How to survive the recession

Other times, a recession can occur for a short period of time followed by very low economic growth and high inflation. This combination of mediocre growth and inflation is called stagflation (stagnation plus inflation). Stagflation was a major problem around the world, especially in Europe in the 1970s. In general during this period the countries suffered low economic growth, high inflation and high unemployment. Stagflation can occur because of several factors such as unfavourable supply shock such as an increase in the price of oil in an oil importing country (as it is today), which tends to raise prices while slowing the economy by making production less profitable. Also both stagnation (recession) and inflation can be caused by inappropriate macroeconomic policies. For example, central banks can cause inflation by permitting excessive growth of the money supply, and the government can cause stagnation by excessive regulation of goods markets and labour markets.

	How to survive the recession
	BREAKING NEWS America chooses its future Russia to retrieve its status of world's strongest superpower Israel launches massive military operation against Gaza Strip
	Astounding photos of planes overcoming sound barrier More...

What is coming?

So what should we expect? In general a recession, especially a severe one is deflationary in nature. But if the government tries to stop the recession or severity of it by pumping money into the economy, especially the money that is not backed by anything and depreciating in value (internationally), it increases inflation which will lead to stagflation. Many economies, the US economy included, today are especially susceptible to this problem. The problems facing these economies are twofold: one is the general macroeconomic policies of the governments and the other is the declining supply of vital commodities.

The government policies in many countries such as US, UK , Australia and others have been pro-business and pro-wealthy for a very long time; especially in the past 50 years. But in the past three decades these policies have been pushed to the extremes, culminating in the latest tax cuts to the rich while continually reducing the services to the less wealthy and the poor. This concentration of the wealth, in itself should have been a major concern for the economists and the governments since it increased the ability of the rich to accept and take bigger risks while at the same time reducing the ability of the less wealthy to cope with the consequences.

Join Pravda.ru forum to experience freedom of speech