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Cicada

(4,533 posts)
15. Financial recessions are always slow to recover, here's why
Thu Oct 8, 2020, 01:45 PM
Oct 2020

If a recession comes from slow home sales, when things are back to normal employers can call workers to come back to work Monday. When the recession is caused by financial firms going broke, wiping out trillions of dollars of capital reserves, no one can call the trillions of dollars to magically reappear on Monday. It takes time for lenders to create profits which increase their capital reserves. They can only loan money based on how much capital they hold, capital that is created by making profits, which takes years.

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