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Debt cycles occur over short-term periods (about 5–8 years) and long-term periods (roughly 75–100 years). During expansion phases:
Borrowing accelerates.
Asset prices rise.
Prices-inflationary pressures emerge.
When debts become unsustainable, a cycle of debt repayment and deleveraging begins, often triggered by asset price crashes, as seen in historical bubbles and crises (e.g., 2008 financial crisis).
The Impact of Debt on Economic Fluctuations
Short-term cycles are driven largely by the availability of credit, influencing spending power and thus economic activity.
Long-term cycles reflect structural shifts—like demographic changes, technological progress, or debt accumulation—that affect overall capacity and societal wealth.