People usually think recessions are bad. Are they in fact necessary? Akin to naturally occurring small forest fires…those are good otherwise there could be a mega fire.
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The short answer is, maybe?
At its most basic, “the economy” is a representation of how well humanity is doing. We try to measure the economy using prices, which are supposed to represent value, and so in total gives us something we can track and watch grow, meaning humanity is getting better. In a perfect world, we constantly get better overtime, but sometimes we get the prices wrong – we get the value incorrect or we value the wrong things, maybe because we didn’t really know everything (like the 2008 financial crisis), or we got overexcited or confused about something (like the tech bubble). We see see and measure these corrections, and call them recessions.
Recessions are really a phenomenon of human fallibility. The study of economics spends a lot of energy trying to find practical ways to avoid or minimize recessions, and there would be no recessions in that perfect world where we got the prices exactly right all the time. But we’re still human and so recessions may not be a necessary phenomenon but they are probably inevitable and are probably a sign of healthy economic activity.
The short answer is, maybe?
At its most basic, “the economy” is a representation of how well humanity is doing. We try to measure the economy using prices, which are supposed to represent value, and so in total gives us something we can track and watch grow, meaning humanity is getting better. In a perfect world, we constantly get better overtime, but sometimes we get the prices wrong – we get the value incorrect or we value the wrong things, maybe because we didn’t really know everything (like the 2008 financial crisis), or we got overexcited or confused about something (like the tech bubble). We see see and measure these corrections, and call them recessions.
Recessions are really a phenomenon of human fallibility. The study of economics spends a lot of energy trying to find practical ways to avoid or minimize recessions, and there would be no recessions in that perfect world where we got the prices exactly right all the time. But we’re still human and so recessions may not be a necessary phenomenon but they are probably inevitable and are probably a sign of healthy economic activity.
The short answer is, maybe?
At its most basic, “the economy” is a representation of how well humanity is doing. We try to measure the economy using prices, which are supposed to represent value, and so in total gives us something we can track and watch grow, meaning humanity is getting better. In a perfect world, we constantly get better overtime, but sometimes we get the prices wrong – we get the value incorrect or we value the wrong things, maybe because we didn’t really know everything (like the 2008 financial crisis), or we got overexcited or confused about something (like the tech bubble). We see see and measure these corrections, and call them recessions.
Recessions are really a phenomenon of human fallibility. The study of economics spends a lot of energy trying to find practical ways to avoid or minimize recessions, and there would be no recessions in that perfect world where we got the prices exactly right all the time. But we’re still human and so recessions may not be a necessary phenomenon but they are probably inevitable and are probably a sign of healthy economic activity.
If by healthy you mean the rich getting richer and staying that way then yes they are necessary, because otherwise the poors might actually have enough money to own property and have some assurances for their future and we can’t have that.
Not really, but it depends what you mean by recession. The classic English recession of two negative quarters of GDP growth is not necessary in a functioning economy. It only means that the government failed to quantify and hedge some risk. Inevitable, maybe, but necessary, no.
The American notion depends on the availability of credit, availability of jobs, gdp growth, and other factors. It is patently an unhealthy economy when in an American recession. Getting a cold doesnt mean youre healthy, and neither does having a recession. Ebbs in the broad market across diverse sectors happen all the time, and that’s what makes the economy healthy. Jobs go here, jobs go there, credit goes everywhere but some places more than others. When that malfunctions, it means the government failed to quantify and hedge some risk.
The communist/marxist/socialist notion of recession is not described in the literature, and there is still some argument there about whether money is a social construct that should be avoided. Hard to quantify an economy without it, but I wish them luck!
If by healthy you mean the rich getting richer and staying that way then yes they are necessary, because otherwise the poors might actually have enough money to own property and have some assurances for their future and we can’t have that.
Yes in a healthy economy you will see constant growth but it will be marked by times of less growth or even a pull back. While in theory supply and demand graphs have an unlimited curve so that a long as supply goes up price and demand goes down. In reality there is a finite point to all of these items. When demand ships because there is to much supply eventually we stop making it this prices rise when prices rise it becomes more expensive to buy things so people buy less thus inflation.
In a truly laisezz fair economy with no intervention we see long periods of growth followed by long periods of recession. Where we get into problems is utilizing government intervention to slow dollar supply which creates more extremes but cycles.
If by healthy you mean the rich getting richer and staying that way then yes they are necessary, because otherwise the poors might actually have enough money to own property and have some assurances for their future and we can’t have that.
Not really, but it depends what you mean by recession. The classic English recession of two negative quarters of GDP growth is not necessary in a functioning economy. It only means that the government failed to quantify and hedge some risk. Inevitable, maybe, but necessary, no.
The American notion depends on the availability of credit, availability of jobs, gdp growth, and other factors. It is patently an unhealthy economy when in an American recession. Getting a cold doesnt mean youre healthy, and neither does having a recession. Ebbs in the broad market across diverse sectors happen all the time, and that’s what makes the economy healthy. Jobs go here, jobs go there, credit goes everywhere but some places more than others. When that malfunctions, it means the government failed to quantify and hedge some risk.
The communist/marxist/socialist notion of recession is not described in the literature, and there is still some argument there about whether money is a social construct that should be avoided. Hard to quantify an economy without it, but I wish them luck!
Not really, but it depends what you mean by recession. The classic English recession of two negative quarters of GDP growth is not necessary in a functioning economy. It only means that the government failed to quantify and hedge some risk. Inevitable, maybe, but necessary, no.
The American notion depends on the availability of credit, availability of jobs, gdp growth, and other factors. It is patently an unhealthy economy when in an American recession. Getting a cold doesnt mean youre healthy, and neither does having a recession. Ebbs in the broad market across diverse sectors happen all the time, and that’s what makes the economy healthy. Jobs go here, jobs go there, credit goes everywhere but some places more than others. When that malfunctions, it means the government failed to quantify and hedge some risk.
The communist/marxist/socialist notion of recession is not described in the literature, and there is still some argument there about whether money is a social construct that should be avoided. Hard to quantify an economy without it, but I wish them luck!
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