6 ms·

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 r

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.

peter_retief 4y ago
Actually, governments printing money causes inflation and the only way out of inflation is a recession. Trying to talk your way out of a recession will not help. I would say that the world is heading for a period of constrained spending, less easy money but technology spending will probably stay strong.
- deleted 4y ago
  [deleted]
- eru 4y ago
  What makes you think that the only way out of inflation is a recession?
  - kqr 4y ago
    Inflation is definitionally a lack of demand for cash. Recession is the name we give to a period with rapidly increasing demand for cash.
    - Majestic121 4y ago
      Where do you get those definitions from? 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 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.
      - kqr 4y ago
        Those formulations are indeed more common, but also equivalent to the ones I gave: - "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.
    - eru 4y ago
      > Recession is the name we give to a period with rapidly increasing demand for cash. 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?
  - peter_retief 4y ago
    It is a well known model, not my "thoughts" really.
- sfe22 4y ago
  People don’t like hearing the obvious. Also one correction, governments printing money IS inflation. They inflate the money supply. Banks can also create additional inflation, but that power is granted by governments usually. 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).
  - gbin 4y ago
    "government printing money IS inflation" is not true. Government printing money is one way of possibly generating inflation. There are other ways: scarcity of goods and services through the lack of productivity is another example.
    - sfe22 4y ago
      You can look up the old definition of inflation (since recently they have changed it to be more confusing), which comes from the word inflate. Refers to inflating the money supply. Printing money is inflating the money supply. 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.
      - dermesser 4y ago
        This is untrue, for example for energy or rent: if energy prices or rent increase, almost everything will also suffer from increased prices, as energy and rent go into almost every product of a modern economy.
        sfe22 4y ago
        I would say that energy and rent are not very correlated, so if both are increasing rapidly at the same time, it is probably because 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?
- dermesser 4y ago
  This is very debatable, and easily disproven - the past decade has seen enormous amounts of money printed, especially but not only in Europe, yet inflation has only started once goods and energy have become scarce. The textbook explanation you have in mind is, if not disproven, severely incomplete.
  - peter_retief 4y ago
    We have had massive Chinese growth for the last 50+- years which has kept inflation mostly under control with consumer countries implementing quantitative easing (printing money). Anyway just wait and see what happens, I hope I am wrong.
2devnull 4y ago
To me it seems like recessions are usually related to macroeconomic conditions, or the debt/business cycle. Often bad public policy, either fiscal or monetary, has a large role. But maybe you can give an example of one that resulted simply from fear or self fulfilling prophecy?
- ragebol 4y ago
  Policy, decisions, are all made by people, who read the news. I'd say this can easily lead to a self fulfilling prophecy: if you expect the economy to go bad, you don't hire or even fire people. If enough businesses do this, lots of people have less money to spend, etc etc. I jut wonder why the economy goes through such cycles and how to break that cycle.
  - 2devnull 4y ago
    “wonder why the economy goes through such cycles” 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.
  - satvikpendem 4y ago
    > I jut wonder why the economy goes through such cycles and how to break that cycle. 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.
    - ragebol 4y ago
      Computer for eg high-frequency trading are still 'reading'/interpreting the news, so even computers have this issue.
- 4y ago

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.

peter_retief 4y ago

Actually, governments printing money causes inflation and the only way out of inflation is a recession. Trying to talk your way out of a recession will not help. I would say that the world is heading for a period of constrained spending, less easy money but technology spending will probably stay strong.

deleted 4y ago
[deleted]
eru 4y ago
What makes you think that the only way out of inflation is a recession?
- kqr 4y ago
  Inflation is definitionally a lack of demand for cash. Recession is the name we give to a period with rapidly increasing demand for cash.
  - Majestic121 4y ago
    Where do you get those definitions from? 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 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.
    - kqr 4y ago
      Those formulations are indeed more common, but also equivalent to the ones I gave: - "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.
  - eru 4y ago
    > Recession is the name we give to a period with rapidly increasing demand for cash. 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?
- peter_retief 4y ago
  It is a well known model, not my "thoughts" really.
sfe22 4y ago
People don’t like hearing the obvious. Also one correction, governments printing money IS inflation. They inflate the money supply. Banks can also create additional inflation, but that power is granted by governments usually. 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).
- gbin 4y ago
  "government printing money IS inflation" is not true. Government printing money is one way of possibly generating inflation. There are other ways: scarcity of goods and services through the lack of productivity is another example.
  - sfe22 4y ago
    You can look up the old definition of inflation (since recently they have changed it to be more confusing), which comes from the word inflate. Refers to inflating the money supply. Printing money is inflating the money supply. 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.
    - dermesser 4y ago
      This is untrue, for example for energy or rent: if energy prices or rent increase, almost everything will also suffer from increased prices, as energy and rent go into almost every product of a modern economy.
      - sfe22 4y ago
        I would say that energy and rent are not very correlated, so if both are increasing rapidly at the same time, it is probably because 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?
dermesser 4y ago
This is very debatable, and easily disproven - the past decade has seen enormous amounts of money printed, especially but not only in Europe, yet inflation has only started once goods and energy have become scarce. The textbook explanation you have in mind is, if not disproven, severely incomplete.
- peter_retief 4y ago
  We have had massive Chinese growth for the last 50+- years which has kept inflation mostly under control with consumer countries implementing quantitative easing (printing money). Anyway just wait and see what happens, I hope I am wrong.

2devnull 4y ago

To me it seems like recessions are usually related to macroeconomic conditions, or the debt/business cycle. Often bad public policy, either fiscal or monetary, has a large role. But maybe you can give an example of one that resulted simply from fear or self fulfilling prophecy?

ragebol 4y ago
Policy, decisions, are all made by people, who read the news. I'd say this can easily lead to a self fulfilling prophecy: if you expect the economy to go bad, you don't hire or even fire people. If enough businesses do this, lots of people have less money to spend, etc etc. I jut wonder why the economy goes through such cycles and how to break that cycle.
- 2devnull 4y ago
  “wonder why the economy goes through such cycles” 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.
- satvikpendem 4y ago
  > I jut wonder why the economy goes through such cycles and how to break that cycle. 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.
  - ragebol 4y ago
    Computer for eg high-frequency trading are still 'reading'/interpreting the news, so even computers have this issue.
4y ago