- Did you know or hear about the 1930 great depression?
- Do you think this recession will be worse compared to the great depression?
Let me explain the great depression.
This was a period between the year 1929 and 1932 varying in different countries around the world but it was particular to the United States in the year 1930. This is regarded as the biggest and longest recession in the world with the world GDP dropping with about 15% while the recession in 2008 only had 1% drop in GDP. The Great depression was as a result of fall in the stock market which began in September 4 of 1929. The great depression having had effect on both the rich and poor has ever since be referred to when talking about how worse the world economy can go down.
The Great Lockdown/The Great Shutdown
It can be much unexpected to hear the international monetary fund (IMF) say that the world will likely experience worst recession since the 1930s. This was immediately after the coronavirus outbreak started getting index cases in nations. The same day JP Morgan Chase Bankalso came out to say the company lost 75% of its shares value compared to the previous year (71%? That is really much) and the bank said they were anticipating a fairly severe recession. The IMF actually called this recession the great lockdown and speculated that we might see the worst recession in history since 1930. If we aren’t going to be playing balls with reality, we must confess that the stock market has dropped within over 75% within the last three months.
Unlike the great Lockdown which we are in now, people could go to work during the great depression (those who had their jobs) but in the case of the great lockdown, we have to deal with a pandemic or a virus which is preventing economic activities and which is costing a lot of nations billions or trillions of dollars daily.
What do we do at this point, the economy will keep crashing if everyone keeps staying at home so the logical thing to do is to open the economy and allow people to move around and do their daily activities but what then happens if the virus becomes more contagious and affects more people, then the economy shuts down again at a more greater cost. So either we stay lockdown or we resume without finding a vaccine to this virus, we will be facing a recession.
One thing that amazes me is the fact that the government is saying there is a recession, the country is in debt but the government has to provide food for the citizens. A lot of countries are giving out cheques and bailouts by printing more money into circulation which is just inflating debt.
How will the economy react after the lockdown?
We are not in a recession yet although it looks like it already started as a lot of people already lost their jobs but after the lockdown, there will surely be people getting their Jobs back but percentage of people who will get their jobs cannot be defined and it is the people that determine a recession or not. A recession occurs when there is no money in circulation as people will not be willing to spend money and when people do not spend money, businesses will not be making profits and sales will be dropping and when sales drop, companies start to fire people and that just keeps going until people start to trust that things are normalizing or the government helps again.