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Recession a natural part of the cycle, so why stop it?

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'Fed makes its biggest cut in 26 years in emergency move to head off recession'

SCMP headline, January 23, 2008

But why head off recession?

I'm not being silly about this. The natural progression of economies and markets is by the cycle - up and down, bull to bear, boom to recession and back again.

Straight unending growth with no halts along the way is not natural. We have a word for this when it happens to ourselves. We call it cancer.

What is happening at the moment in the United States is entirely natural. For 15 years, Americans went on a residential building boom that saw their expenditure on housing construction quadruple. It came to a halt two years ago and housing starts since then have plummeted, with home prices now also tumbling.

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