America has experienced at least 30 recessions throughout history, dating back as early as 1857. Some experts believe that they have become an inevitable part of the economic cycle that fluctuates between periods of expansion and contraction. Nonetheless, certain measures can still be taken to make recessions less likely. As the nation’s authority on monetary policies, the Federal Reserve plays a critical role in managing recessions. So why do recessions happen and what can the Fed do about it? Watch the video to find out. The U.S. has experienced at least 30 recessions throughout history, dating back as early as 1857. Some economists argue that they may have become an inevitable part of the financial cycle that fluctuates between periods of expansion and contraction. “History teaches us that recessions are inevitable,” said David Wessel, a senior fellow in economic studies at The Brookings Institution. “I think there are things we can do with a policy that makes recessions less likely or when they occur, less severe. We’ve learned a lot, but we haven’t learned enough to say that we’re never going to have another recession.” As the nation’s authority on monetary policies, the Federal Reserve plays a critical role in managing recessions. The Fed is currently attempting to avoid a recession by engineering what’s known as a “soft landing,” in which incremental interest rate hikes are used to curb inflation without pushing the economy into recession. “What they’re trying to do is raise rates enough so demand slows,” said Jason Snipe, chief investment officer at Odyssey Capital Advisors. But a successful soft landing is extremely rare as the monetary policy needed to slow down the economy is often enforced too late to make any meaningful impact. It was arguably achieved just once, in 1994, thanks to the Fed’s more proactive response to inflation and good timing. ″[It’s] really, really difficult to get into that really, really narrow zone,” said Stephen Miran, former senior advisor at the U.S. Department of Treasury. “It’s the difference between trying to land an airplane in a really wide and spacious open field versus trying to land an airplane on a very, very narrow piece of land with rocks and water on either side.” Some experts also argue that policies have a limitation on what they can achieve against an impending downturn. “Policy tends to operate with long lags, which means the ability to effect immediate change in the economy is quite slow. I also think that increasingly we live in a global economy where the cross-currents that are impacting the economic dynamics are very complex,” said Lisa Shalett, chief investment officer, wealth management at Morgan Stanley. “These are dynamics that the Fed doesn’t have the tools to address and so to a certain extent, we do think that policymakers have certainly developed more tools to fight recessions,” she said. “But we don’t think that you can rely on policymakers to prevent recessions” » Subscribe to CNBC: » Subscribe to CNBC TV: About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more. Connect with CNBC News Online Get the latest news: Follow CNBC on LinkedIn: Follow CNBC News on Facebook: Follow CNBC News on Twitter: Follow CNBC News on Instagram: #CNBC Why Recessions May Be Inevitable...(read more)
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Recessions are periods of economic downturn when there is a significant decline in economic activities and the overall output of goods and services. They are characterized by high levels of unemployment, low consumer spending, and reduced business profitability. Many economies around the world have experienced recessions at one point or another, and there are various reasons why these recessions may be inevitable. First, the economy is cyclical. Economic cycles are natural and occur due to various factors, including changes in consumer spending, business investment, and government policies. These cycles typically last anywhere from five to ten years. During a recession, the economy contracts, and growth slows down. Eventually, the economy will recover and grow again, triggering a new cycle. Second, many economies rely heavily on debt to fuel growth, which can create unsustainable levels of debt. When consumers and businesses take on too much debt, and cannot make payments, or when the value of assets that back the loans falls below the amount of debt owed, a financial crisis can occur. The most recent recession in 2008 was triggered by a housing market crash, which caused a ripple effect throughout the financial system. Third, the global economy is interconnected, and events in one country can have a significant impact on other countries. A recession in one country may cause a ripple effect throughout the global economy, leading to a worldwide recession. For example, a recession in China, which is the world's second-largest economy, would have a domino effect on the world's economies. Fourth, technological advancements can cause job losses as machines and automation replace human labor. This can lead to a decline in consumer spending, and businesses may struggle to maintain profits, which can lead to a recession. Finally, natural disasters such as earthquakes, hurricanes, and pandemics can cause a significant economic impact, leading to a recession. For example, the COVID-19 pandemic has caused a significant decline in economic activities worldwide, leading to millions of job losses, business closures, and reduced consumer spending. In conclusion, recessions may be inevitable due to the cyclical nature of the economy, reliance on debt, interconnected global economy, technological advancements, and natural disasters. While recessions can be painful, they are a necessary part of the economic cycle, and through proper policies and measures, economies can recover and grow once again. https://inflationprotection.org/the-inevitability-of-recessions/?feed_id=99135&_unique_id=646785e797bb7 #Inflation #Retirement #GoldIRA #Wealth #Investing #bearmarket #Bonds #breakingnews #business #CNBC #crypto #cryptocurrencies #economics #economy #fed #federalreserve #Finance #financenews #financestock #financialnews #inflation #investing #Investments #jeromepowell #jobs #labormarket #layoffs #Markets #money #morganstanley #NYSE #personalfinance #policy #prices #recession #stagflation #stockmarket #stockmarketnews #Treasury #U.S.News #unemployment #UnitedStates #usnews #Wages #whatstocktobuy #YieldCurve #RecessionNews #bearmarket #Bonds #breakingnews #business #CNBC #crypto #cryptocurrencies #economics #economy #fed #federalreserve #Finance #financenews #financestock #financialnews #inflation #investing #Investments #jeromepowell #jobs #labormarket #layoffs #Markets #money #morganstanley #NYSE #personalfinance #policy #prices #recession #stagflation #stockmarket #stockmarketnews #Treasury #U.S.News #unemployment #UnitedStates #usnews #Wages #whatstocktobuy #YieldCurve
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