Aside from variable economic indicators, inverted yield curves, ect., what are the few things that happen preceding the collapse of an economy. Is it skyrocketing prices of precious metals, divestment against currency, government printing ridiculously large notes…?
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There are a few different metrics that can be measured:
* There are stock market indexes like the Dow Jones, which tracks the value of the 30 largest companies on the New York Stock Exchange and NASDAQ. The value of their stocks is generally considered a bellwether for the health of the stock market as a whole.
* The inflation rate, or the rate at which the average of a bunch of different consumer goods (a consumer price index) rises per year. While inflation is usually not in and of itself a bad thing, a sudden spike in it (either by a sharp rise in the cost of goods or a lot of money entering into circulation) is generally a bad thing.
* You can also look at the markets for specific goods. For instance, if there’s a sudden shortage in oil and the price spikes, you know that it’ll cause prices to rise in a lot of other industries as a result (e.g., anything that relies on trucks or diesel trains for their logistics).
* The Federal Reserve’s interest rates. The Federal Reserve, the US’s central bank, can raise or lower interest rates if they want to reduce or increase the amount of money in circulation, respectively. For instance, the Federal Reserve jacking up interest rates throughout Biden’s term is generally seen as damage control for widespread inflation.
* “Real” GDP growth. While the nominal growth of the GDP (Gross Domestic Product) is just the total increased value of our economy, the real GDP growth is the nominal growth adjusted for inflation. So if the nominal GDP grew by 5%, but inflation was 6%, then the economy technically shrank.
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