How can factors like inflation, supply and demand, and interest rates trigger recessions? Learn the economic basics of modern markets.
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For millennia, the people of Britain had been using bronze to make tools and jewelry, and as a currency for trade. But around 800 BCE, that began to change: the value of bronze declined, causing social upheaval and an economic crisis— what we would call a recession today. So what causes recessions? Richard Coffin digs into the economic fluctuations that affect our modern markets.
Lesson by Richard Coffin, directed by Augenblick Studios.
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An economic recession is a period of economic decline, characterized by decreased economic activity and employment rates, and increased inflation rates. It is a cyclical event that occurs from time to time, impacting millions of people around the world. There is no singular cause of a recession, but there are several factors that can trigger it. In this article, we will explore the causes of economic recessions.
1. Declining Consumer Spending
Consumer spending makes up a significant part of any economy. When consumers stop spending due to uncertain economic conditions, it can trigger a recession. Consumers may cut back on spending when they face job losses, declining incomes, or inflation. Slowing consumer spending leads to a slowdown in economic activity, which can ultimately lead to a recession.
2. Financial Crisis
Financial crises occur when there is a shock to the financial system that undermines the confidence and trust of investors and lenders. Financial crises can trigger a recession by impairing the ability of firms and households to borrow and invest, which can lead to higher unemployment rates, lower economic production, and lower consumer spending.
3. High Interest Rates
High interest rates make borrowing expensive and reduce the money supply. This situation can slow down economic activity, leading to a recession. Governments increase interest rates to control inflation and reduce debt in the economy which eventually leads to a decrease in investment, lower consumption, and fewer jobs.
4. Asset Bubbles
Asset bubbles occur when asset prices grow too quickly, fueled by speculation and irrational exuberance. When the bubble bursts, the market can experience a sharp decline in asset prices. This can trigger a recession as people lose money and are unable to repay their debts, which eventually leads to a financial crisis.
5. Government Policies
Government policies can also contribute to the onset of an economic recession. For example, policies that encourage lending and promote loose fiscal policy can create a housing bubble, which can eventually burst and lead to a recession. Additionally, fiscal policies that increase taxes or reduce government spending can lead to a decrease in consumer spending and a slowdown in economic activity.
In conclusion, economic recessions can occur due to various factors and triggers. While the causes of recessions may vary, there is no doubt that they have significant economic and social costs. Governments and policymakers need to be vigilant and take measures to prevent economic downturns, to ensure sustainable economic growth, and to protect the welfare of their citizens.
Market declines, soaring inflation, a significant increase in interest rates by the Fed, and rising Treasury yields all point to additional losses for portfolios this quarter. How can I profit from the present market turbulence? I'm still debating whether to sell my $125,000 ETF/Growth Stock portfolio.
A recession is currently the "most likely consequence for the economy," and I cannot fathom becoming a victim of circumstances, with inflation at a four-decade high. In two years, I plan to retire, and my target retirement fund is $967,000. How can I assure this? What steps can I take?
A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time!
Don't get me wrong, I know the economy is in shambles and in order to break even and make profit, we have to ride it out until stock recovery, but how are some folks in the same stock market as me still able to pull off substantial profits of as much as 650K within months, what am I doing wrong?
During a bear market, the headlines will focus on negative news, whether it's declining economic growth, geopolitical upheaval, cultural and legal turmoil, or some combination of all three. I listened to a podcast of someone that grew his reserve from $120k to almost $460k during this Red season, can you share tips on how to make such aggressive proceeds in short periods?
This video starts out false.
No. Inflation IS NOT when the prices increases or when the money becomes worth less. Inflation is when the money supplies is increased. That the money becomes worth less and prices increases are symptoms of the fact there is more money today than last year. If there is 100 dollars in existence and you create another 100 dollars, you have devalued the dollar to be worth half as much as it used to be worth.
This is quite interesting and informative, but in order to be success or financially free don't depend on one source of income.
Investment create a safe haven for the future.
It's not actually that hard. Capitalism causes recessions. Getting rid of recessions isn't hard. The people benefiting from the system just don't let us get rid of it.
Economic topics always attract scammers. Look at how many scam comments in this video.
Rumors of recession create recession.
what is this i prefer using chat gpt
Banks and politicians
An economic recession causes a decline in economic output. It is accompanied by a drop in income and an increase in unemployment. The video explained and demonstrated everything clearly and concisely.
Yes, the dangers are greater, but isn't the current business sector just as risky? The majority of those adopting these tactics are earning substantial gains. What I gather is that rather than long-term trading, instantaneous trading is the preferred method for managing this downturn and rapid expansion.
Times up North America get a boot and keep it pushing. 9(5a-3b-3c+4d)= What is difficult? It goes to the future of your business to come scoop me my backs against the wall. That's how it is moving on.
What bothers me about this situation is the fact that the news and media are all going about a recession which is understandable due to the war and pandemic but still the same media still publish articles about folks in the same economy pulling off hefty 6figure profit(Averg. 200k in barely 8weeks) in this downtrend how is that possible?
A recession shouldn't even be a thing in UK , they are making so much money this word shouldn't even be in their dictionaries ,counties around London in Englad have excess money !
Covid made this age well
Instead of trying to predict and prognosticate whether or not we’re going into a recession and precisely when it’s going to happen, a better strategy is simply having a portfolio that’s well prepared for any eventually, that’s how some folks' been averaging 150K every 7week these past 4months according to Bloomberg.
'The stock market is still a fantastic tool for building wealth, however, so it's wise to consider investing even if you don't have much money to spare".
Recessions are part of the economic cycle, all you can do is make sure you're prepared and plan accordingly. I graduated into a recession (2009). My 1st job after college was aerial acrobat on cruise ships. Today I'm a VP at a global company, own 3 rental properties, invest in stocks and biz, built my own business, and have my net worth increase by $500k in the last 4 years.
Jews.
The only thing you can do is make sure you're ready and plan accordingly because recessions are a natural part of the economic cycle. I began my career during a recession (2009). Aerial acrobatics on cruise ships was my first job out of college. I've developed my own business, am a vice president at a large corporation, own three rental homes, invest in stocks and businesses, and have seen a growth in my net worth of $400k over the past four years.
Also supply/demand curve are absurd model and provably bad for modeling anything remotely like macro.
Inflation is completely unnecessary to spur demand. Demurrage, that is Freigeld, is price stable and immune to deflationary spirals. See city of Wörgl’s stamp script used to revive the city’s economy during the Great Depression or cheimgauer in Bavaria today.