Monday, April 16, 2012

Monetarism

21-2-24 Age of Monetarism - Hoover > .
0:00​ - introduction
1:57 - is the US like Weimar?
13:07​ - when is hyperinflation unstoppable?
18:50 - is the US special?
20:27 - how to protect yourself
Game of Theories: How to fight a recession - mru >> .

Monetarism ..

"There are conditions under which governments can create money—or debt—without fear of inflation or excessive debt burdens. There are other conditions under which debt or money creation can lead to inflation and balance sheet problems." Michael Pettis 

Monetarism is a school of thought in monetary economics that emphasizes the role of governments in controlling the amount of money in circulation. Monetarist theory asserts that variations in the money supply have major influences on national output in the short run and on price levels over longer periods. Monetarists assert that the objectives of monetary policy are best met by targeting the growth rate of the money supply rather than by engaging in discretionary monetary policy.

Monetarism today is mainly associated with the work of Milton Friedman, who was among the generation of economists to accept Keynesian economics and then criticise Keynes's theory of fighting economic downturns using fiscal policy (government spending). Friedman and Anna Schwartz wrote an influential book, A Monetary History of the United States, 1867–1960, and argued "inflation is always and everywhere a monetary phenomenon".

Though he opposed the existence of the Federal Reserve, Friedman advocated, given its existence, a central bank policy aimed at keeping the growth of the money supply at a rate commensurate with the growth in productivity and demand for goods.

Monetarism is an economic theory that focuses on the macroeconomic effects of the supply of money and central banking. Formulated by Milton Friedman, it argues that excessive expansion of the money supply is inherently inflationary, and that monetary authorities should focus solely on maintaining price stability.

This theory draws its roots from two historically antagonistic schools of thought: the hard money policies that dominated monetary thinking in the late 19th century, and the monetary theories of John Maynard Keynes, who, working in the inter-war period during the failure of the restored gold standard, proposed a demand-driven model for money. While Keynes had focused on the stability of a currency's value, with panics based on an insufficient money supply leading to the use of an alternate currency and collapse of the monetary system, Friedman focused on price stability.

The result was summarised in a historical analysis of monetary policy, Monetary History of the United States 1867–1960, which Friedman coauthored with Anna Schwartz. The book attributed inflation to excess money supply generated by a central bank. It attributed deflationary spirals to the reverse effect of a failure of a central bank to support the money supply during a liquidity crunch.

Friedman originally proposed a fixed monetary rule, called Friedman's k-percent rule, where the money supply would be automatically increased by a fixed percentage per year. Under this rule, there would be no leeway for the central reserve bank, as money supply increases could be determined "by a computer", and business could anticipate all money supply changes. With other monetarists he believed that the active manipulation of the money supply or its growth rate is more likely to destabilise than stabilise the economy.

Most monetarists oppose the gold standard. Friedman, for example, viewed a pure gold standard as impractical. For example, whereas one of the benefits of the gold standard is that the intrinsic limitations to the growth of the money supply by the use of gold would prevent inflation, if the growth of population or increase in trade outpaces the money supply, there would be no way to counteract deflation and reduced liquidity (and any attendant recession) except for the mining of more gold.

Clark Warburton is credited with making the first solid empirical case for the monetarist interpretation of business fluctuations in a series of papers from 1945. Within mainstream economics, the rise of monetarism accelerated from Milton Friedman's 1956 restatement of the quantity theory of money. Friedman argued that the demand for money could be described as depending on a small number of economic variables.

Thus, where the money supply expanded, people would not simply wish to hold the extra money in idle money balances; i.e., if they were in equilibrium before the increase, they were already holding money balances to suit their requirements, and thus after the increase they would have money balances surplus to their requirements. These excess money balances would therefore be spent and hence aggregate demand would rise. Similarly, if the money supply were reduced people would want to replenish their holdings of money by reducing their spending. In this, Friedman challenged a simplification attributed to Keynes suggesting that "money does not matter." Thus the word 'monetarist' was coined.

The rise of the popularity of monetarism also picked up in political circles when Keynesian economics seemed unable to explain or cure the seemingly contradictory problems of rising unemployment and inflation in response to the collapse of the Bretton Woods system in 1972 and the oil shocks of 1973. On the one hand, higher unemployment seemed to call for Keynesian reflation, but on the other hand rising inflation seemed to call for Keynesian disinflation.

In 1979, United States President Jimmy Carter appointed as Federal Reserve chief Paul Volcker, who made fighting inflation his primary objective, and who restricted the money supply (in accordance with the Friedman rule) to tame inflation in the economy. The result was a major rise in interest rates, not only in the United States; but worldwide. The "Volcker shock" continued from 1979 to the summer of 1982, decreasing inflation and increasing unemployment.

Former Federal Reserve chairman Alan Greenspan argued that the 1990s decoupling was explained by a virtuous cycle of productivity and investment on one hand, and a certain degree of "irrational exuberance" in the investment sector on the other.

There are also arguments that monetarism is a special case of Keynesian theory. The central test case over the validity of these theories would be the possibility of a liquidity trap, like that experienced by Japan. Ben Bernanke, Princeton professor and another former chairman of the U.S. Federal Reserve, argued that monetary policy could respond to zero interest rate conditions by direct expansion of the money supply. In his words, "We have the keys to the printing press, and we are not afraid to use them."

These disagreements—along with the role of monetary policies in trade liberalisation, international investment, and central bank policy—remain lively topics of investigation and argument.

Monetarists not only sought to explain present problems; they also interpreted historical problems. Milton Friedman and Anna Schwartz in their book A Monetary History of the United States, 1867–1960 argued that the Great Depression of the 1930s was caused by a massive contraction of the money supply (they deemed it "the Great Contraction"), and not by the lack of investment Keynes had argued. They also maintained that post-war inflation was caused by an over-expansion of the money supply.

They made famous the assertion of monetarism that "inflation is always and everywhere a monetary phenomenon." Many Keynesian economists initially believed that the Keynesian vs. monetarist debate was solely about whether fiscal or monetary policy was the more effective tool of demand management. By the mid-1970s, however, the debate had moved on to other issues as monetarists began presenting a fundamental challenge to Keynesianism.

Monetarists argued that central banks sometimes caused major unexpected fluctuations in the money supply. They asserted that actively increasing demand through the central bank can have negative unintended consequences.

Notable Proponents of Monetarism
Karl Brunner .
Phillip D. Cagan .
Milton Friedman .
Alan Greenspan .
David Laidler .
Allan Meltzer .
Anna Schwartz .
Margaret Thatcher .
Paul Volcker .
Clark Warburton .

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Saturday, April 14, 2012

Neoliberalism

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Neoliberalism | US Political Polarization - Cynical > .
'79-'90 Margaret Thatcher's Monetarism - Learning > .


Sociopolitical Conflict


Neoliberalism (or neo-liberalism) is a term used to describe the 20th-century resurgence of 19th-century ideas associated with economic liberalism and free-market capitalism. It is generally associated with policies of economic liberalization, including privatization, deregulation, globalization, free trade, austerity and reductions in government spending in order to increase the role of the private sector in the economy and society; however, the defining features of neoliberalism in both thought and practice have been the subject of substantial scholarly debate. In policymaking, neoliberalism was part of a paradigm shift away from the prevailing Keynesian economic consensus that existed prior to the persistent stagflation of the 1970s.
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Neoliberalism partly explains why the USA has become so unequal over the course of this party system. As a result, the US increasingly divided politically. The economy has more influence than anything else upon political opinions, so neoliberalism is the most important component of America's political polarization. 

neoliberal characteristics: 
- emphasis of individuality and rejection of groups 
- market liberalism and fiscal conservatism (which are kinda the same thing) 
- privatization of public goods and infrastructure 
- deregulating any corporations 
- austerity measures against welfare 
- free trade agreements which allow for more rapid globalization Connected videos: 
1:35 - US political polarization playlist: https://www.youtube.com/playlist?list... . 
14:40 - police militarization: https://youtu.be/HehnDHNoItk . 
19:30 - anti-conspiracism playlist: https://www.youtube.com/playlist?list... . 
24:00 - what caused the GWOT: https://youtu.be/7Nwe0ehW2nY . 
While a number of recent histories of neoliberalism in the United States have traced its origins back to the urban renewal policies of the 1950s, Marxist economic geographer David Harvey argues the rise of neoliberal policies in the United States occurred during the 1970s energy crisis, and traces the origin of its political rise to Lewis Powell's 1971 confidential memorandum to the Chamber of Commerce in particular. A call to arms to the business community to counter criticism of the free enterprise system, it was a significant factor in the rise of conservative and libertarian organizations and think-tanks which advocated for neoliberal policies, such as the Business Roundtable, The Heritage Foundation, the Cato Institute, Citizens for a Sound Economy, Accuracy in Academia and the Manhattan Institute for Policy Research. For Powell, universities were becoming an ideological battleground, and he recommended the establishment of an intellectual infrastructure to serve as a counterweight to the increasingly popular ideas of Ralph Nader and other opponents of big business. The original neoliberals on the left included, among others, Michael Kinsley, Charles Peters, James Fallows, Nicholas Lemann, Bill Bradley, Bruce Babbitt, Gary Hart, and Paul Tsongas. Sometimes called “Atari Democrats,” these were the men — and they were almost all men — who helped to remake American liberalism into neoliberalism, culminating in the election of Bill Clinton in 1992. These new liberals would recoil in horror at the policies and programs of mid-century liberals like Walter Reuther or John Kenneth Galbraith or even Arthur Schlesinger.

Early roots of neoliberalism were laid in the 1970s during the Carter administration, with deregulation of the trucking, banking and airline industries,as well as the appointment of Paul Volcker to chairman of the Federal Reserve. This trend continued into the 1980s under the Reagan administration, which included tax cuts, increased defense spending, financial deregulation and trade deficit expansion. Likewise, concepts of supply-side economics, discussed by the Democrats in the 1970s, culminated in the 1980 Joint Economic Committee report "Plugging in the Supply Side". This was picked up and advanced by the Reagan administration, with Congress following Reagan's basic proposal and cutting federal income taxes across the board by 25% in 1981.

During the 1990s, the Clinton administration also embraced neoliberalism by supporting the passage of the North American Free Trade Agreement (NAFTA), continuing the deregulation of the financial sector through passage of the Commodity Futures Modernization Act and the repeal of the Glass–Steagall Act and implementing cuts to the welfare state through passage of the Personal Responsibility and Work Opportunity Act. The neoliberalism of the Clinton administration differs from that of Reagan as the Clinton administration purged neoliberalism of neoconservative positions on militarism, family values, opposition to multiculturalism and neglect of ecological issues. 
...
During her tenure as UK Prime Minister, Margaret Thatcher oversaw a number of neoliberal reforms, including tax reduction, exchange rate reform, deregulation, and privatisation. These reforms were continued and supported by her successor John Major. Although opposed by the Labour Party, the reforms were, according to some scholars, largely left unaltered when Labour returned to power in 1997.

The Adam Smith Institute, a United Kingdom-based free-market think tank and lobbying group formed in 1977 which was a major driver of the aforementioned neoliberal reforms, officially changed its libertarian label to neoliberal in October 2016.

According to economists Denzau and Roy, the "shift from Keynesian ideas toward neoliberalism influenced the fiscal policy strategies of New Democrats and New Labour in both the White House and Whitehall....Reagan, Thatcher, Clinton, and Blair all adopted broadly similar neoliberal beliefs."
...
Writing in New York, journalist Jonathan Chait disputed accusations that the Democratic Party had been hijacked by neoliberals, saying that its policies have largely stayed the same since the New Deal. Instead, Chait suggested these accusations arose from arguments that presented a false dichotomy between free-market economics and socialism, ignoring mixed economies. American feminist philosopher Nancy Fraser says the modern Democratic Party has embraced a "progressive neoliberalism," which she describes as a "progressive-neoliberal alliance of financialization plus emancipation". Historian Walter Scheidel says that both parties shifted to promote free-market capitalism in the 1970s, with the Democratic Party being "instrumental in implementing financial deregulation in the 1990s". Historians Andrew Diamond and Thomas Sugrue argue that neoliberalism became a "'dominant rationality' precisely because it could not be confined to a single partisan identity." Economic and political inequalities in schools, universities, and libraries and an undermining of democratic and civil society institutions influenced by neoliberalism has been explored by Buschman.

English speakers have used the term neoliberalism since the start of the 20th century with different meanings, but it became more prevalent in its current meaning in the 1970s and 1980s, used by scholars in a wide variety of social sciences as well as by critics. The term is rarely used by proponents of free-market policies. Some scholars have described the term as meaning different things to different people as neoliberalism has "mutated" into geopolitically distinct hybrids as it travelled around the world. Neoliberalism shares many attributes with other concepts that have contested meanings, including representative democracy.

The definition and usage of the term have changed over time. As an economic philosophy, neoliberalism emerged among European liberal scholars in the 1930s as they attempted to revive and renew central ideas from classical liberalism as they saw these ideas diminish in popularity, overtaken by a desire to control markets, following the Great Depression and manifested in policies designed to counter the volatility of free markets, and mitigate their negative social consequences. One impetus for the formulation of policies to mitigate free-market volatility was a desire to avoid repeating the economic failures of the early 1930s, failures sometimes attributed principally to the economic policy of classical liberalism.

When the term entered into common use in the 1980s in connection with Augusto Pinochet's economic reforms in Chile, it quickly took on negative connotations and was employed principally by critics of market reform and laissez-faire capitalism. Scholars tended to associate it with the theories of Mont Pelerin Society economists Friedrich Hayek, Milton Friedman and James M. Buchanan, along with politicians and policy-makers such as Margaret Thatcher, Ronald Reagan and Alan Greenspan. Once the new meaning of neoliberalism became established as a common usage among Spanish-speaking scholars, it diffused into the English-language study of political economy. By 1994, with the passage of NAFTA and with the Zapatistas' reaction to this development in Chiapas, the term entered global circulation. Scholarship on the phenomenon of neoliberalism has grown over the last few decades.

Anarcho-capitalism .
Beltway libertarianism .
Capitalism .
Classical liberalism .
Conservatism in the United States .
Cultural globalization .
Economic globalization .
Economic liberalism .
Elite theory .
Free market .
Globalism .
Globalization .
History of macroeconomic thought .
Inverted totalitarianism .
Late capitalism .
Neoclassical economics .
Neoclassical liberalism .
Neoconservatism .
Neo-libertarianism .
Objectivism .
Political Economy .
Reagan Democrat .
Reaganomics .
Reason magazine .
Right libertarianism .
Shock therapy (economics) .
Thatcherism .
Triangulation .
Trickle-down economics .
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Friday, April 13, 2012

Productivity & Demographics

22-9-20 Worker Productivity & the Economy | WSJ > .
24-6-28 Booming Demographics of Kazakhstan - KaiserBauch > .
24-5-31 Global Population - Malthus, Migrant Crisis - Niall Ferguson - Bloomberg > .
24-4-28 (Realistic) [Ruscian Demographics & Economy Imploding] - Inside R > .
24-1-14 How USA Brain-Drains The World - Versed > .
23-12-18 Xina's Declining Demographic Destiny - Update > .
23-11-7 Scientific Progress & War - [Counterproductive for Ruscia] (subs) - Katz > .
23-10-20 X's Population Decline: Flawed Economic Model, Low Productivity - Dig > .
23-8-10 Japan Could Rise Again as an Economic Super-Power - VisEk > .
23-8-9 Global Aging Institute: Xina's Accelerating Demographic Decline - Update > .
23-7-7 Xina, Japan - Impact of Demographic Decline - Real > .
23-7-2 Global Debt & Productivity | Global Assets vs GDP - EcEx > .
23-6-29 New Chinese Demographic Data = Population COLLAPSE | PZ > .
23-1-17 Xina Records First Population Drop in Decades | Focus > .
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Thursday, April 12, 2012

QE - Quantitative Easing

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Quantitative Easing - Bagel > .2010 Quantitative Easing - How It Works - BofE > .
2020 Quantitative Easing in How is Money Created - Fusion > .
Debt ..


Quantitative easing (QE) is a monetary policy whereby a central bank purchases at scale government bonds or other financial assets in order to inject money into the economy to expand economic activity. Quantitative easing is considered to be an "unconventional" form of monetary policy, which is usually used when inflation is very low or negative, and when standard monetary policy instruments have become ineffective. The term "quantitative easing" was coined by German economist Richard Werner in 1995 in the context of the Japanese crisis.

A central bank implements quantitative easing by buying financial assets from commercial banks and other financial institutions, thus raising the prices of those financial assets and lowering their yield, while simultaneously increasing the money supply. In contrast to conventional open-market operations, quantitative easing involves the purchase of more risky assets (than short-term government bonds) and at a large scale, over a pre-committed period of time.

Central banks usually resort to quantitative easing policies when their key interest rates approach or reach zero (a situation described as the "zero lower bound") which induces a "liquidity trap" where people prefer to hold cash or very liquid assets, given the perceived low profitability on other assets. In such circumstances, monetary authorities may then use quantitative easing to further stimulate the economy.

Quantitative easing has been largely undertaken by all major central banks worldwide following the global financial crisis of 2007–08 and in response to the COVID-19 pandemic. Quantitative easing can help bring the economy out of recession and help ensure that inflation does not fall below the central bank's inflation target. However QE programmes are also criticized for their side-effects and risks, which include the policy being more effective than intended in acting against deflation (leading to higher inflation in the longer term), or not being effective enough if banks remain reluctant to lend and potential borrowers are unwilling to borrow.

Quantitative easing affects the economy through several channels:
  • Credit channel: By providing liquidity in the banking sector, QE makes it easier and cheaper for banks to extend loans to companies and households, thus stimulating credit growth. Additionally, if the central bank also purchases financial instruments that are riskier than government bonds (such as corporate bonds), it can also increase the price and lower the interest yield of these riskier assets.
  • Portfolio rebalancing: By enacting QE, the central bank withdraws an important part of the safe assets from the market onto its own balance sheet, which may result in private investors turning to other financial securities. Because of the relative lack of government bonds, investors are forced to "rebalance their portfolios" into other assets. Additionally, if the central bank also purchases financial instruments that are riskier than government bonds, it can also lower the interest yield of those assets (as those assets are more scarce in the market, and thus their prices go up correspondingly).
  • Exchange rate: Because it increases the money supply and lowers the yield of financial assets, QE tends to depreciate a country's exchange rates relative to other currencies, through the interest rate mechanism. Lower interest rates lead to a capital outflow from a country, thereby reducing foreign demand for a country's money, leading to a weaker currency. This increases demand for exports, and directly benefits exporters and export industries in the country.
  • Fiscal effect: By lowering yields on sovereign bonds, QE makes it cheaper for governments to borrow on financial markets, which may empower the government to provide fiscal stimulus to the economy. Quantitative easing can be viewed as a debt refinancing operation of the "consolidated government" (the government including the central bank), whereby the consolidated government, via the central bank, retires government debt securities and refinances them into central bank reserves.
  • Boosting asset prices: When a central bank buys government bonds from a pension fund, the pension fund, rather than hold on to this money, it might invest it in financial assets, such as shares, that gives it a higher return. And when demand for financial assets is high, the value of these assets increases. This makes businesses and households holding shares wealthier – making them more likely to spend more, boosting economic activity.
  • Signalling effect: Some economists argue that QE's main impact is due to its effect on the psychology of the markets, by signalling that the central bank will take extraordinary steps to facilitate economic recovery. For instance, it has been observed that most of the effect of QE in the Eurozone on bond yields happened between the date of the announcement of QE and the actual start of the purchases by the ECB.
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Wednesday, April 11, 2012

Recession, Depression

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The Great Depression: CrCo US History > .
Recession & Depression - anf >> .

12 - 2008 Financial Crisis ..


In economics, a recession is a business cycle contraction when there is a general decline in economic activity. Recessions generally occur when there is a widespread drop in spending (an adverse demand shock). This may be triggered by various events, such as a financial crisis, an external trade shock, an adverse supply shock, the bursting of an economic bubble, or a large-scale anthropogenic or natural disaster (e.g. a pandemic). In the United States, it is defined as "a significant decline in economic activity spread across the market, lasting more than a few months, normally visible in real GDP, real income, employment, industrial production, and wholesale-retail sales". In the United Kingdom, it is defined as a negative economic growth for two consecutive quarters.

Governments usually respond to recessions by adopting expansionary macroeconomic policies, such as increasing money supply or increasing government spending and decreasing taxation.

Put simply, a recession is the decline of economic activity, which means that the public has stopped buying products for a while which can cause the downfall of GDP after a period of economic expansion (a time where products become popular and the income profit of a business becomes large). This causes inflation (the rise of product prices). In a recession, the rate of inflation slows down, stops, or becomes negative.
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An economic depression is a period of sustained, long-term downturn in economic activity in one or more economies. It is a more severe economic downturn than a recession, which is a slowdown in economic activity over the course of a normal business cycle.

Economic depressions are characterized by their length, by abnormally large increases in unemployment, falls in the availability of credit (often due to some form of banking or financial crisis), shrinking output as buyers dry up and suppliers cut back on production and investment, more bankruptcies including sovereign debt defaults, significantly reduced amounts of trade and commerce (especially international trade), as well as highly volatile relative currency value fluctuations (often due to currency devaluations). Price deflation, financial crises, stock market crash, and bank failures are also common elements of a depression that do not normally occur during a recession.
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The Great Depression was a severe worldwide economic depression that took place mostly during the 1930s, beginning in the United States. The timing of the Great Depression varied across the world; in most countries, it started in 1929 and lasted until the late 1930s. It was the longest, deepest, and most widespread depression of the 20th century. The Great Depression is commonly used as an example of how intensely the global economy can decline.

The Great Depression started in the United States after a major fall in stock prices that began around September 4, 1929, and became worldwide news with the stock market crash of October 29, 1929, (known as Black Tuesday). Between 1929 and 1932, worldwide gross domestic product (GDP) fell by an estimated 15%. By comparison, worldwide GDP fell by less than 1% from 2008 to 2009 during the Great Recession. Some economies started to recover by the mid-1930s. However, in many countries, the negative effects of the Great Depression lasted until the beginning of WW2.

The Great Depression had devastating effects in both rich and poor countries. Personal income, tax revenue, profits and prices dropped, while international trade fell by more than 50%. Unemployment in the U.S. rose to 23% and in some countries rose as high as 33%. Cities around the world were hit hard, especially those dependent on heavy industry. Construction was virtually halted in many countries. Farming communities and rural areas suffered as crop prices fell by about 60%. Facing plummeting demand with few alternative sources of jobs, areas dependent on primary sector industries such as mining and logging suffered the most.

Economic historians usually consider the catalyst of the Great Depression to be the sudden devastating collapse of U.S. stock market prices, starting on October 24, 1929. However, some dispute this conclusion and see the stock crash as a symptom, rather than a cause, of the Great Depression.

Even after the Wall Street Crash of 1929, where the Dow Jones Industrial Average dropped from 381 to 198 over the course of two months, optimism persisted for some time. The stock market turned upward in the early 1930, with the Dow returning to 294 (pre-depression levels) in April 1930, before steadily declining for years, to a low of 41 in 1932.

At the beginning, governments and businesses spent more in the first half of 1930 than in the corresponding period of the previous year. On the other hand, consumers, many of whom suffered severe losses in the stock market the previous year, cut their expenditures by 10%. In addition, beginning in the mid-1930s, a severe drought ravaged the agricultural heartland of the U.S.

Interest rates dropped to low levels by the mid-1930, but expected deflation and the continuing reluctance of people to borrow meant that consumer spending and investment remained low. By May 1930, automobile sales declined to below the levels of 1928. Prices, in general, began to decline, although wages held steady in 1930. Then a deflationary spiral started in 1931. Farmers faced a worse outlook; declining crop prices and a Great Plains drought crippled their economic outlook. At its peak, the Great Depression saw nearly 10% of all Great Plains farms change hands despite federal assistance.

The decline in the U.S. economy was the factor that pulled down most other countries at first; then, internal weaknesses or strengths in each country made conditions worse or better. Frantic attempts by individual countries to shore up their economies through protectionist policies – such as the 1930 U.S. Smoot–Hawley Tariff Act and retaliatory tariffs in other countries – exacerbated the collapse in global trade, contributing to the depression. By 1933, the economic decline pushed world trade to one third of its level compared to four years earlier.
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The Great Recession was a period of marked general decline (recession) observed in national economies globally that occurred between 2007 and 2009. The scale and timing of the recession varied from country to country. At the time, the International Monetary Fund (IMF) concluded that it was the most severe economic and financial meltdown since the Great Depression. One result was a serious disruption of normal international relations.

The causes of the Great Recession include a combination of vulnerabilities that developed in the financial system, along with a series of triggering events that began with the bursting of the United States housing bubble in 2005–2006. When housing prices fell and homeowners began to abandon their mortgages, the value of mortgage-backed securities held by investment banks declined in 2007–2008, causing several to collapse or be bailed out in September 2008. This 2007–2008 phase was called the subprime mortgage crisis. The combination of banks unable to provide funds to businesses, and homeowners paying down debt rather than borrowing and spending, resulted in the Great Recession that began in the U.S. officially in December 2007 and lasted until June 2009, thus extending over 19 months. As with most other recessions, it appears that no known formal theoretical or empirical model was able to accurately predict the advance of this recession, except for minor signals in the sudden rise of forecast probabilities, which were still well under 50%.

The recession was not felt equally around the world; whereas most of the world's developed economies, particularly in North America, South America and Europe, fell into a severe, sustained recession, many more recently developed economies suffered far less impact, particularly China, India and Indonesia, whose economies grew substantially during this period. Similarly, the oceanic region suffered minimal impact, in part due to their proximity to the Asian markets.
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The COVID-19 recession, which began in February 2020, is the worst global economic crisis since the Great Depression.

Following a global economic slowdown during 2019 that saw stagnation of stock markets and consumer activity, the COVID-19 lockdowns and other precautions taken during the COVID-19 pandemic threw the global economy into crisis. Within seven months, every advanced economy had fallen to recession or depression, while all emerging economies were in recession. Modeling by the World Bank suggests that in some regions a full recovery will not be achieved until 2025 or beyond.

The recession has seen unusually high and rapid increases in unemployment in many countries. By October, more than 10 million unemployment cases had been filed in the United States, swamping state-funded unemployment insurance computer systems and processes. The United Nations (UN) predicted in April 2020 that global unemployment will wipe out 6.7% of working hours globally in the second quarter of 2020—equivalent to 195 million full-time workers.] In some countries, unemployment is expected to be at around 10%, with more severely affected nations from the COVID-19 pandemic having higher unemployment rates. Developing countries were also being affected by a drop in remittances, exacerbating COVID-19 pandemic-related famines.

The crisis' onset coincided with the 2020 stock market crash, which saw major indices drop 20 to 30% in late February and March. Recovery began in early April 2020, and many market indices recovered or even set new records by late 2020. 

The recession and the 2020 Russia–Saudi Arabia oil price war led to a drop in the price of oil; the collapse of tourism, the hospitality industry, and the energy industry; and a downturn in consumer activity in comparison to the previous decade.
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The COVID-19 pandemic had a deep impact on the Canadian economy, leading it into a recession. The governments' social distancing rules had the effect of limiting economic activity in the country. Companies started considering mass-layoffs of workers, which was largely prevented by the Canada Emergency Wage Subsidy. But despite these efforts, Canada's unemployment rate was 13.5% in May 2020, the highest it has been since 1976.

Many large-scale events that planned to take place in 2020 in Canada were canceled or delayed. This includes all major sporting and artistic events. Canada's tourism and air travel sectors were hit especially hard due to travel restrictions. Some farmers feared a labour shortfall and bankruptcy.

COVID-19 affected consumer behaviours. In the early stages of the pandemic, Canadian grocery stores were the site of large-scale panic buying which lead to many empty shelves. By the end of March, most stores were closed to walk-in customers with the exception of grocery stores and pharmacies, which implemented strong social distancing rules in their premises. These rules were also implemented in other Canadian businesses as they began to re-open in the following months.
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sī vīs pācem, parā bellum

igitur quī dēsīderat pācem praeparet bellum    therefore, he who desires peace, let him prepare for war sī vīs pācem, parā bellum if you wan...

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