Well I've had great interest in understanding the current recession and its cause. It seems that economics sometimes randomly turn around and stop working in peoples favor.
The great question is, do economics EVER work in our favor?
To answer that we must understand what is controlling the current market.
We can start with money since money is what makes economics go around it should be the best source to go to when examining the current economy crisis. World economy is more or less controlled by dollar. Dollar is what controls all other currencies and their quotation. We must examine who or what controls the dollar.
To simplify everything I will briefly explain how the moneymaking process works in USA. Central bank or Federal Reserve as its called is what makes money in America. To simplify the process it goes something like this:
Government of the United States needs 10 000 000 000 dollars. What they do is send request to federal bank to make that money for them. Bank answers with yes and starts making money. While the money is made they receive some kind of paper telling them that the money will be repaid with INTEREST and this is when things start getting nasty. USA buys its own money from themselves and needs to pay back more than they get. Same goes for the banks that get that money and then people who borrow the money from banks. What do you do when you borrow money from bank? You work and gather money to pay back and theres always some kind of interest where you need to pay some percentage to the bank. So its a cycle of people paying interest so that the one you are paying interest to is able to pay interest to the one they borrowed their money from. In the end this is what makes everybody in debt. Money is created out of thin air and having money it therefore being in debt (since all the money has to be repaid with interest). The problem here is that this debt can never be paid. If we say that we manage to collect 100% out of 100% dollar in the world and try to repay the federal reserve it wouldn't work. It wouldn't work since we still owe them 10% interest and the only way to get that money is to ask them to print some more money for us, but that wouldn't work either since that money comes with interest as well... And who gets all the money from federal bank and can profit of it? Few people that control most of the industries in the states. The question "why?" is answered easily, because they want more money and more power.
So how can recession benefit them?
1. A recession will make it difficult for new firms who have just entered the market. Most new firms have high set up costs, therefore, a downturn in the economy could make them close down. However, this does not mean that they are inefficient. It just means they are new and struggling to get established..
2. Increased Monopoly Power. If a recession causes the smaller and newer firms to go out of business then the larger dominant firms will gain more monopoly power. In the long run this will lead to less choice and higher prices. This is a definite disadvantage of a recession. When the Chairman of Ryanair argued recessions would be a good thing, maybe he meant - a good thing for Ryanair, as it may involve new firms going out of business leaving him more market power.
3. Hysteresis. This is the argument that the past is a predictor for the future. Basically, if you have high unemployment, then it is more likely to have high unemployment in the future. If people are made unemployed in a recession, it may take a long time for them to find work again. When they are unemployed they lose skills, become demotivated and become less attractive to employers. Note after the recession of 1981, Unemployment remained stubbornly high in the UK, even into the boom years of the late 1980s
4. Fall in Productive Capacity. A recession can damage the productive capacity of an economy. Firms can go out of business and therefore shut down their resources. Furthermore in a recession, there will be a significant fall in investment, this can harm the long term development of an economy.
5. You don't need a recession to weed out inefficient firms. If markets are reasonably competitive, inefficient firms will be forced out of the market anyway.
Source : http://www.economicshelp.org/2008/02/can-recession-really-be-good-thing.html
Conclusion is that recession isn't needed to improve competition and efficiency on the current market. Recession will in fact make that worse and small companies will be either closed or bought up by bigger ones. Recession will also make interest rates lower and therefore make people more interested in borrowing money. That leads us to the conclusion that recession will only benefit banks (the ones who can survive the competition) and big companies. And now to the final question. Who owns majority of the big companies and the Federal bank. THE SAME PEOPLE. Those people will also buy smaller businesses that can't survive recession and that way expand every time recession kicks in.
Your thinking that your safe since your not part of the American system. But you aren't. USA is expanding its control and just look at the way they took over Iran, Iraq, Venezuela etc. etc. What they do is offer aid to countries who are in need of money. The money is as I explained earlier made out of thin air. They borrow the money and need to pay back with the interest rate. Americas goal is to borrow them more money than they can possibly repay and that way slowly enslave the population of that country. When the country fails to repay the money USA comes in and demands other things such as oil or fruit or anything else thats of value. That way USA exploits the world for free! Because the money/debt is made out of nothing...
I could go on forever but I'm afraid that you already got tired of me babbling. For more info read "John Perkins, "Confessions of an Economic Hitman," and go and see Zeitgeist.
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hey hey =) jo, det går bra hittills och jag trivs, fast skolan är rörig och flummig. på torsdag har jag salstenta, vi får se hur det går... be en bön för mig e du gullig ^^ hur går det för dig? trivs du? jobbiga tentor och mycket plugg?
ha det bäst! kramar
Ojoj ja du har mycket på gång förstår jag! Ja, det är psyktenta på torsdag, så då vet du hur jag känner mig.
Trivs du då? tycker du det är kul, känns det rätt? =)
Tobbe kämpar på i Norge, han trivs super på jobbet och med sina arbetskamrater och chef. Men det som är jobbigt för honom är att bo kollektivt. Han är en pedantisk person som behöver få vara för sig själv. Och det är ju bristvara på både städning och privatliv där i huset som de bor i. Sen så vill han ju vara med mig och slippa pendla varje helg hit från Oslo. Han letar efter jobb här i Gbg men det går segt, finns ju inga för systemtekniker och fibersvettsare =/
Hur går det med flickorna då? =)
Kramar
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