Would the economy grow indefinitely without financial crises?

Hello, that's a great question, and many people share this doubt. Let me try to explain it to you in simple terms.

Let's start with the conclusion: It's basically impossible.

Even without financial crises, it's almost impossible for the economy to achieve "never-ending, uninterrupted growth." Economic fluctuations are inherent to its nature.

You can imagine economic growth as someone driving a car up a mountain. This mountain is very tall and large, representing that the economy is generally trending upwards in the long run.

Uphill (Economic Expansion): You're pressing the accelerator, the car is fast, and you're moving steadily upwards. During this time, people's incomes increase, companies make profits, and opportunities are everywhere.
Flat or Downhill (Economic Slowdown/Recession): The road can't always be uphill. Sometimes you encounter flat stretches, where you need to drive steadily; other times you'll encounter downhill sections, where you have to brake, and the car might even slow down. This is often when people feel money is hard to earn and jobs are difficult to find.

The economy itself has its own "spring, summer, autumn, and winter," which we call the economic cycle.

Spring (Recovery): The economy slowly recovers from its trough.
Summer (Boom): The economy is hot, perhaps even overheating.
Autumn (Slowdown): Growth feels less rapid; things start to cool down.
Winter (Recession): The economy enters a downturn, a more difficult period.

So why do we have these cyclical "winters"? Financial crises aren't the only culprits.

Financial crises are just one cause of these "winters," and they are a particularly extreme and cold type, like a "century-long cold snap." But even without them, many other factors can put the brakes on the economy:

Waves of Innovation Rise and Fall: When a revolutionary technology (like the steam engine or the internet) first emerges, it can drive decades of rapid growth. But once the potential of that technology has been largely exploited, the momentum for growth weakens until the next major wave of innovation appears. In between, there will be a relatively flat period.
People's 'Sentiment' Changes: The economy is largely driven by "confidence." When people generally feel the future is bright, they dare to consume and invest, and the economy thrives. But once this optimism peaks, even a slight disturbance (like a major company collapsing or international tensions) can suddenly make people pessimistic, causing them to tighten their belts and reduce investment. This "collective braking" naturally slows down the economy.
'Proactive Regulation' as a Brake: Sometimes the economy gets too hot (like a scorching summer), prices soar (inflation), much like a car going too fast and losing control. At this point, central banks and other institutions will proactively "hit the brakes," for example, by raising interest rates, making loans more expensive, and cooling down the economy. These are necessary measures taken to prevent bigger problems from arising.
Sudden External Shocks: For instance, sudden outbreaks of war, global pandemics, soaring oil prices, and so on. These events are not directly related to the financial system, but they can instantly disrupt normal production and consumption, leading to a sudden economic slowdown.

What is the Role of Financial Crises?

Among these causes, financial crises act as a "super amplifier" and "accelerator."

If a normal economic recession is like a common cold, then a financial crisis is severe pneumonia. It directly attacks the economy's "blood system" – the financial system. Banks become reluctant to lend, businesses can't get funds, and the entire social credit chain breaks down. This significantly increases the depth, breadth, and duration of the economic downturn, making recovery particularly slow.

To Summarize

So, to answer your question:

Would the economy grow continuously without financial crises? No. The economy would still have its own cycles, with "summers" of rapid growth and "winters" of slower or even negative growth.
What are the benefits of not having financial crises? The benefits are immense! It means the economy's "winters" might not be as harsh, and their duration wouldn't be as long. Recessions would be milder and more orderly, with much less impact on ordinary people. The overall functioning of the economy would be smoother; while fluctuations would still exist, it wouldn't be as prone to "derailing" or "hard landings."