There are not many things in life as consistent and stable as is the above graph. What it shows is a human society growing and learning. So long as the society is stable and functioning, the graph should go up. But if people go beserk and elect a wingnut like Hitler then all bets are off.
Every one of the downturns in the graph has an explanation:
- the Great Depression because of excessive speculation worsened by a Hoover, a Republican who believed in "sound money" so the fiscal policies were contractionary (austerity) rather than expansionary
- post WWII readjustment
- the "oil shock" of 1973-4
- Paul Volcker raising interest rates to choke of inflation in the early 1980s
- the 1987 crash caused by "financial engineering" which had created "portfolio insurance" which works well when used in a limited way, but when everybody rushed for the exits the market crashed
- the "tech wreck" of 2000
- the Bush crash of 2008 caused by an ideology of "deregulation" and Wall Street's "financial engineering" that encouraged fraudulent mortgages that imploded
In each case there was a recovery and a retracing of growth to get back onto the trend growth line.