Lv3 Economy B: Recession

For millennia（何千年）, 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（大変動）and an economic crisis– what we would call a recession（不況）today. 

What causes recessions? This question has long been the subject of heated debate among economists, and for good reason. A recession can be a mild decline in economic activity in a single country that lasts months, a long-lasting downturn（下落）with global ramifications（影響）that last years, or anything in between. 

Complicating matters further, there are countless（無数の）variables（変わりやすいもの）that contribute（一因となる）to an economy's health, making it difficult to pinpoint（正確に示す）specific causes.

So it helps to start with the big picture: recessions occur when there is a negative disruption（混乱）to the balance between supply and demand. There's mismatch（不釣り合い）between how many goods people want to buy, how many products and services producers can offer, and the price of the goods and services sold, which prompts（誘発する）an economic decline. 

An economy's relationship between supply and demand is reflected in its inflation（物価上昇）rates and interest（利子）rates. Inflation happens when goods and services get more expensive. Put another way, the value of money decreases. Still, inflation isn't necessarily（必ず）a bad thing. 

In fact, a low inflation rate is thought to encourage economic activity. But high inflation that isn't accompanied（付随して起こる）with high demand can both cause problems for an economy and eventually lead to a recession. 

Interest rates, meanwhile（一方では）, reflect the cost of taking on debt for individuals and companies. The rate is typically an annual percentage of a loan that borrowers pay to their creditors（金の貸し主）until the loan is repaid. 

Low interest rates mean that companies can afford to borrow more money, which they can use to invest in more projects. High interest rates, meanwhile, increase costs for producers and consumers, slowing economic activity. 

Fluctuations（変動）in inflation and interest rates can give us insight（洞察）into the health of the economy, but what causes these fluctuations in the first place? 

The most obvious causes are shocks like natural disaster, war, and geopolitical（地政学の）factors. An earthquake, for example, can destroy the infrastructure needed to produce important commodities（産物）such as oil. That forces the supply side of the economy to change more for products that use oil, discouraging（抑止する）demand and potentially promoting a recession. 

But some recessions occur in times of economic prosperity（繁栄）– possibly even because of economic prosperity. Some economists believe that business activity from a market's expansion can occasionally reach an unsustainable（継続できない）level. 

For example, corporations and consumers may borrow more money with the assumption（仮定）that economic growth will help them handle the added burden. But if the economy doesn't grow as quickly as expected, they may end up with more debt than they can manage. To pay it off, they'll have to redirect（注ぎ直す）funds from other activities, reducing business activity. 

Psychology can also contribute to a recession. Fear of a recession can become a self-fulfilling prophecy（自己充足的予言）if it causes people to pull back investing and spending. In response, producers might cut operating costs to help weather（うまく切り抜ける）the expected decline in demand. That can lead to a vicious cycle（悪循環）as costs cuts eventually lower wages, leading to even lower demand. 

Even policy designed to help prevent recessions can contribute. When times are tough, governments and central banks may print money, increase spending, and lower central bank interest rates. Smaller lenders can in turn lower their interest rates, effectively making debt "cheaper" to boost（増大させる）spending. 

But these policies are not sustainable and eventually need to be reversed（一変させる）to prevent excessive（過度の）inflation. That can cause a recession if people have become too reliant（当てにする）on cheap debt and government stimulus（刺激）. 

The Bronze recession in Britain eventually ended when the adoption of iron helped revolutionize farming and food production. Modern markets are more complex, making today's recessions far more difficult to navigate（うまく切り抜ける）. But each recession provides new data to help anticipate（予想する）and respond to future recessions more effectively.