Duration 5:5

What causes an economic recession - Richard Coffin

by TED-Ed

1 970 397 watched

43.5 K

Published 15 Oct 2019

How can factors like inflation, supply and demand, and interest rates trigger recessions? Learn the economic basics of modern markets. -- For millennia, the people of Britain had been using bronze to make tools and jewelry, and as a currency for trade. But around 800 BCE, that began to change: the value of bronze declined, causing social upheaval and an economic crisis— what we would call a recession today. So what causes recessions? Richard Coffin digs into the economic fluctuations that affect our modern markets. Lesson by Richard Coffin, directed by Augenblick Studios. Animator's website: http://nabilburias.com Educator's channel: /c/ThePlainBagel Sign up for our newsletter: http://bit.ly/TEDEdNewsletter Support us on Patreon: http://bit.ly/TEDEdPatreon Follow us on Facebook: http://bit.ly/TEDEdFacebook Find us on Twitter: http://bit.ly/TEDEdTwitter Peep us on Instagram: http://bit.ly/TEDEdInstagram View full lesson: https://ed.ted.com/lessons/what-causes-an-economic-recession-richard-m-coffin Thank you so much to our patrons for your support! Without you this video would not be possible! Felipe Hoff, Rebecca Reineke, Cyrus Garay, Victoria Veretilo, Michael Aquilina, William Biersdorf, Patricia Alves Panagides, Valeria Sloan Vasquez, Mike Azarkman, Yvette Mocete, Pavel Maksimov, Victoria Soler-Roig, Betsy Feathers, Samuel Barbas, Therapist Gus, Sai Krishna Koyoda, Elizabeth Parker, William Bravante, Irindany Sandoval, Mark wisdom, Brighteagle, Beatriz Inácio, Mighterbump, Pamela Harrison, Maija Chapman, Liana Switzer, Curtis Light, The Brock, Dianne Palomar, Edgar Campos Barrachina, Maria Lerchbaumer, Ever Granada, Marin Kovachev, Ravi S. Rāmphal, Penelope Misquitta, Tekin Gültekin, Jhuval, Hans Peng, Gaurav Mathur, Erik Biemans, Tony, Michelle, Katie and Josh Pedretti, Vaibhav Mirjolkar, Thomas Bahrman, Allan Hayes, Aidan Forero, Uday Kishore, Mikhail Shkirev, Devesh Kumar, Sunny Patel and Anuj Tomar.

Category

Comments - 2019

@

@WestonScally7614yesterday I used to think every investor lose out during recession, meanwhile some make millions. I'm nonetheless considering to invest $150k in my portfolio. What is the greatest approach to profit from the market? 3373
@

@Riggsnic_co2 months ago Some economists have projected that both the U.S. and parts of Europe could slip into a recession for a portion of 2023. A global recession, defined as a contraction in annual global per capita income, is more rare because China and emerging markets often grow faster than more developed economies. Essentially the world economy is considered to be in recession if economic growth falls behind population growth. ... 971
@

@GorkemHernandez2 months ago Market highs can sometimes be followed by corrections, but predicting the timing and extent of it is challenging. I've heard some analysts talk about a 'massive' correction. It makes me wonder if it's time to adjust my $2M portfolios or maybe even consider some defensive investments. ... 1332
@

@ClementRusso24 months ago It's hard to predict the future until we see this month’s inflation results. However, historical data consistently show that stocks tend to outperform bonds in the long term. Therefore, I'm staying in the market and focusing on selecting high-quality stocks. The challenge lies in identifying these stocks. ... 1134
@

@matturner82 months ago Recession is often the result of external factors, and it appears that the United States is losing its grip as a federal reserve currency.
With a decreasing ability to control inflation and a reduction in stock and oil trading, it seems that a new multilateral world order is on the horizon. ... 1064
@

@Mrshuster4 weeks ago Some of the most respected analysts in the fields of markets, business, and economics have been expressing their opinions on how severe they believe the next downturn would be, as well as how far stocks may have to go, as concerns about a recession grow on Wall Street and inflation stays well above the Fed's 2% target. My objective is to have a portfolio worth at least $850,000 by the time I'm 60 years old, so I need suggestions and guidance on what investments to make to position myself for retirement. ... 1026
@

@Natalieneptune4692 months ago You got valid points though Inflation is dilapidating. Quite sad what's happening in the market. Although, even the worst recessions offer wonderful buying opportunities in the markets if you're cautious. Volatility can also result in excellent short-term buy and sell opportunities. The market circumstances are driving me insane, my portfolio has lost almost $13K this month alone, my earnings are tanking. I'd appreciate some financial advice from anyone who knows more going forward. ... 979
@

@jameswood97728 months ago During a recession, many stocks and assets may be undervalued. I believe now is an ideal time to capitalize on the market for long-term gains, but it wouldn't hurt to know how to make short-term profit. I've heard of investors making over $400k profit in this current sinking market, and I'm looking for ideas on how to earn similar profits. ... 3453
@

@shellylofgren5 months ago We experienced the peak of our era, and now it is gone. Recession is tanking everything including 401K. My retirement equities portfolio of $750K is in the reds. I keep losing because of inflation. This world will fall to the corrupt rulers in the same way that Rome did. I'm sorry if you're thinking about retiring and you're worried that your pension won't be enough to meet the rising cost of living. Horrible foreign policies everywhere, bad regulatory policy, bad fiscal policy, and bad energy policy. ... 587
@

@bernadofelix8 months ago Global financial markets have been significantly impacted by SVB's demise, prompting investors to sell off bank equities hastily and reevaluate their interest rate expectations. I am a $350,000 investor who is at a crossroads and wondering if it is wise to hold onto securities that are losing value. I want guidance on the best approaches to maximizing my returns in this negative market. ... 1418
@

@lawerencemiller97202 months ago In these uncertain times, it's more important than ever to have a solid understanding of how to manage your finances, invest wisely and navigate economic downturns. But my primary concern is how to grow my reserve of $240k which has been sitting duck since forever with zero to no gains, sure I'm all in on the long term game, but with my savings are lying waste to inflation and my portfolio losing gains everyday, I need a remedy. ... 1186
@

@hushbash29894 months ago With inflation running at a four-decade high, Recession is now the ‘most likely’ outcome for the economy and i cannot imagine being a victim of circumstances. My portfolio suffered a big hit, holding it further won’t be any good. I've heard of people netting hundreds of thousands this red season. How can i ensure this? ... 1523
@

@JimmyA.Alvarezlast month As recession fears mount on Wall Street and inflation remains well above the Fed's 2% target, some of the top commentators in markets, business, and economics have been sounding off on just how bad they think the next downturn might be — and how far stocks may have to fall. I need ideas and advice on what investments to make to set myself up for retirement, my goal is to have a portfolio of at least $850k at the age of 60. ... 1452
@

@elvismark5172last year Yes, the dangers are greater, but isn't the current business sector just as risky? The majority of those adopting these tactics are earning substantial gains. What I gather is that rather than long-term trading, instantaneous trading is the preferred method for managing this downturn and rapid expansion. ... 2310
@

@bobbymainz1160last year Recession is most likely the result of an external factor. For the first time in decades, the United States is losing its clout as a federal reserve currency. They don't have any more economies to use to control inflation, and less money is being spent on stock and oil trading than in the past. They all lend support to the idea that a new multilateral world order is in the works. ... 537
@

@stephenpotter214 months ago A recession is currently the "most likely consequence for the economy," and I cannot fathom becoming a victim of circumstances, with inflation at a four-decade high. In two years, I plan to retire, and my target retirement fund is $967,000. How can I assure this? What steps can I take? ... 1517
@

@kashkat9872 years ago As we get deeper into this recession more people will lose their jobs which will expand the inventory along with homebuilders delivering their massive backlog .In my opinion Inventory could keep building for a few years .The more inventory that builds up , the more desperate sellers are going to feel and will be cutting prices . Fear drove it up and fear is going to drive it down.This is what the beginning of a crash feels like.I would rather buy at a cheaper price and a higher interest rate. I can always refi when rates come down but I don't want to buy a depreciating asset. Thanks again for a great show with facts backed by real data ... 960
@

@poweroffriendship2.05 years ago "It's a recession when your neighbor loses his job; it's a depression when you lose yours."
~ Henry S. Truman 4351
@

@erichkraetz26222 years ago "If there is one common theme to the vast range of the world’s financial crises. It is that excessive debt accumulation, whether by the government, banks, corporations, or consumers, often poses greater systemic risks than it seems during a boom." -- Carmen Reinhart It's a good time to take a beat up 401k and do a Roth Conversion if your stocks are really beaten down. Then you'll only pay taxes on the much lower current prices, and your Roth will be tax free. ... 1161
@

@ShadowKick324 years ago Oh hey, I'm not even 30 but I got to live through 2 recessions already. Neat. 1724
@

@alexyoung312611 months ago I would say TAKE ADVANTAGE OF THE RECISSION! Recessions are an unavoidable part of the economic cycle; all you can do is prepare for them and plan accordingly. I graduated into a slump (2009). My first job after graduating from college was as an aerial acrobat on cruise ships. Today, I work as a VP for a global corporation, own three rental properties, invest in stocks and businesses, run my own company, and have increased my net worth by $500k in the last four years. ... 517
@

@Zoesus5 years ago I got this notification while sitting in my macroeconomics class while discussing inflationary and recessionary gaps... 1332
@

@mayacho4910last year 'The stock market is still a fantastic tool for building wealth, however, so it's wise to consider investing even if you don't have much money to spare". 631
@

@jenl7325 years ago me, taking economics, seeing the good old S & D graph: hello darkness my old friend 983
@

@tzwacdastag82235 years ago what do i like about Ted:
a) The are for non profit.
b) They are selfless.
c) They are the best! 461
@

@m.r.53792 years ago With inflation running at a four-decade high, a recession is now the ‘most likely outcome for the economy. How can I grow my portfolio to outpace inflation and maintain a successful long-term strategy? I have been reading of investors making about $250k profit in this current crashing market, and I need ideas on how to achieve similar profits. ... 942
@

@mesutserim15952 years ago A recession as bad it can be, provides good buying opportunities in the markets if you’re careful and it can also create volatility giving great short time buy and sell opportunities too. This is not financial advise but get buying, cash isn’t king at all in this time! ... 151
@

@viviangall17862 years ago There is ALWAYS a way to make money in this market! While the market has not been set to easy mode recently, there are still nft to flip, solid coins to stake, IDOs to ape into, trades to make, yields to farm. Never stop hustling for those gains! ... 459
@

@JohnDoe19xx2 years ago May 2022 we have everything set for a
recession
1. High Inflation
2. Disruption of supply chain
3. A war in Europe
4. Raising interest Rates
It like we’ve been making a to do list ... 91
@

@cuddyb96312 years ago U.S. stocks rebounded on Wednesday following back to back losses. The Dow Jones industrial average DIJA 1.29% was on track to recoup its 400 point loss from the prior day, while the S&P 500 and Nasdaq composite comp 2.5% were both on track for strong gains. Meanwhile I am focused on making better investments and earning more as recesssion fear increases, and recently heard of someone on Bloomberg business who pulled a profit of $200k within 3months. How do I leave this strategies, my portfolio is stationary for months. ... 722
@

@mathemagixlearningsolution8765 years ago Ted-Ed: What Causes an Economic Recession?
IMF, World Bank: We do. 263
@

@dinohunter71762 years ago As always, nice and clear explanations. 2
@

@guiadavid38772 years ago Recessions are where millionaires are created, I feel for the older generation, but if you are you or middle age, you should do everything possible to double or triple your income. 123
@

@azuremain91942 years ago Ok let me summarise (this is mainly for my benefit so I can better understand this, correct me if I'm wrong)
So a recession is a fall in production and economic growth. There're two ideas here, inflation and interest rates. Inflation is basically the same item being worth more. That same item has not changed at all, rather it is the money that is changing, i.e. decreasing in value. Instead of 1 dollar being worth a bagel, 1 dollar is now only worth half a bagel. (This might increase economic activity since by increasing your prices, provided that you still have enough demand, the company can grow larger)
Interest rates is a percent of the loan paid by debtors to the creditors. If it is low, it is good seeing as companies can borrow money to expand without need to worry about bankruptcy. High interest rates will mean less people borrowing money, thus less expansion of the economy (i.e. economic activity declines).
Other than being caused by shock factors (e.g. war), there might be a recession due to people borrowing lots of money and expecting to pay it back but their assumptions are not met and economic growth is slower than thought, thus they make a loss, not a profit. On the other end, people may be reluctant to invest, resulting in producers slowing down production, having to cut jobs and wages to make a profit.
With the printing of money, the bank can attempt to lower interest rates (but increase inflation) to stimulate spending and economic growth. But (as the video stated) people become reliant on "cheap debt" and thus inflation becomes excessive. ... 5
@

@janakipejov36673 years ago Watching this few weeks before 2022... what a foresight TedEd 2
@

@adiabd15 years ago is this a reference to The Plain Bagel economy and finance channel??? 😏 27
@

@hlogiitholeng6172 years ago Literally learnt more here than in my actual economics lecture at school today 4
@

@JK-gu3tl5 years ago "How an Economy Grows and Why It Crashes" is a book I recommend to anyone interested in hearing how the economy works. It won't answer everything but it's very informative. 177
@

@regiea.salvadorjr99882 years ago Thanks for this.. so much more learning for this video.
@

@ExpatriatePaul3 months ago Simplest and most accurate answer to what causes economic recession...government. 1
@

@Yackblaster90004 years ago Ayyy shoutout to the plain bagel channel! 5
@

@Smith.ash2last year This is quite interesting and informative, but in order to be success or financially free don't depend on one source of income.
Investment create a safe haven for the future. 10
@

@Roarpian3 years ago The Plan Bagel Co!!! Great job Richard.
@

@maryannviccortes17665 years ago The bg music somehow unconsciously made a complex topic into something more “digestible” 👌🏼 1
@

@ThePlainBagel5 years ago Excited to see this posted, thank you Ted Ed for the incredible opportunity of working on this video with you! 34
@

@theodorerossi79982 years ago Awesome! Your potential seems limitless. I have always been fascinated with investing and need to start now. Starting with 50k $, what sectors do you recommend ? 10
@

@mr.minnesoulja12575 years ago I’m studying for the CPA so this was a nice refresher. 2
@

@pinda79193 years ago Wonderful timing of the algorithm recommendation
@

@oliviaralston16 months ago You work for 40yrs to have $1M in your
retirement, meanwhile some people are putting just $10K in a meme coin from just few months ago and now they are multimillionaires. 19
@

@starcloak5 years ago This was like a refresher for me with an added bonus. Delightful. 167
@

@marikstongue56635 years ago Thank you for all the free information over the years, TED-Ed. Useful, entertaining, thought-provoking: an all-in-one package. Kudos to the presentation!!!!!!! 32
@

@dkaloger57205 years ago Noticed that economic Chanel placement. Good job the plaine bagel
@

@commitnooxygen53665 years ago I like that reference to The Plain Bagel Co. lol. 5
@

@nicolaspilot5 years ago Great explanation! Can you do more videos on economics and finance? 16
@

@sallylou74834 years ago im confused already 6
@

@shubhamsinha34575 years ago Ted-ed is my fav youtube channel.Explanation is concise and amazing. Continue these informative video. 4
@

@slayler1195 years ago I love ted ed but always wondered how accurate their videos were. As an Econ graduate I feel knowledgeable enough to say this is a great video. So good from ted ed 47
@

@pongop2 years ago Hey, it's Richard Coffin of The Plain Bagel! Cool! I didn't know he did a TED-Ed Talk!
@

@Oisinptbyrne5 years ago “For millennia, people of Britain...”
Starts with map of Britain and Ireland 152
@

@leaf42674 years ago Very clear contents and easy for watchers to follow. 3
@

@miraajlalwala27945 years ago Please make a video on Palaeoloxodon namadicus 1
@

@ritzkola23022 years ago Four Economic sectors. Primary, Secondary, Tertiary, Quaternary.
Is there a chart or website or channel, that breaks down WHAT time of year each sector is at its strongest?
As well as a chart that shows historical data Year by year for each sector performance? ...
@

@TREV93092 years ago Not a good sign when this video appears in your recommended videos people 🤣🤣🤣 4
@

@ZAR5564 years ago So Interest, Devaluation and Central Bank 3
@

@dunggg4 years ago I love the shout out to the Plain Bagel YouTube channel
@

@whcolours99955 years ago Me, an intellectual: Hmm, yes, central banks. 388
@

@TheTaurusGaming5 years ago Complicated subjects simplefied, got to love TED 8
@

@hkmarhk4 years ago Who's here after the Dow was down more than 2000 points today? 23
@

@subhakantbehera6275 years ago I am not first
I am not last
But when i see your notification i click fast 8
@

@christopherellis26638 months ago When everyone had enough bronze, demand declined and its value fell. Unless traded for exotica or fashioned into useful items, it no longer had purchase in the market 1
@

@davids62715 years ago Hold up... The Plain Bagel? That's legitimately the name of an investing/economy teaching channel here on YouTube. I'm sure you guys aren't trying to plagiarize, but is just a very interesting coincidence. ^-^
(Edit* wrote are trying to plagerize instead of aren't XD) ... 6
@

@u02498984 years ago Watching TED Ed for 5 min is sometimes better than researching online for hours. Thanks TED!!! 8
@

@bananaforscale12835 years ago So, everything is leading to recession? 12
@

@STOP_THE_WASTING5 years ago Recent Economics and International Business graduate. This video explains things so much better than what I learnt in three years damn lol. 8
@

@thattimestampguy2 years ago What causes Recessions?
Months Years Decades of Struggle
When Supply and Demand fall out of balance
@

@antipoti5 years ago "Plain Bagel" - is it a reference to the investment youtube channel, or is it an idiom im not aware of? 2
@

@ben_dukesonlast month If you are properly prepared and knowledgeable, every crash/collapse/inflation or recession gives an equal market opportunity. I've seen folks amass up to $800,000 throughout crises and even do it with ease in a terrible economy. Without a doubt, someone has become enormously wealthy as a result of the crash. ... 5
@

@yanoyreid15412 years ago This video ages well each time it happens flawlessly 4
@

@user-mg9lw4hw1olast year An economic recession causes a decline in economic output. It is accompanied by a drop in income and an increase in unemployment. The video explained and demonstrated everything clearly and concisely.
@

@WingofTech8 months ago Huh, plain bagels represent a good baked good, wheat, and water cost reference / measurement / metric.
@

@benjaminbartholomew5 years ago Inflation is when there is an increase in the supply of money chasing the same amount of goods, the increase in prices is a symptom of that and not the cause. 52
@

@paulsorensen94422 years ago The rich stay rich by spending like the poor and investing without stopping then the poor stay poor by spending like the rich yet not investing like the rich. 56
@

@user-re7bp6uj3slast month Gold we Indians use for Jewels.
Currency coins if gold, what other metal combination you use.
Quality of product decides price, may be even low price. UTI amc not defining anything properly.
Suuti is government side, is their need to link suuti with UTI amc.
But UTI AMC with forex trading needed for settling leo puri issues ...
@

@moazeldefrawy43792 years ago recession can be happen because of the following:
- borrwing more and more money when a business is growing to satisfy demand but unpredicted events happen causing the business to be in huge debt.
- natural disasters to an oil reserve -> high prices -> less buying -> lower demnad -> less wages -> lower demand .. etc
- government print money + cheap debt -> to increase spending -> causes inflation ... 2
@

@Kraflyn5 years ago The real question is "Who causes an economic recession?" :D 100
@

@abthedragon49215 years ago Another wonderfully informative lesson by Ted Ed. 7
@

@sutats3 years ago Recession is mentioned 15 times in the video.
@

@swirlandtwirl54172 years ago I just watched the Argentina's inflation issue