Quote:
Originally Posted by sltr
that's an overly simplistic view and not accurate.
|
Yes, you are correct.
A recession is defined as a drop of more than 10% of the GDP for less than one calendar year, whereas a depression is a drop of more than 10% of the GDP for one calendar year or more.
The last time the GDP dropped more than 10% for a one year period or more was the Great Depression where it dropped over 18%.
If one person goes OH SHIT..... or they and a few people go OH SHIT and drastically lower or halt their spending... a recession can happen because there is an interruption in the monetary flow... when everyone goes OH SHIT!! at the same time... when everyone stops spending and effectually halts the flow of money.. there you go... a nice little (or big) depression. Hoarding money is the worst thing that can happen, but it's what everyone wants to naturally do.
Yes, very simplistic, but I don't have all my graphs and charts handy and it always takes weeks to remove the dry erase from my monitor when I start drawing on it.