The white knight of the global economy

No two economic cycles are exactly same. Different factors come in to play making long term predictions based on past data more of an art than science. The length and strength of this economic cycle has surprised many. The Morgan Stanley analysis page has some analysis of factors behind this long cycle.

When economies face inflationary pressure, their central banks do not have to raise interest rates by as much as before, because the global financial system does half the job by pushing up their currencies, which essentially transforms inflationary pressure into current account deficit. The global financial system is maximizing global growth by spreading inflationary pressure across the world.

Globalization of production has decreased inflationary pressure, and globalization of finance has made current account deficits easy to finance. The combination is behind the longevity of the current cycle.