When information technology explodes, the Y axis of the chart causes the sudden downturn as the economy is disrupted by the sudden appearance of $20 bills on the sidewalk.When transportation technology explodes, the X axis is disrupted by the sudden ability to move heavy goods to better locations.
The first effect causes actual GDP to drop below potential, and the second causes actual GDP to rise above potential.
Since 1820, all depressions follow the same path: Information technology explodes on the scene then transportation technology adapts.
But the X axis is time!
Yes, the transactions rates slow down during the downturn. We are seeing a strain on the transportation grid. John Taylor at Stanford gets this part.
The first effect causes actual GDP to drop below potential, and the second causes actual GDP to rise above potential.
Since 1820, all depressions follow the same path: Information technology explodes on the scene then transportation technology adapts.
But the X axis is time!
Yes, the transactions rates slow down during the downturn. We are seeing a strain on the transportation grid. John Taylor at Stanford gets this part.