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Causes of Economic Recession

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What the Economists Say about What Causes an Economic Recession versus What I Say

What Causes an Economic Recession? According to a "recession is primarily caused by the actions taken to control the money supply in the economy. The Federal Reserve is responsible for maintaining an ideal balance between money supply, interest rates, and inflation. When the Fed loses balance in this equation, the economy can spiral out of control, forcing it to correct itself."

As in past panics, greed and envy drove markets.
— Edward Abbey

But blaming the Federal Reserve as the cause of the present recession is not the way to take responsibility for our lives. We have witnessed an outrageous era of greed and excess which has to be one of the causes of the recession. And let up not place greed in the hands of the rich financial types. The average person in North American is just as greedy as these bankers. A recession, however is a great way for separating fools from their money.

Causes Of the Present Economic Recession

Economists tend to look at U.S. economic recession history including major causes of the 2001 recession and the recession of the 70s to come with the causes of the present recession. I look for other causes that others may overlook.

Top-10 Causes of a Recession the Way the Mainstream Media and the Economists See It

  1. Excessive interest rates
  2. Underconsumption
  3. Overproduction
  4. Currency crises
  5. Lack of consumer confidence
  6. Inflation
  7. National debt
  8. Speculation and economic bubbles
  9. Natural recession cycle
  10. Inadequate government interference

Top-10 Causes of Economic Recession the Way I See It

  1. Economists 
  2. Individuals who follow advice of economists 
  3. Greed — including that of the average citizen
  4. Governments 
  5. Money 
  6. Stock Markets 
  7. Groupthink
  8. Corporations 
  9. Credit and Debt 
  10. Definition of recession itself

Top-10 Other Possible Causes of Economic Recession

  1. Insufficient Regulation 
  2. Alan Greeenspan 
  3. George Bush 
  4. People who voted for George Bush 
  5. People who didn't vote for George Bush 
  6. Guys Like Ernie Zelinski who write international bestsellers such as like  The Joy of Not Working 
  7. God 
  8. The Devil 
  9. The Global Savings Glut 
  10. People Who Don't Buy Books — particularly copies of How to Retire Happy, Wild, and Free 

Although some responsibility for the cause of the current economic recession can be placed squarely on government officials and lack of regulation, we must still take personal responsibility for the effects that the recession has on our own lives. Our financial well-being will only be in great shape if we take 100 percent responsibility and place no blame on anyone but ourselves.

All types of things add to an economic recession including greed that adds to corruption at financial firms. Do doubt bankers and financial experts will be in denial about this.

During the boom, a speculative fervour gripped homeowners, particularly in the United States, where they got hooked on cheap, gimmicky mortgages. They believed that they could buy low, sell high, and could always get out at the peak, instead of being the last player in the game to hold the old maid card.
— Dr. Robert Burner, Dean of the Darden School of Business at University of Virginia

As an aside, get this: A South Korean financial researcher lost his job for telling a TV talk show that people make unwise investments because they are too greedy.

This calls for a throw-the-bums-out solution. Not only should we throw the bums out, we should have them punished. As someone rightfully pointed out on a blog comment, "If we shield idiots from the consequences of their actions, they not only remain idiots, but they conclude that idiocy pays, breeding more idiocy."

Growth for the sake of growth is the ideology of the cancer cell.
— Edward Abbey

In all recorded history there has not been one economist who had to worry where the next meal would come from.
— Peter Drucker

Unfortunately, the punishment is unlikely to ever happen. But let up not place greed in the hands of the rich financial types. The average person in North American is just as greedy as these bankers and contributed to the ecomonic downturn and the consequential recession.

As Newsweek magazine recently stated in their cover story titled Economic Recession: There is a Silver Lining: [about what caused the US economic recession]

 “The whole country has been complicit in a great fraud.”

Unfortunately economists don't see this — including their voodoo economic theories and strategies that helped cause the recession, such as the belief that economic good times could go on forever. This leads to a very important cause of the present recession. There is no shortage of expert opinion, particularly from economists and financial analysts — too often, however, the wrong ones prevail.

Why do people who laugh at fortune tellers take economists seriously?
— Unknown wise person

Again, we as individuals are to blame big time. We trust what economists and financial analysts tell us. We trust the financial and economic models that point to a stable economy and ever increasing house prices and stock prices. But results don't lie — these models have been proven to be dead wrong.

The economy depends about as much on economists as the weather does on weather forecasters.
— Jean-Paul Kauffmann

In his book, True Enough: Learning to Live in a Post-Fact Society, Farhad Manjoo, points out how our personal belief systems — however wrong they may be — heavily influence the way we see the world. "Facts no longer matter," says Manjoo, when it comes to making important life and ecomonic decisions. We take the easy way out by finding "experts" and false evidence that back up our false beliefs. At the same time, we dismiss those who disagree with us — more often than not with serious, if not totally devastating consequences.

There is nothing so disturbing to one's well-being and judgment as to see a friend get rich.
— Economist Charles Kindleberger writing in his book Manias, Panics and Crashes: A History of Financial Crises

Stefan M.I. Karlsson, an economist currently working in Sweden, concludes that "there can be no doubt that [Alan] Greenspan, primarily through his low-interest-rate policy but also through the negative effects of his various bailouts, was responsible for the housing bubble and therefore the current slump."

So now, regardless of the causes of the economic recession, we now have to suffer the consequences as did people in the economic recession in the 70s. A question that is asked is: What happens during a recession?


  Effects of Recessions the Way Economists See It

  • Bankruptcies
  • Banks lending less money
  • Deflation (or disinflation)
  • Foreclosures
  • Reduced sales
  • Stock market crash
  • Unemployment

Effects of Economic Recessions the Way I See It

  • Bad things happen but good things happen too!
  • More time to reflect about the idiocy of economists and financial experts who helped us get into this mess.
  • I get the pleasure of writing 101 Reasons to Love a Recession.
  • An opportune time to read The Joy of Not Working and start living life like you have never lived before.
  • Will teach fools something about saving money.
  • More time to spend with your best friends.


Recession Retirement Book


From Someone Who Predicted This Recession:

What Is the Cause of the Economic Recession That We Have Today?

Question by John Heinzl of the Globe and Mail:  What was the root cause of this mess [economic recession] we're in?

Answer by John Talbott:  Everybody understands that this happened because there was no regulation. But you have to ask the next question: Why wasn't there any regulation? And the answer is [U.S. politicians] were being paid to deregulate. They were accepting enormous campaign contributions from corporations, banks, hedge funds and Wall Street institutions.

NOTE: John Talbott is the author of Contagion: The Financial Epidemic that is Sweeping the Global Economy and How to Protect Yourself from it. Talboott has been right before. His 2003 book, The Coming Crash in the Housing Market, warned about the dangers of subprime loans, the precarious state of Fannie Mae and Freddie Mac, and the potential for “economic disaster” years before the credit crisis became front-page news.


Causes Of the Great Depression

Depression / Recession History: "Debt fuelled massive speculation in real estate and stocks during the Roaring Twenties (Radio Corp. of America, or RCA, climbed from $2 a share to $500). When the markets crashed in October 1929, misguided government policies caused a decade-long depression." — from Report on Business Magazine



Copyright 2015 by Ernie Zelinski  All Rights Reserved

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Other Websites to Help You Deal with a Recession

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The Joy of Not Working During a Recession

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