The Great Recession has left the U.S. economy in shambles, and many economists fear that we may have already reached the economic nadir and are now headed upwards again. But just how low can an economy go before it collapses altogether? The answer to this question depends on whether you are looking at GDP (Gross Domestic Product) or GDP per capita, as well as on which economies you compare it to in order to judge its size and stability.
Why the Recession Never Ended
For many Americans, the Great Recession never ended. Their jobs never came back. Or they found only part-time work. They sold their homes for less than they owed on their mortgages and moved in with relatives or rented. They gave up looking for new jobs and just stopped working altogether. All of these people were written off as discouraged workers by the government’s official unemployment statistics. If they had been included in the count, the unemployment rate would have been 11 percent, not 5 percent, in September 2015.
How Can We Avoid Another Collapse?
No one knows for sure how low an economy can go before it collapses. But we can look at past examples to get an idea. The Great Depression was the lowest point in recent history. And while it was devastating, it didn't lead to the collapse of the economy. That's because there were other economic factors that came into play and pulled the US out of its depression. That's not to say that another such incident couldn't happen again, but chances are slim since our economic policies are much more regulated now than they were then.
The Effects of a Depression on Society
A depression is more than just an extended recession. It's a prolonged and deep economic downturn that can have devastating effects on individuals, businesses, and entire countries. During a depression, people lose their jobs, homes, and savings. Businesses close their doors, and economies contract. The Great Depression of the 1930s was the deepest and longest-lasting economic downturn in history. It began in 1929 and lasted for more than a decade. More than 15 million Americans were unemployed, and many lost their homes and savings. The effects of the Great Depression were felt around the world.
The Need for New Financial Tools
As we stand on the edge of an economic abyss, it is clear that we need new financial tools to prevent collapse. Central banks around the world have been using quantitative easing (QE) to pump money into the economy, but this has only had limited success. Some economists believe that negative interest rates may be the answer, but there is no guarantee that this will work. It is clear that we need to be prepared for all eventualities and have a plan B in place should things take a turn for the worse.
How Will Governments React in Coming Years?
The recent pandemic has sent shockwaves through the global economy, with businesses shutting down and millions of people losing their jobs. This has led many to wonder how low the economy can go before it collapses. If a government spends more than what it collects in taxes, then eventually the money will run out. For example, Venezuela is on the brink of economic collapse because they don't have enough oil to sell abroad.
How Will Individuals React in Coming Years?
As we enter what some are calling the second Great Depression, it's natural to wonder how low things can go before our whole system collapses. After all, we've already seen businesses close and people lose their homes and jobs. So what is the bottom of the economic abyss? And how will individuals react in coming years? Certainly, the news isn't good. Jobless rates in the United States hit 9.4% this month, up from 7.6% one year ago. Foreclosures also increased in July by 34%. And with unemployment benefits running out for millions of Americans this week, there seems little hope for any significant improvement anytime soon.
Are You Prepared For An Economic Collapse?
No one knows for sure what the lowest an economy can go without collapsing. However, many experts agree that an economic collapse is possible if we're not careful. The signs are all around us: unemployment is high, debt is rising, and confidence in our financial institutions is low. If you're not prepared for an economic collapse, now is the time to start making changes. Here are seven things you can do to get ready