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Why the Panic is Just Beginning
by James Rickards Daily Reckoning
Let’s step back from today’s banking financial crisis and look at the bigger picture. That will help us to understand the system dynamics, and estimate how long the crisis might last, and how destructive it might be.
As a preliminary matter, let’s distinguish between a recession (even a bad one) and a financial crisis. They’re different.
A recession is a part of the business cycle. It involves some combination of tighter monetary conditions, higher unemployment, business failures, inventory dumping, declines in industrial output and declining GDP.
In recent decades, we’ve had recessions in 1973, 1980, 1981, 1990, 2000, 2007 and 2020. That’s a tempo of one recession about every seven years, although the recessions of 1980 and 1981 show that back-to-back recessions are possible.