A closer look
Long before Wall Street accepted that markets have bipolar mood swings, a Ukrainian-Russian economist named Mikhail Tugan-Baranovsky cracked the code. While mainstream economists in the 1890s thought markets naturally balanced themselves in perfect harmony, Tugan-Baranovsky looked at data and pointed out that capitalism is structurally doomed to cyclical panic attacks. He theorized that investment in factories and machines outpaces consumer spending, inevitably leading to a chaotic collapse before starting all over again. He was basically the first guy to mathematically prove that the boom-and-bust cycle isn't an accident—it's a fundamental feature of a deeply neurotic economic system.
