Most cyclical imbalances result from the boom and bust characteristics of the global economy and financial markets. In his last speech, read on his behalf at the Jackson Hole Conference on 31 August 2007, the late Edward Gramlich had some interesting things to say about booms and busts.
Essentially, he argued, American history showed that boom periods followed a pattern of initial discoveries, breakthroughs, widespread adoption, widespread investment, and then a collapse where prices cannot keep up and many investors lose a lot of money.