, and loans are easy to get at low interest rates. Businesses borrow and expand, hiring more people, and the economy rises -- a hot air balloon heated up by the flames of debt. Consumers start borrowing and spending, businesses prosper and hire more people, the upward bubble feeds on itself. Meanwhile the big banks are accumulating huge portfolios of loans that they'll be collecting on for decades to come. The upward spiral is of course accompanied by inflation and over-production, and eventually the growth cannot be maintained. The economy runs out of steam, and the big banks shift into the second part of the game.
In part two, credit is tightened, interest rates are raised, and the bubble bursts. Depending on the scale of the game, this period is called a slowdown, a recession, a depression, or a collapse. For the big banks and investors, this is a period of ownership consolidation and monopolization. Debt-ridden businesses and properties are picked up for a fraction of their real value. Many loans must of course be written off, which the banks love to whine and cry about, but those losses are peanuts compared to the loans that do get paid off. And the value of that loan portfolio is much larger than it would have been without the bubble -- part one of the game. Small banks fail, and those are picked up by the bigger banks, further concentrating financial control into a few elite hands.
While the people and governments are left to deal with the collapse scenario, the big banks and investors are busy counting their money, picking up bargains, and planning the next round of the game. We are now in what may be the last round of that game because economic growth has finally surpassed the ability of the Earth to support it. Rather than fix the system that causes all these problems, financial elites want to hold on to their power and to the capitalist system that supports it. Global starvation, genocide, and misery are the inevitable result, and that's why Western nations are gradually, or not so gradually, being turned into fascist dictatorships (dressed in sheep's clothing), with militarized police trained to suppress populations.