[Script Info]
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Format: Layer, Start, End, Style, Name, MarginL, MarginR, MarginV, Effect, Text
Dialogue: 0,0:00:06.82,0:00:08.00,Default,,0000,0000,0000,,For millennia,
Dialogue: 0,0:00:08.00,0:00:12.41,Default,,0000,0000,0000,,the people of Britain had been using \Nbronze to make tools and jewelry,
Dialogue: 0,0:00:12.41,0:00:15.06,Default,,0000,0000,0000,,and as a currency for trade.
Dialogue: 0,0:00:15.06,0:00:19.10,Default,,0000,0000,0000,,But around 800 BCE, that began to change:
Dialogue: 0,0:00:19.10,0:00:25.12,Default,,0000,0000,0000,,the value of bronze declined, causing \Nsocial upheaval and an economic crisis—
Dialogue: 0,0:00:25.12,0:00:28.77,Default,,0000,0000,0000,,what we would call a recession today.
Dialogue: 0,0:00:28.77,0:00:30.65,Default,,0000,0000,0000,,What causes recessions?
Dialogue: 0,0:00:30.65,0:00:35.07,Default,,0000,0000,0000,,This question has long been the subject \Nof heated debate among economists,
Dialogue: 0,0:00:35.07,0:00:36.55,Default,,0000,0000,0000,,and for good reason.
Dialogue: 0,0:00:36.55,0:00:39.87,Default,,0000,0000,0000,,A recession can be a mild decline in \Neconomic activity
Dialogue: 0,0:00:39.87,0:00:42.60,Default,,0000,0000,0000,,in a single country that lasts months,
Dialogue: 0,0:00:42.60,0:00:47.41,Default,,0000,0000,0000,,a long-lasting downturn with global \Nramifications that last years,
Dialogue: 0,0:00:47.41,0:00:49.85,Default,,0000,0000,0000,,or anything in between.
Dialogue: 0,0:00:49.85,0:00:51.38,Default,,0000,0000,0000,,Complicating matters further,
Dialogue: 0,0:00:51.38,0:00:55.03,Default,,0000,0000,0000,,there are countless variables that \Ncontribute to an economy’s health,
Dialogue: 0,0:00:55.03,0:00:59.03,Default,,0000,0000,0000,,making it difficult to pinpoint \Nspecific causes.
Dialogue: 0,0:00:59.03,0:01:01.67,Default,,0000,0000,0000,,So it helps to start with the big picture:
Dialogue: 0,0:01:01.67,0:01:04.78,Default,,0000,0000,0000,,recessions occur when there is a negative \Ndisruption
Dialogue: 0,0:01:04.78,0:01:07.64,Default,,0000,0000,0000,,to the balance between supply and demand.
Dialogue: 0,0:01:07.64,0:01:11.12,Default,,0000,0000,0000,,There’s a mismatch between how many \Ngoods people want to buy,
Dialogue: 0,0:01:11.12,0:01:14.26,Default,,0000,0000,0000,,how many products and services producers \Ncan offer,
Dialogue: 0,0:01:14.26,0:01:19.97,Default,,0000,0000,0000,,and the price of the goods and services \Nsold, which prompts an economic decline.
Dialogue: 0,0:01:19.97,0:01:23.16,Default,,0000,0000,0000,,An economy’s relationship between supply \Nand demand
Dialogue: 0,0:01:23.16,0:01:27.24,Default,,0000,0000,0000,,is reflected in its inflation rates \Nand interest rates.
Dialogue: 0,0:01:27.24,0:01:31.69,Default,,0000,0000,0000,,Inflation happens when goods and services \Nget more expensive.
Dialogue: 0,0:01:31.69,0:01:35.08,Default,,0000,0000,0000,,Put another way, the value \Nof money decreases.
Dialogue: 0,0:01:35.08,0:01:38.95,Default,,0000,0000,0000,,Still, inflation isn’t necessarily \Na bad thing.
Dialogue: 0,0:01:38.95,0:01:43.57,Default,,0000,0000,0000,,In fact, a low inflation rate is thought \Nto encourage economic activity.
Dialogue: 0,0:01:43.57,0:01:46.77,Default,,0000,0000,0000,,But high inflation that isn’t accompanied \Nwith high demand
Dialogue: 0,0:01:46.77,0:01:52.52,Default,,0000,0000,0000,,can both cause problems for an economy \Nand eventually lead to a recession.
Dialogue: 0,0:01:52.52,0:01:54.02,Default,,0000,0000,0000,,Interest rates, meanwhile,
Dialogue: 0,0:01:54.02,0:01:58.39,Default,,0000,0000,0000,,reflect the cost of taking on debt for \Nindividuals and companies.
Dialogue: 0,0:01:58.39,0:02:01.60,Default,,0000,0000,0000,,The rate is typically an annual percentage\Nof a loan
Dialogue: 0,0:02:01.60,0:02:05.72,Default,,0000,0000,0000,,that borrowers pay to their creditors \Nuntil the loan is repaid.
Dialogue: 0,0:02:05.72,0:02:09.79,Default,,0000,0000,0000,,Low interest rates mean that companies \Ncan afford to borrow more money,
Dialogue: 0,0:02:09.79,0:02:12.49,Default,,0000,0000,0000,,which they can use to invest \Nin more projects.
Dialogue: 0,0:02:12.49,0:02:17.29,Default,,0000,0000,0000,,High interest rates, meanwhile, increase \Ncosts for producers and consumers,
Dialogue: 0,0:02:17.29,0:02:19.56,Default,,0000,0000,0000,,slowing economic activity.
Dialogue: 0,0:02:19.56,0:02:22.56,Default,,0000,0000,0000,,Fluctuations in inflation and interest \Nrates
Dialogue: 0,0:02:22.56,0:02:25.38,Default,,0000,0000,0000,,can give us insight into the health \Nof the economy,
Dialogue: 0,0:02:25.38,0:02:29.38,Default,,0000,0000,0000,,but what causes these fluctuations \Nin the first place?
Dialogue: 0,0:02:29.38,0:02:33.60,Default,,0000,0000,0000,,The most obvious causes are shocks \Nlike natural disaster, war,
Dialogue: 0,0:02:33.60,0:02:35.72,Default,,0000,0000,0000,,and geopolitical factors.
Dialogue: 0,0:02:35.72,0:02:37.24,Default,,0000,0000,0000,,An earthquake, for example,
Dialogue: 0,0:02:37.24,0:02:42.25,Default,,0000,0000,0000,,can destroy the infrastructure needed to \Nproduce important commodities such as oil.
Dialogue: 0,0:02:42.25,0:02:47.56,Default,,0000,0000,0000,,That forces the supply side of the economy\Nto charge more for products that use oil,
Dialogue: 0,0:02:47.56,0:02:51.94,Default,,0000,0000,0000,,discouraging demand and potentially \Nprompting a recession.
Dialogue: 0,0:02:51.94,0:02:55.62,Default,,0000,0000,0000,,But some recessions occur in times of \Neconomic prosperity—
Dialogue: 0,0:02:55.62,0:02:59.04,Default,,0000,0000,0000,,possibly even because \Nof economic prosperity.
Dialogue: 0,0:02:59.04,0:03:03.34,Default,,0000,0000,0000,,Some economists believe that business \Nactivity from a market’s expansion
Dialogue: 0,0:03:03.34,0:03:06.61,Default,,0000,0000,0000,,can occasionally reach \Nan unsustainable level.
Dialogue: 0,0:03:06.61,0:03:10.55,Default,,0000,0000,0000,,For example, corporations and consumers \Nmay borrow more money
Dialogue: 0,0:03:10.55,0:03:14.83,Default,,0000,0000,0000,,with the assumption that economic growth \Nwill help them handle the added burden.
Dialogue: 0,0:03:14.83,0:03:18.38,Default,,0000,0000,0000,,But if the economy doesn’t grow as \Nquickly as expected,
Dialogue: 0,0:03:18.38,0:03:21.34,Default,,0000,0000,0000,,they may end up with more debt \Nthan they can manage.
Dialogue: 0,0:03:21.34,0:03:25.05,Default,,0000,0000,0000,,To pay it off, they’ll have to redirect \Nfunds from other activities,
Dialogue: 0,0:03:25.05,0:03:27.47,Default,,0000,0000,0000,,reducing business activity.
Dialogue: 0,0:03:27.47,0:03:30.39,Default,,0000,0000,0000,,Psychology can also contribute \Nto a recession.
Dialogue: 0,0:03:30.39,0:03:34.55,Default,,0000,0000,0000,,Fear of a recession can become a \Nself-fulfilling prophecy
Dialogue: 0,0:03:34.55,0:03:38.55,Default,,0000,0000,0000,,if it causes people to pull back investing\Nand spending.
Dialogue: 0,0:03:38.55,0:03:41.85,Default,,0000,0000,0000,,In response, producers might \Ncut operating costs
Dialogue: 0,0:03:41.85,0:03:44.93,Default,,0000,0000,0000,,to help weather the expected \Ndecline in demand.
Dialogue: 0,0:03:44.93,0:03:49.81,Default,,0000,0000,0000,,That can lead to a vicious cycle as cost \Ncuts eventually lower wages,
Dialogue: 0,0:03:49.81,0:03:52.80,Default,,0000,0000,0000,,leading to even lower demand.
Dialogue: 0,0:03:52.80,0:03:57.61,Default,,0000,0000,0000,,Even policy designed to help prevent \Nrecessions can contribute.
Dialogue: 0,0:03:57.61,0:04:01.74,Default,,0000,0000,0000,,When times are tough, governments and \Ncentral banks may print money,
Dialogue: 0,0:04:01.74,0:04:05.50,Default,,0000,0000,0000,,increase spending, and lower central bank\Ninterest rates.
Dialogue: 0,0:04:05.50,0:04:08.96,Default,,0000,0000,0000,,Smaller lenders can in turn lower their \Ninterest rates,
Dialogue: 0,0:04:08.96,0:04:12.47,Default,,0000,0000,0000,,effectively making debt “cheaper” \Nto boost spending.
Dialogue: 0,0:04:12.47,0:04:16.62,Default,,0000,0000,0000,,But these policies are not sustainable \Nand eventually need to be reversed
Dialogue: 0,0:04:16.62,0:04:18.82,Default,,0000,0000,0000,,to prevent excessive inflation.
Dialogue: 0,0:04:18.82,0:04:23.27,Default,,0000,0000,0000,,That can cause a recession if people have \Nbecome too reliant on cheap debt
Dialogue: 0,0:04:23.27,0:04:25.20,Default,,0000,0000,0000,,and government stimulus.
Dialogue: 0,0:04:25.20,0:04:30.03,Default,,0000,0000,0000,,The Bronze recession in Britain eventually\Nended when the adoption of iron
Dialogue: 0,0:04:30.03,0:04:33.26,Default,,0000,0000,0000,,helped revolutionize farming \Nand food production.
Dialogue: 0,0:04:33.26,0:04:35.42,Default,,0000,0000,0000,,Modern markets are more complex,
Dialogue: 0,0:04:35.42,0:04:39.17,Default,,0000,0000,0000,,making today’s recessions far \Nmore difficult to navigate.
Dialogue: 0,0:04:39.17,0:04:43.49,Default,,0000,0000,0000,,But each recession provides new data to \Nhelp anticipate and respond
Dialogue: 0,0:04:43.49,0:04:46.50,Default,,0000,0000,0000,,to future recessions more effectively.