The old and apparently still persistent notion of “the” business cycle, as a single, simple, self-generating cycle (analogous to that of a pendulum swinging under influence of the single force of gravity) and as actually realized historically in regularly recurring crises, is a myth. Instead of one force there are many forces. Specifically, instead of one cycle, there are many co-existing cycles, constantly aggravating or neutralizing each other, as well as co-existing with many non-cyclical forces.
— Irving Fisher, “The Debt–Deflation Theory of Great Depressions,” Econometrica 1, 4 (1933), p. 338.
As I read Richard C. Koo’s The Holy Grail of Macroeconomics a similar thought constantly crosses my mind. The title references a paper by Ben Bernanke, where Bernanke claims that understanding the Great Depression is the “Holy Grail” of economics. Koo claims, maybe for dramatic effect, that his “balance sheet recession” is the Holy Grail. But, rather than any one theory, the Holy Grail is most likely a mixture of several theories — each explaining a certain aspect of the same phenomenon.