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I need a large recession to hit my small country of 4.5 million people.

It's similar to New Zealand, similarly developed, also an island nation, and a GDP around 150,000 million USD.

Most importantly, it needs to not be obvious that the government caused it. Essentially, high unemployment within months, which the government will "fix" with massive job creation - effectively turning the government into the largest employer in the world, and the country into a massive company.

I play Cities Skylines, and the fastest way to loose money there is to cut the electricity off, but that is clearly linked back to the government.

How can they cause this recession without it being obvious it was them?

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  • $\begingroup$ Edit your question title to include "without being blamed". Because the easiest, fastest way is for the Fed to jack interest rates substantially without regard for economic conditions. $\endgroup$ – SRM Sep 8 '16 at 0:19
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    $\begingroup$ How obvious are you talking? Does this just need to be good enough to fool a Prole (a. la. 1984), or does this need to withstand a fact seeking organization actively trying to root out the cause. Is this a one time thing, or somethign they need to be able to repeat (a good magician never repeats a trick twice) $\endgroup$ – Cort Ammon Sep 8 '16 at 1:48
  • $\begingroup$ What is the starting nature of the government? People usually blame the government for generalized woe regardless of whether it was the government's "fault" or not. In liberal, transparent governments it will be easier to dig up evidence to support the charge, and correspondingly harder to hide intention. Also, why does the government need to hide the intention? Is it a short term reason or a long term reason? $\endgroup$ – Nathaniel Ford Sep 8 '16 at 2:13
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    $\begingroup$ @CortAmmon Well not blatantly "the government did this thing to cause this" visible to a layman - I guess it needs to hold up for as long as is required to start up the new economy. $\endgroup$ – Tim Sep 8 '16 at 2:15
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    $\begingroup$ Worth noting, the housing crash in the US crept up because of loosening in oversight in an area of banking that had no noticeable or immediate effect. Those who took advantage of the loopholes seemed to have little idea of the consequences. Indeed very few people did. The crash was so sudden and so devastating that we are still recovering 8 years later. Power shifts did occur but they were soft, decentralizing, but upward bound, and set before the crash. Corporations now compete over campaigns with no cap on donations, etc. Tight power wears no target, it hides, waits and manipulates. $\endgroup$ – Nolo Sep 8 '16 at 9:07

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One way to cause a recession without much suspicion on governments part would be to pour in a lot of fake paper currency, coins or any kind of currency that can be easily faked.

You can't blame the government becuase

Those poor servants of the people would be trying their best to root out the currency and unfortunately have no idea where the fake currency came from. Also your government could simply blame a rival country to make matters worse

And its pretty grim recession because

Your government's currency is now devalued because there is a lot of fake currency in the market. It leads to high inflation kind of like the German economic crisis which occurred between the world wars. Which was like very bad with 350% extra bad.

To conclude

For every two currency notes or coins or anything else you make, make one counterfeit and smuggle it through bribing or any other creative way and make sure it reaches the public hands and when enough counterfeits have been printed or counterfeit notes have been exposed simply try Your Best to root them out and blame your rival for basically everything that's happening in your country so that you now can potentially have a war and an economic crisis to worry about at the very same time. Looks pretty bad to me

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Raise the minimum wage.

By increasing the minimum wage the government will put swaths of low-skilled low-earning poor people out of a job by making it illegal to hire them. The businesses that depend on these types of workers will have trouble staying in business and will either have to increase prices (and lose customers) or cut back on their work force. Or go out of business altogether.

All the while, the government can claim the high moral ground of being "compassionate" towards the poor by raising the minimum wage. And, according to the government, it's only because of "all the greedy business owners that people are being laid off, raising prices and closing down completely."

Bonus points to the government because the business owners will complain; then the responsible politicians can respond to the complaints by claiming they need to be re-elected in order to continue to further protect the poor and the public against all these evil, greedy rich business owners who want to raise prices and cut wages.

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    $\begingroup$ Worth pointing out: Increasing minimum wage will not affect the service sector much because higher minimum wage increases consumer purchasing power which increases demand for goods and services. The most affected industries will be those which produce things which can be traded internationally, because they will now be unable to compete on the international market. $\endgroup$ – Philipp Nov 21 '16 at 13:02
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    $\begingroup$ @Philipp: You are incorrect. Increasing wages increases prices. It does not decrease prices as you claim. Increased prices reduces purchasing power. It does not increase purchasing power. As you claim. Even if it did, your theory would still be incorrect because the wage impact you describe a) only affects a small subset of the total workforce and b) is more than offset by the decrease in demand due to people being laid off because employers can no longer afford them. $\endgroup$ – Mowzer Nov 21 '16 at 19:39
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    $\begingroup$ @Mowzer For a real-world example you could look at Germany. Germany had no minimum wage before and introduced it in 2015. No, contrary to the FUD propagated by the neocons, unemployment did not increase. It did in fact go down a little. It also didn't affect exports much, because most products which are made in Germany are premium products made by people who receive far above minimum wage. The minimum wage law mostly affected people in the service sector, so the economical effect was small. $\endgroup$ – Philipp Nov 21 '16 at 22:58
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    $\begingroup$ @Mowzer The feeling you have right now is called "cognitive dissonance". It's what we get when we hold a believe and get confronted with evidence that it might not be universally true. First reaction is always to deny that the evidence exists and claim that it is wrong. When you want to feel more of it, do research how unemployment numbers developed in other countries after minimum wage was introduced, like UK or Ireland. That's just a natural reaction, but being aware of it can help. $\endgroup$ – Philipp Nov 22 '16 at 10:27
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    $\begingroup$ As @Philipp states: it has been tested and proven wrong. Of course one might argue that this is no reason to give up a good theory. It simply wouldn't make much sense to do so. $\endgroup$ – Burki Nov 22 '16 at 13:50
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Implement something that causes a brain-drain, like to-the-letter Communism.

Equality up to a point that it's just not economical/logical to put in the extra work and study to become high-end professions such as doctors, scientists or someone in IT (and whatnot). Why would you study for 7+ years if you're going to earn just the same as anyone else who haven't (and who don't need to do a double shift).

A system like this will cause a brain drain. Dumber, less critical people, or those biased in your favor, will believe that you are indeed changing the system for the greater good and that they're going to be end up the better for it.

People who are ambitious and want to take initiative will leave, without them you will no longer have the economic and scientific leaders that you need to keep your country progressing, so you will collapse into a recession.

No one will blame you if the remaining populace supports you and your decisions.

Especially if you cultivate a culture in which bright people are condemned as traitors by default, consider Pol Pot's regime in Cambodia.

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  • $\begingroup$ communism could work if the intellectuals get paid to study and get the same hours. $\endgroup$ – Donald Hobson Sep 8 '16 at 20:17
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    $\begingroup$ @DonaldHobson: Correct, but then it isn't Communism anymore. No more absolute equality. $\endgroup$ – Spikee Sep 9 '16 at 4:47
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    $\begingroup$ The system I am suggesting is absolutely equal. Pay and hours are just removed as factors, You get the same hours at the same pay whether you are a doctor, training to be a doctor or cleaning loos. So you get paid just as much to go to Uni as you do to work and all carriers pay the same. People can do whatever job they prefer doing without which one pays more being a consideration. $\endgroup$ – Donald Hobson Sep 9 '16 at 20:13
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    $\begingroup$ You make the assumption that all people do what they do wholly because of compensation, which I think is a naïve way of looking at humanity. I'd like to see evidence to suggest that most doctors and nurses adopt their profession just for the money, for one. Similarly you misunderstand communism; which never was meant to bring about absolute economic equality. At least, why then did the USSR have pay grades and overtime? Too simplistic. $\endgroup$ – inappropriateCode Nov 21 '16 at 14:37
  • $\begingroup$ @DonaldHobson could someone then become a 'career student', doing nothing their entire life but spending it at university? Even if they graduated, they could get paid to re-attend over and over again... $\endgroup$ – shiningcartoonist Nov 22 '16 at 17:25
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Someone mentioned communist brain drain, but let's look at something more specific: the brain drain the Soviets created by purging the engineers. Solzhenitsyn goes into a lot of detail in Volume 1 of The Gulag Archipelago, but the basic idea is this:

Accuse your country's engineers of "wrecking," or intentional sabotage of critical infrastructure and industry. Put the leaders on trial publicly, detailing their treason and malevolence. (Minor figures like good foremen can be dealt with in smaller and less well-broadcast trials.) Then exile, imprison, or execute them all.

Now everyone who knows how to run a power station efficiently, repair a drill press, or build a road is in [Siberia|Gitmo|the grave]. Things start to break down, and there's a massive recession.

You see, these terrible engineers! They damaged our country's factories so badly, look what they did to the economy. If the glorious government hadn't rooted them out and dealt with them, think how much worse it could have gotten! Now every good citizen has to pitch in, take a government job, and do your bit to repair the damage those evil engineers did!

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Corruption is an easy way of doing it (and since that seems like the end goal anyway, it is a good place to start).

Take the sub-prime crisis for example. Removing of some financial regulations (which people were actually supportive of happening) resulted in, a handful of years later, a debt crisis that threatened the collapse of the entire economy and huge unemployment rates (for the US at least). If the gov't hadn't stepped in, and supported the banks and the auto industry, things would have gotten very bad in the US (relatively speaking). The tricky part? The only people who got blamed for it were politicians who had, at the time, voted on the measures to remove the regulation, and even they got off light. Those in power during the crisis weren't the same group of legislators, so they didn't get blamed for it. Your government could, for example, let their opposition party get something they want (like the conservatives wanted the regulations removed) and let it come full circle into a catastrophe.

Another good way to cause a recession is international trade. If, for example, your government (A) convinced another country (B) to take a protectionist stance and raise tariffs, it could ruin the manufacturing industry of country A. Country A could then have state run manufacturing that is subsidized or wholly owned by them. They could then negotiate removal of the tariff, and restore normalcy to the economy, but with the government owning most of the factories that were shut down before.

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The government could hire a group of mercenaries to take out the electrical system, creating a similar environment you described in the question. Then the government would be the only ones with electricity because they 'protected' those towers from the terrorists.

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    $\begingroup$ Paying for mercenaries can be traced back to the government. Further, if the government is the only one not affected people will be super quick to blame them for the outage - even if it wasn't their fault. $\endgroup$ – Nathaniel Ford Sep 8 '16 at 2:15
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A island nation is going to have imports and exports upon which it depends, drastically slowing down those shipments would cause a recession. Produce "credible" evidence of terrorist activity or a health scare so that the shipments get delayed, then put in enough reasonably seeming bureaucracy regarding releasing the shipments and suddenly prices at the grocery store are going up while employees are being furloughed. (Obviously, having black ops sink a bunch of shipments would have similar effect, but that is a more direct uncover-able action that would probably be considered treason if discovered).

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Edit

Not sure exactly how you would go about it quickly, as you requested, but diverting the flow of money that the government has control over is a sure fire method.

Some things could take months to accomplish (doing the ground work), others perhaps years in this way (as it applies in practice). For example, raising interest rates too high will limit borrowing between banks and cut off the flow of money in the economy. This would threaten the banks as well as almost all other industries that need money to keep going and it would perhaps cause runs on banks which subsequently makes markets unstable. Banks make money through lending. Making them unable to do that is a serious problem and would perhaps lead to effects in the amount of time you are interested in. Another point worth noting is that most people do not understand how these things work, so it would take time for people en mass to "catch up", which usually happens long after the fact.

And now for the ranting, more protracted and slower moving version. Maybe the two could be combined to good effect.


Well let's go down the list of "mistakes" (not accusing just, hmmm) that the US has made.

  1. Reducing taxes, across the board, but mostly for the wealthy and putting lots of money into military development reduces the effectiveness of the GDP which makes a country poorer.

  2. Borrowing lots of money to go to war pays off, it makes a lot of money indeed, but this usually happens when the wealthy are not being taxed as much and the money mostly goes to the top anyway and the country is still poor.

  3. Huge debt accumulates and the government has little choice but to raise taxes on everyone, but not as much on the wealthy.

  4. The crooked leaders get voted out because everyone hates everything, regardless of who is to blame, but the leaders are easiest to place the blame on.

  5. New leadership finds ways to implement programs and tax accordingly but not threateningly and the economy starts to grow again, wages go up and people are happier.

So to put it all together:

  1. Lower taxes to get everyone's support for anything stupid that you choose to do.

  2. Stop spending money on infrastructure and programs for folks in need.

  3. Divert that money into military development.

  4. Start snooping around a smaller country, spread rumors, then go to war with them, beat them up, put new leadership in place there and make their government (essentially their people), pay for a portion of you having to go to war with them.

This solves 5 problems:

  1. It creates a recession.

  2. It deepens the recession.

  3. It set the scenario for the next time you want a recession, because you've meddled in another country's affairs to a high degree, and they will probably break and start acting up again in a decade or two.

  4. It provides a mechanism for pulling back out of the recession.

  5. Greedy jerks ridiculously increase their wealth, but nobody else does, in fact it makes it worse for everyone else, and the greedy jerks matter most because they support the government and often provide the economic support structures that allow the government to function as it does, e.g. private industry is the backbone and the jerks run private industry.

P.S. Screw the government and the jerks.

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  • $\begingroup$ BTW, if anything here is inaccurate or misleading, please point it out to me and I will gladly fix it. This was as much a rant as it was an answer, so it is admittedly biased. :) $\endgroup$ – Nolo Sep 8 '16 at 7:56
  • $\begingroup$ The point of the OQ was to have the government appear blameless. Raising interest rates, spending on war; these are all things government does $\endgroup$ – Daniel M Sep 9 '16 at 2:21
  • $\begingroup$ @DanielM Yes, but these are things that the government does regularly and people do not question it much. The objective was to create a recession. In this way the objective can be presented as something else and the recession can be the ulterior motive, itself a means to a different end, which is more power. $\endgroup$ – Nolo Sep 9 '16 at 3:44
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The value of currency needs to be based on something, (or the people need to think its based on something) for it to be worth anything to a population. For example, gold. If the value of gold suddenly decreased, because say somebody discovered that if you dug down a few feet you could find an inexhaustable supply of gold, then your currency would suddenly become meaningless until your government determined some other way to represent the country's wealth.

So my suggestion is something to the effect of:

"Foreign powers are no longer interested in our currency/goods (for whatever reason), so we're unable to make essential imports/exports. Our most valuable commodity is now our talented young people and highly skilled workforce, which the government will train, and contract out to other nations, to ensure the country continues to run in the manner to which you have become accustomed."

EDIT:

Have a referendum à la Brexit.

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    $\begingroup$ Gold already isn't the (only) base of relative wealth of first world countries. It is already close to what you are suggesting. Scenarios such as in Goldfinger would have limited effect, possibly even also when the movie premiered. $\endgroup$ – Spikee Sep 8 '16 at 14:35
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    $\begingroup$ Thanks for the reply. Yes I know this is the case, but since I don't absolutely know the specifics of his particular world, I figured the concept, rather than the implementation, would be the most useful. I.E Determine what exactly it is about the currency that makes it valuable, and work from there. $\endgroup$ – Fearless Wombat Sep 8 '16 at 18:26
  • $\begingroup$ Oh, okay :). Just figured I'd add to what you said. $\endgroup$ – Spikee Sep 8 '16 at 18:51
  • $\begingroup$ In that case, I absolutely 100% had the plot of goldfinger in my head :p $\endgroup$ – Fearless Wombat Sep 8 '16 at 19:37
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Give yourself to the Dark Side

False-Flag terrorist attacks on infrastructure

In the first day of trading after the September 11th attacks in the US, the stock markets plummeted. This accelerated an already rumbling recession, and kept it going much longer.

Now imagine if instead of one extremely dramatic attack, you had a series of attacks that collapsed bridges, cut canals, and destroyed power stations. Economic activity in many areas would grind to a halt; many other areas would lose access to the national economy and be reduced to a purely local economy. You'd have shortages of food, fuel, and medical treatment. All in all, a bad day to be living in that country.

Blaming the attacks on external terrorists would give the government an excuse to declare a state of emergency and vote itself sweeping powers to resolve the 'crisis'. They could immediately hire people to start infrastructure repairs, nationalise important utilities and industries, etc, then arrange more 'foreign terrorist attacks' to maintain the status quo.

This also has the advantage of allowing the government fairly granular, detailed control over exactly how bad things get. In an election year, you can "capture" a terrorist cell and publicly execute them; If private enterprise is rebuilding, you can destroy their supply lines, forcing them into bankruptcy.

This is essentially the method used by Supreme Chancellor Palpatine of the Star Wars universe to get himself named Emperor - he ran both sides of the Clone Wars, using the ebb and flow of the conflict to gather more and more power to himself.

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