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The point of a recession is that the economy is underutilized (unemployment for example). Therefore more overall spending is needed. If you overdo it you get i

The point of a recession is that the economy is underutilized (unemployment for example). Therefore more overall spending is needed. If you overdo it you get inflation, that's why it's the typical central bank target.

megous 7y ago
I don't think that's the point of recession, necessarily. Previous recession happened for other systemic reasons, like subprime mortages bubble bursting bringing down with it a lot of other things. Unemployment was more like a temporary consequence of that and necessary changes/realignment of expectations/allocation of money in the economy.
- H8crilA 7y ago
  It is. There's only goods and services in the real world, and at some point people slow down on exchanging them. That's a recession. "How the Economic Machine Works" https://youtu.be/PHe0bXAIuk0 https://youtu.be/PHe0bXAIuk0
  - megous 7y ago
    There is also demand, and capital, and it's allocated somehow (inflexibly, because people tend to like ownership), and there are governments (agents with systemic effects, almost by definition), and there are various currencies and boundaries in the world, and million other things,... and slowdown in economic activity in any geographic area can come for all kinds of reasons, and it's generally a symptom and not a cause. Increased (or trying to artificially increase) economic activity (as measured by GDP) is also not good by itself, but only in relation to meaningful demand. Otherwise, digging and filling holes (like in a war, basically) would be an overally good thing, which it is not. There's no need to increase spending via a central bank currency manipulation, just because it's lower than before, nor is it the only way to achieve that.
    - H8crilA 7y ago
      I'm merely stating that a recession is, by definition, less stuff and services being exchanged between people and institutions. Money is just an abstract concept by which people do such exchanges. And money printing (lowering interest rates, QE, helicopter money, fiscal stimulus like New Deals or the likes of building the Hoover's Dam) is a generally acknowledged consensus on how to at least try to fix it. That is how to at least try to make people transact more.

megous 7y ago

I don't think that's the point of recession, necessarily. Previous recession happened for other systemic reasons, like subprime mortages bubble bursting bringing down with it a lot of other things. Unemployment was more like a temporary consequence of that and necessary changes/realignment of expectations/allocation of money in the economy.

H8crilA 7y ago
It is. There's only goods and services in the real world, and at some point people slow down on exchanging them. That's a recession. "How the Economic Machine Works" https://youtu.be/PHe0bXAIuk0 https://youtu.be/PHe0bXAIuk0
- megous 7y ago
  There is also demand, and capital, and it's allocated somehow (inflexibly, because people tend to like ownership), and there are governments (agents with systemic effects, almost by definition), and there are various currencies and boundaries in the world, and million other things,... and slowdown in economic activity in any geographic area can come for all kinds of reasons, and it's generally a symptom and not a cause. Increased (or trying to artificially increase) economic activity (as measured by GDP) is also not good by itself, but only in relation to meaningful demand. Otherwise, digging and filling holes (like in a war, basically) would be an overally good thing, which it is not. There's no need to increase spending via a central bank currency manipulation, just because it's lower than before, nor is it the only way to achieve that.
  - H8crilA 7y ago
    I'm merely stating that a recession is, by definition, less stuff and services being exchanged between people and institutions. Money is just an abstract concept by which people do such exchanges. And money printing (lowering interest rates, QE, helicopter money, fiscal stimulus like New Deals or the likes of building the Hoover's Dam) is a generally acknowledged consensus on how to at least try to fix it. That is how to at least try to make people transact more.