It almost feels like: the more you/we talk about a recession, the more likely/grave it will be. It's got a high potential to be a self-fulfilling prophecy, as recessions often are fear-driven.
But maybe you can give an example of one that resulted simply from fear or self fulfilling prophecy?
I jut wonder why the economy goes through such cycles and how to break that cycle.
Ray Dalio has written some very easy to digest books on the debt cycle. That’s not the full picture but a good start. There’s an entire field of study around all this stuff and economists never agree completely —if they did they would have no job- but as I understand it sentiment is a predictor of recession but it tends to lag other things like interest rates and gas prices.
You answered your own question there. If funding and policy is made by humans, they'll be influenced by others and if everyone starts hiring or firing, pretty soon you'll have a bubble or a recession, respectively. The only way to stop that is to not have humans make decisions.
Inflation is the loss of purchasing power of the currency that results in an increase general and sustainable prices.
And Recession is a period of temporary economic decline during which trade and industrial activity are reduced, generally identified by a fall in GDP in two successive quarters.
From https://www.insee.fr/en/metadonnees/definition/c1473 Match much more the common definition.
It might have a relation to cash demand in certain contexts, but the link is not definitional : inflation and recession are defined by symptoms, not causes.
- "Loss of purchasing power" is a fancy way of saying "people don't want your money as much as they used to", i.e. low demand for cash.
- Similarly, "economic decline during which trade and industrial activity are reduce" are complicated words for "people more and more prefer to hold on to the money they have rather than exchange it for other stuff", i.e. increasing demand for cash.
The reason I phrased it the way I did is that it helps highlight how a recession is the way out of inflation.
Huh? If demand for cash rises a lot, but we are printing lots of money, too, to satisfy that demand; and everything else stays stable, by your definition you would call that a recession?
Usually when significant inflation is created prices go up across the board (what we are seeing now) or prices stay relatively still, when they would have normally gone down due to more efficient production (2010s).
Scarcity of goods or services a will cause those respective prices to go up, but not broad price increases, which is often the cause of inflation.
And which one of my statements is not true? Definition of inflation or that scarcity of a product will cause that product to become more expensive?