The Recession We Need To Have | Economics Explained

Are we entering a new age where serious downturns caused by genuine economic hardships can be avoided with piles of cash? Or is this all just putting off the inevitable and potentially making it worse further down the road?

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[Kariddi]

The problem is that "the pain" is always inflicted to the lower classes that will lose their jobs, while the upper classes just ride the downturn with slightly suboptimal returns on their portfolios

[ShukriVikas]

Transfer of wealth usually occur during inflation and market crash at times like this. So for me, this is time for aggressive investment. The more stocks drop, the more I buy. I'm just focused on making better investments and earning more as recession fear increases.

[leion]

The recession we need is one where the big companies that are "too big to fail, " fail and all the people that got screwed over get the real bailouts so they can create new small businesses. Increasing competition and decreasing monopoly. Along with better stabilizing the economy and reducing the most suffering long term. A decent example of this would be Iceland.

[TheMatthew]

on a fundamental level i agree the issue though is that we aren't just dealing with companies anymore but megacorporations. whenever we go into a recession only the strong survive works, until you have companies so full of capitol and assets that they can literally weather any storm. once the storm passes they buy up all the removed competition until it is literally only them, they buy out the new competition, stop innovating because there is no competition to compete against, and focus on absorbing as much money from the consumer as possible with things like planned obsolescence.

they became so powerful they literally influence entire countries, and some have even more power than the countries they operate out of. the warehouses that collapsed a while back as i'm sure everyone has heard got tornado warnings but the company believed it knew better and ignored the warning and order people to keep working... and they did because the handful of companies that own everything have too much power and a recession would only let me acquire more.

[eboyjim]

I thought Covid was going to be the thing that forced the correction. And then it made it worse. The current model is totally unsustainable. Not from a financial perspective but just from a “people need to afford to live” perspective.

[thepug]

I’d argue that recessions push money to the top. The big companies weather the storm and the small businesses don’t have the recourses to hold up.

[erichkraetz]

I'm not kidding when I say that the market crash and high inflation have me really stressed out and worried about retirement. I've been in the red for a while now and although people say these crisis has it perks, I'm losing my mind but I get it Investing is a long-term game, so focus on the long run.

[WalkinChristum]

Amazing video, so cool that we get to see such in-depth documentaries for free nowadays, some of them are x10 better than what we get in college lol

[AlecMuller]

There's also the "The Cantillon Effect", which exacerbates wealth- and income-inequality. When the money supply is expanding, rich people tend to get the new money first (before prices rise), and see less inflation, while poor people get it later and see more inflation. It's part of why trillion-dollar corporations can scoop up single-family homes but more & more average people can't.

[chrisholdread]

"they are also effective at getting rid of underperforming workers" Man I've been in the work force 22 year and I've never had a single job that made me felt like I mattered no matter how hard I performed, we're all just cogs in the machine, discs to put on a grinding wheel until we're ground down to nothing. Maybe people are waking up to the fact that we shouldn't have to kill ourselves for a paycheck when that paycheck doesn't even give us the ability to survive.

[viviangall]

Amazing how people would rather have hyperinflation and a stagflation risk instead of a corrective recession because they want to keep their stock portfolios up

[Nick-sdum]

I feel as though a recession is just going to enrich those well off further.. Our terrible housing policy in Australia has favoured investors and particularly early investors (most of which have paid off their loans). As prices drop their purchasing power arguably increases.

Just seems like the middle and lower class will suffer as per usual.

[rich]

I think one problem with the assessment about the benefit of an economic downturn is the foundation of many economic theories: they assume a rational human being behaving rationally.
When it comes to reducing the workforce, this then comes in the form of assuming that the underperforming staff are the ones to be laid off first. Having been employed through several economic downturns and having survived the cut, I can say for certain that this is not my experience.

[PontschPauPau]

This video really highlights how economic theory has little to do with economic reality. Corporations going broke in times of economic downturn? Not the big boys, they just print themselves more money.

[cuddyb]

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! I have been reading of investors making about $250k profit in this current crashing market, and I need ideas on how to achieve similar profits.

[hyunsungjung]

Painful honesty... Yes, a recession's effect can be lessened by structural designs. A worker in Sweden or Denmark is going to suffer less pain in a recession than in the US or Britain. But recession, in its entirety, cannot be avoided at some point.

[gbadspcps]

Well said EE. When you stop small wildfires, it weakens the forest and allows for the old, weak growth to strangle new life. Eventually, the whole biome is vulnerable to burning down. The economy is similar. Keynes was a brilliant man but his theories willfully ignored the fact that no one wants to pull back fiscal stimulus when they need to.

[chasingblue]

What happens when corporate entities raise prices for years, but fail to raise buying power to workers' hourly wage?

[nabo]

Trust me bro, food insecurity, evictions and increasing stress are a feature of this system.

[killerhurtalot]

Wages has stagnated for 20 years even with so much inflation and "economic growth"

Deflation doesn't sound that bad for the average worker.