Blog Cycles, Recessions, and Depressions

A business cycle, by definition, is the "downward and upward movement of levels of Gross Domestic Product". Every free market economy has these, they can not be avoided. Economists fail to predict these business cycles no matter how hard they try. Why is it so hard to predict? The answer to this is, no one can predict the future. Economist can only go by the past and make predictions off of that. Meaning that the predictions will not always be 100 percent accurate. "The future is inherently uncertain, so these decisions often depend as much on gut feelings as cold calculation" (2). A bull market is used to describe a high in the economy while a bear market is used to describe a low or recession in a market. These phrases come from the ways the animal strikes it's opponent. A bull strikes upwards with it's horn and a bear strikes downwards with it's paws. "Bear markets are more violent than bull markets" (2), because of chaos. Way back when there were different causes of an economic recession/crash than there are today. Today technology investments can, oil prices and the house market have all been reasons why there has been an economic recession/crash. In early America an economic recession/crash was usually due to a natural disaster such as crop failure. A recession is a quick lull in the economy. The economy quickly regenerates itself from this though. A depression is caused when this lull is not regenerated and keeps on going lower. Recession and Depression can be described in the words of Harry Truman, "a recession [is] when your neighbor loses his job; it's a depression when you lose yours" (5).

Underground Economy

There are people who work a full time job, 40 hours or so a week, pay taxes n the money they make and that tax money goes to the economy. Then there are people who work under the table, or get payed without being taxed on the money they make. This is part of the underground/shadow economy. This underground economy can be good and bad. "There is consumer spending in the short term...and thats boosting the economy," says Schneider. People have money at that mment bu that mney is not getting taxed on. This is good and bad. It is good becuse that person gets all the mney they earned right then and there. But none of it is being put away for Social Security, etc. They also do not get benifits. The government loses tax money by having all of these people work under the table. "...about $500 billion in txes were lost last year because of unreported wages, versuses $384 billion in 2001" (Koba 2). "Those wokring and not paying taxes puts the burden on those who pay the taxes...taxes could be lower if the government were able to capture the underground economy instead of raising taxes on those currently paying the various income and payroll taxes, " says Fiorenza. Basically, if so many people were not getting paying under the table then taxes may be lower.

Net Neutrality

Net Neutrality, its probably something that you've never even heard of. I never knew what it was until a few days ago. Net Neutrality is basically making sure there is an even playing feild for all internet companies. "New ruling will enable the FCC to enact new rules that would prevent Internet service providers from manipulating how quickly or slowly sites are transmitte along their networks" (Net Neutrality 1). This is important to both Internet companies and us consumers. Large Internet companies do not like this because they make money when there is no regulation. When there is no regulation they can charge companies more money for better service to the consumers. Smaller, entrepreneur, companies like regulation because they plaing eild is nott even for them and the larger companies. Net Neutrality is good for us consumers because we have more than one Internet provider to choose from, not just one over priced one. The FCC makes sure larger companies are not charging more for better service. They did this under Title II of 1934 Communications Act.