Brad wants a model of business cycles

Ok, here is one.
Households and firms decide that the transaction costs of relying on outside firms for processed goods are too high.  They decide to perform more processing inside the household or firm, thus increasing the transaction size while reducing the transaction rates.  Scale increases while variability in products reduce. Households and firms increase inventory levels, of both money and goods.  The length of the supply chain reduces.

We did not due this out of some psychological defect, we did this because oil became suddenly scarce relative to plan; and oil is the main ingredient in transaction costs.