On Likelihood of Recession in Early 2020s

There continues to be a lot of talk over whether a new Recession is going to occur or not. The rhetoric has not subsided in the two years since I began creating large-scale contributions to The Fourth Estate. For those who have forgotten or are unaware, the Coronavirus Pandemic back in 2020 saw governments around the world sustaining massive amounts of Kapital and Schuld to deal with the short-term consequences. The immediate term consequences, the rising Inflation Rates and Currency Depreciations, have been met with rising Interest Rates. The Fractional-Reserve Banking Systems throughout the Empire of Liberty have tried to be cautious when it came to the raising of Interest Rates. With so much of Neoliberalism’s economic firepower being dependent on borrowing and lending Fiat Currencies, the increased Interest Rates were bound to cause a Recession. Throw in some other crises, not to mention COVID-19’s persistence, and it becomes unsurprising that people are still buying into this narrative.

Last year as well as 2021, I would have been convinced that a lot of the rhetoric has been overblown. The fact that some people were drawing comparisons to the Stagflation of the 1970s does not provide enough credence to the possibility of a Recession. This year, however, may be different (or so I am led to believe). The consensus among the Liberal Capitalists is split between those who think that there will be a Recession at some point and those who remain adamant about the Empire of Liberty’s member-states recovering from the crises of the past three years. What is really amazing about this would-be Recession, compared to the Great Recession and the ones before, is that it has become anticipated to the point of being overhyped.

So much of the discussion is being pivoted toward the exact impact of the Recession. The impact alone cannot be anticipated beforehand. The real question that needs to be addressed is whether there will even be a Recession at all. The possibility should be more important than what will actually happen. Remember, the past two years has seen unyielding rhetoric about an impending Recession that never came.

If I had to make an educated guess about why the rhetoric is persisting, it has to be because media outlets have a feeding frenzy on their hands. The early 2020s has been preoccupied with so many crises that it makes the 2010s (and even the 2000s by extension) look quaint by comparison. But 2023 in particular has seen the Fractional-Reserve Banking System within the Western world sustain a moderate blow that has left privatized commercial banks uncertain about their longevity. The hope is that the Central Banks will be able to return Inflation Rates to their predictable rates from the 2010s. The Central Banks are not going achieve that until sometime late this year. Exactly how the Central Banks handle this by raising Interest Rates is decisive because their decisions will determine whether a Recession will happen at all.

In short, it is still too early to speak of a Recession. If a Recession does happen in 2023, it will probably happen later this year.            

Categories: Politics

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