So the economy is in a constant stage of creative destruction, which is a huge win for the consumer, obviously. It's not necessarily a huge win for the investor class.

Just think in terms of your four-function calculator. Twenty-five years ago, you paid $100 for a four-function Texas Instruments calculator. And now, people give them away as party favors. So any profits that were there for the taking in making four-function calculators clearly were taken, and the process of creating the structure has a tendency to turn all manner of economic activity into commodities. So, everyone's trying to find the next new thing that's not a commodity, but then, once they find it, it attracts capital and it becomes a commodity.

And it's the absolute beauty of capitalism. The problem is that capitalism also has boom-bust methodologies, which gives birth to the notion that you need to have a government sector that is anti-boom and also anti-bust, otherwise known as countercyclical. Call me a Keynesian because I obviously am one.

Simonoff: Do you think we're out of the recession now, or not?

McCulley: We're out of the recession. Recessions are about going down. And what was happening last year is two particular items and GDP were going down, not slowing down but literally going down. And that was business investment and inventories.

And once you stop going down, then the recession is over. It doesn't mean that you have a vigorous recovery on the other side, but means that you don't have to go to hell twice for the same sin.

And obviously, business investment was an intense sinner, as well as inventories. And they were obviously connected because of the lot of the business inventory-business investment was in the tech sector, which had heavy inventories, with Cisco being a poster child for that 12 to 18 months ago.

So I think that the recession is over because we've stopped going down, and I think we will have and are having a recovery that is challenged by a couple of things.

Number one is that the consumer sector never went down during the recession, as historically is frequently the case. You look at last year, as well as this year, and both housing and motor vehicles have been sturdy as all get out.

So the fact that you never went down in housing and cars means that you can't bounce back. So I think that a bit of an arithmetic head wind to the recovery is that you didn't have a recession in those classic sectors.

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