The concept of the boom-bust cycle has a long history. In fact, it goes all the way back to a major stock market crash known as the Panic of 1825, when large investments failed in several South America countries (including a fake country!). The crisis led to the collapse of 12 banks in Britain alone and was felt across Europe and both American continents.
Until this point, economists had generally believed that economic downturns were the result of purely external factors, like war – but the situation in 1825 didn’t seem to fit this rule. Swiss economist De Sismondi was first to point this out and thus give rise to concept of the “boom-bust”, or economic cycle. The idea being that capitalist economies are subject to continual cycles of economic expansion and contraction.