How are Inflation, recession, and high interest rates are characterized in economics events?
Inflation or changes in the money supply affect business. When the government is printing too much money, taking too much out of circulation or does something to devalue its currency on the world market, prices change far faster than expected and businesses scramble to survive while many don't.
High interest rates mean the money is decreasing in value quickly, and the higher the rate of inflation, the more worthless the money becomes. This results in barter, theft, people starving because pensions and welfare are meaningless. Look at Zimbabwe, modern Venezuela and Argentina for examples of what happens.
Recession means the economy has decreased in size for two or three quarters. Recessions normally happen periodically.
What is dangerous is to have a recession go into a depression where the economy is contracting several percent a year, causing everyone to become poorer.
A recession can be caused by high inflation and become a depression if it continues. A recession can be caused by a government pumping up the interest rate too high, so people can't borrow money and others spend what they have on consumables instead of saving and investing.
The ideal case is low interest rates and an interest rate not much above the inflation rate.
by Jack Lee 2 years ago
Do you think we are already in a recession?Some data seems to indicate we are already in a recession in 2016. What do you think?
by AMBTN WEAR 2 weeks ago
Hi Hubbers,I'd like some help with passing the Quality Assessment Process. Will you please give feedback on my article? What can I do to improve? Thanks!My above Article has been declined twice and the feedback I get via Mail is just a standardized message, so I really don't get what I'm missing...
by veganbev 8 years ago
Do you think interest rates will go up soon?A 5-year CD pays 2.5% APY. Is it wise to sign up now, or wait a few months/years?
by ledefensetech 9 years ago
http://dailyreckoning.com/a-financial-world-gone-mad/It's getting cheaper and cheaper to live in the US. Of course all bets are off when the inflation from the massive deficits hit us next year. So much for the specter of deflation.
by pseudoyou 8 years ago
Is it allowed by the law for a bank to lower its interest rates without notifying its customers?
by John Wilson 2 years ago
Will our civilization survive Central Banks historically low interest rates?With Central Banks forcing interest rates below O%, will our financial system survive?European banks are actually charging customers to store their savings in the banking system.The only reason for this is to get citizens...
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