Out of the box There is nothing catastrophic about a recession
The central banks kept interest rate too low and printed too much money during the past decade. 

This has led to high inflation. The war in Ukraine, together with the pandemic, made the situation worse. 

The central banks have now increased interest rate sharply. They wanted to fight inflation. 

This is expected to cause an economic recession in 2023. The media, and the government, made it appear to be a big problem. 

What is a recession? It is an economic decline. Maybe, the economic will drop by 5% or worse by 10%.

So what?

If it dropped by 10%, it meant that the economic growth for the past 5 years have been wiped out, i.e. assuming that the economy grew by 2% a year. What is so bad about 2018? We just go back in time by 5 years, maybe less.

The problem with an economic recession is that 10% of the people, or perhaps 20%,  will be hit badly. They will lose their jobs and be depressed. Even those who remained employed will be scared. 

People who lose their income may face great financial distress. They may go hungry or be chased out of their home. 

This problem is our economic system. We need a new economic system. 

I suggest that people who lose their jobs can get some financing from the state, e.g. by premature withdrawing from their retirement savings, or have access to a subsistence loan from the state, it will not be so bad. 

Another approach is to pass a law to reduce the working hours by 10%, so that everyone remains employed, maybe at a 10% cut in pay. This allows people to get through the recession.

Sadly, the capitalist system is designed for financial vultures. They take advantage of the depressed economy to buy over assets from the vulnerable people at low prices. This is how the financial vultures get rich.

We need a socialist system to provide better protection to ordinary people. A capitalist system is bad. 

This is why I prefer a socialist system, even a communist system. 

Tan Kin Lian 

 
 

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