Economics and depressions

2020


Some possible causes of a depression

	a) Overproduction, e.g. the 'roaring twenties' decade of 1920's.

	If there is a high production of cars, equipment and buildings, after some time there will be more of these items than can be practically used. This could lead to a following period of low economic activity.

	b) A pandemic causing a shutdown of production and trade to stop the spread of the disease.

	c) concentration of all the money and land in society into the ownership of one group of people, e.g. the capitalists of the 19th century. If this group's attitude is i) not to purchase goods and services, ii) not to invest in new enterprises, but to leave all the money in bank accounts and do nothing, this would lead to an economic depression as the remaining 80% of society would have no funds to purchase goods, or market for products that they sought to produce.



Solutions to a depression

1) A wealth tax to distribute money into the hands of people that produce goods and purchase goods and services.

2) Laws to ensure high wages and high prices for goods and services to lead to the same result as item 1).

3) Waiting for an oversupply of goods to depreciate and need replacement.


Depression is a serious and negative situation which involves large numbers of people potentially homeless and on the verge of starvation.