A short list of examples of boom and bust in the mining industry
- Bodie, California
- Bannack, Montana
- Saint Elmo, Colorado
- Pajala, Sweden
- Moranbah
- Zambia
- Tumbler Ridge
- Waiuta
- Denniston, New Zealand
- Sewell, Chile
- Pulacayo
In economics, boom and bust is a process characterized by sustained increases in several economic indicators followed by a sharp and rapid contraction. It refers to a severe business cycle. [1] The phrase "boom and bust" pertains to capitalism. [2] [ dubious – discuss ] Times of increased business and investment have seen these collapse leaving widespread poverty such as the depressions of 1837 and 1857 in the United States. [3] For example, in the early 1800s in Ohio people were buying land on credit to sell at twice the price but land became too expensive to buy. At the same time, wheat prices became too low to transport wheat to market. Wheat was $1.50 per bushel in 1816; by 1821, 20 cents. [4] In 1894 someone wrote, "Of course it stood to reason that the music hall boom would bust sooner or later . . . In fact the boom has busted and according to the published balance sheet the Alhambra has suffered as much as the rest in consequence." [5] Business leaders such as automaker Paul Hoffman have used the phrase in calling for increased civic responsibility toward taming the business cycle; he also said, "we cannot live with a crash" in reference to 26 depressions over 100 years including "the bust" of the 1930s. [6] Some authors have used "boom and bust" to define the business cycle. [7] Other ways of saying unwanted changes sales have been used, such as "more volatile cycle". [8] William Forbes uses the phrase in his textbook on finance, in which he identifies credit characteristics of boom and of bust:
1. Indicators of boom include banks extending more credit
- for domestic consumption activities
- for "investments" in the commodities, stock, and housing markets
- and for imports of goods made in developing countries
2. Indicators of bust include banks extending less credit
- from lower domestic consumption activities and resulting unemployment
- from fewer investments made
- from less demand for imports causing companies in developing countries to have trouble paying their loans
- and from bank portfolio deterioration from non-performing loans; for example, there was a credit boom and bust in the early 1990s in the United Kingdom. In 1956 Changing Times blamed boom and bust on demand being too high and too low, with business needing to sell things to customers and customers needing to be employed to afford to buy things. [9] In the early 21st century, after entire poor neighborhoods in U. S. cities were evicted from their homes, Edward M. Gramlich used "boom and bust" in the title of his book about the decline of anti-usury laws meeting variable-rate sub-prime mortgages. [10]