RE: Winners and Losers from the “Cost of Living Crisis”
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Recessions are a naturally occurring part of the business cycle (demand-side)
Many people don’t know recession is part of everything and even in our day to day life’s we sometimes where things won’t be going as planned but we have to keep pushing. During recession what is important is finding a way to survive without destroying our investment.
Who would we normally expect to be the winners and losers of an economic crisis?
Government intervention are very important in making out of recession but that’s it is the right intervention like the one you have stated in this paragraph because interest rate is increasing on daily bases in U.S now which positive impact does that have on the present economy situation?
Winners
Most of the major companies listed above are doing amazingly during this time and will continue to do well especially the pharmaceuticals and weapons companies.
I always thought banks are the problems because of what happened in 2008 and now things are different in many ways, not Covid 19 that caused this recession it is the mismanagement of the economy.
Conclusion
Government intervention for this recession has not been enough and they are not helping matters looking like they are trying to support the pocket of the banks. I hope this doesn't take longer than expected.
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Most recessions are challenging but they also offer opportunities to people who can recognise them and have positioned themselves to take advantage of them. It is like a crypto bear market. There are opportunities to accumulate assets that will appreciate in price when the market picks up, which it does eventually.
Intervention during a recession is typically expansionary policy; this stimulates activity (i.e. increases demand). However, expansionary policy is inflationary. This does not normally matter as inflation is normally low during a recession. This time it is different. Growth is low and inflation is high. They cannot both be tackled at the same time using demand side policies.
Increasing interest rates is contractionary policy that is used to reduce inflation. This slows the economy down. Under current circumstances, it will make a recession worse. The causes of the crisis need to be addressed. They are mostly on the supply-side and caused by past interventions. Sadly, it is going to take a long time to fix.
I consider Covid-19 policies as a trigger. They were very damaging but this has been because economies have become very vulnerable. If Covid-19 had never happened, something else would have triggered this current crisis.