According to the theory of leverage cycle of John Geanakoplos and originally by Hyman Minsky, in the absence of intervention, leverage becomes too high in boom times and too low in bust times. As a result, asset prices become too high in boom times and too low in bad times, rather than correctly reflecting the fundamental value of assets. This recurring leveraging-deleveraging cycle is one of the most important amplifying mechanism contributing to the credit cycles and business cycles. Deleveraging is responsible for the continuing fall in the prices of both physical capital and financial assets after the initial market downturn. It is part of the process that leads the economy to recession and the bottom of the leverage cycle.