Why the Rich Get Richer Every Time We Have a Recession

The rich get richer— or so it seems during the rare times when our economy experiences a recession. After all, who doesn’t love watching their savings spiral in value while they anxiously await the end of a financial downturn? In reality, however, these downturns are nothing more than convenient opportunities for the wealthy elite to further consolidate their wealth. In fact, the only reason that we have consistently experienced economic recessions with ever-shrinking recoveries is because of how our capitalist system is structured. The rich get richer every time we have a recession because that’s just how a free market economy functions. The ultra-wealthy tend to be interested in preserving capital rather than consuming it and so they find ways to preserve their wealth even during difficult economic times. This article will explore why this happens and how you can prepare yourself so that the next time the ultra-rich have an opportunity to make a killing from an economic downturn, you won’t be left behind.

What Is an Economic Downturn?

An economic downturn is a sudden decrease in economic activity. As a country’s economy experiences a downturn, the amount of money flowing through it decreases; this decrease is usually accompanied by a rise in unemployment and a fall in government revenues. The reason that the ultra-rich stay rich during economic downturns is that they keep their money safely stored away in a variety of different financial assets. When the economy is in a recession, fewer people have money to spend. As a result, businesses have fewer customers, meaning that they often go out of business. If a business has money tied up in its assets, it will go out of business as well, losing that money to the rest of the economy.

The Rich Stay Rich by Storing Their Wealth

The wealthy are extremely likely to preserve their wealth during a recession because that is simply how they’re built. The ultra-rich typically come from wealthy families with a long history of accumulating wealth, and so they are biologically inclined to protect their money. To keep their savings safely stored away during a recession, the rich will typically move their money from low-yielding assets like stocks and bonds into something like cash, gold, or real estate. As the economy struggles, the value of cash and other non-marketable assets like real estate goes up because these assets are considered “non-productive” and have no real economic value.

Why the Rich Stay Rich in Recessions

The ultra-wealthy will naturally go to great lengths to protect their wealth during a recession because that is simply how they’re built. The wealthy are typically genetically inclined to protect their money and so they will do whatever it takes to keep their savings safe. To do this, they will often move their money from low-yielding assets like stocks and bonds into something like cash, gold, or real estate. As the economy struggles, the value of stocks and real estate fall. With their wealth, they are able to buy them at cheap discounts. When the economy recovers, these assets will appreciate in value.

How to Keep From Being Robbed During a Recession

The best way to protect yourself from the rich getting richer during a recession is to learn how to invest your own money. If the wealthy have their money sitting in cash earning next-to-nothing, they’ll be happy to take a much smaller profit when the next recession comes along. However, if they have their money tucked away in stocks and bonds, they’ll be able to keep the entire profit that they made. To protect your money from the next financial downturn, it is important to never keep all of your money in one place. Invest your money in stocks and bonds and then stash the remaining cash somewhere where it will be safe when the next recession comes around.

Final Words

One of the many advantages of being wealthy is that you receive very little media attention during recessions. This makes it easy for the wealthy to simply sit back and wait for the next recession to come along. Another important tip is to never keep all of your money in one place. This will help you to protect your money from the next economic downturn and allow you to maximize your profit when the next time comes around.

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