Tuesday, April 25, 2006
What To Do During a Recession? Depression?
I'm curious, would anyone be able to help me understand what my best options would be during a time of recession? How about a depression? Do you know what to do? I guess we wouldn't really know we're in a situation until after the fact...but still, it's good to know right? Let me try to explain my understanding, a depression is a severe or long recession. I never knew this until I found it on Wikipedia, but apparently a recession can be due to inflation (value of money goes down, costs of goods go up) or deflation (value of money increases, costs of goods go down). So during: a) Inflationary recession, the value of cash is decreasing, thus the best investments would be non-cash investments, stocks? b) Deflationary recession, the value of cash is increasing, so cash is king. Would you agree with that? Since we're in a period of inflation right now, the biggest threat is too much inflation...thus we need to find the best investment vehicle that can beat inflation. Right? Am I completely confused? :/ Hopefully I didn't overly simplify everything...But just trying to understand the basics first...
Posted by freedumb at 4/25/2006 07:42:00 AM