WASHINGTON, DC: As a tool for analyzing and influencing the economy, is the business cycle outdated? Yes, says the Bank for International Settlements (BIS) in Basel, Switzerland. Unless you’re deep into today’s economic debates, you’ve probably never heard of the BIS. But its annual reports—the latest is just out—are eagerly awaited, because the BIS plays an informal role as loyal opposition to mainstream economics. This year is no different.

For the mainstream, smoothing the business cycle is job one. The aim is to prolong its expansions and avoid or minimize its recessions. Until the Great Recession—and excluding the inflation-caused recessions of the 1970s and early 1980s—America’s post-World War II record looked good. Deft shifts in interest rates by the Federal Reserve and the economy’s natural recuperative powers sustained growth. The longest US expansions lasted a decade (1991-2001) and nearly nine years (1961-69).

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