What started as a health crisis is likely to lead to an economic crisis the likes of which humanity may not have experienced for nearly a century, rivalling the Great Depression.
In the US, 17m unemployment claims in the last 3 weeks, the highest in history, looks like this:
In the US, 17m unemployment claims in the last 3 weeks, the highest in history, looks like this:
Closer to home, I was speaking to @VALRdotcom's accountants who serve hundreds of clients in SA and the CEO said "People don't understand what's coming. March was fine because companies just made payroll. But wait til April, 80% of my clients are going to have difficulty.
You may have heard the call of @GrantPattison (CEO of Edcon, one of Southern Africa's largest retailers) to suppliers saying he can't pay them. If not, listen to @brucebusiness's clip from March 26: omny.fm/shows/the-mone…
And this was before the SA lockdown even started.
And this was before the SA lockdown even started.
The economic havoc that lockdowns have/will unleash on economies across the world have prompted govts and central banks to create stimulus packages worth trillions of dollars. Here's the Fed's balance sheet that now stands at >$6T and will be growing even bigger.
To be clear, most of the stimulus packages are not tax dollars that are being directed to relief, but are composed of newly 'printed' money by central banks.
Central banks have historically not been allowed to monetize government debt directly to keep monetary policy decisions independent from fiscal policy. Meaning: CBs don't print money to give directly to government... But that changed this week starting with the BOE:
This is dangerous. But also not a judgement on central bankers. If you have a mandate to maintain monetary and financial stability and the only major tool you have left is to print money and try get it into the economy, you're going to do it.
We've seen this done again and again in history, with different forms of money, and ultimately it leads to currency debasement and, at the extreme, currency failure.
In the last few weeks we've seen @VALRdotcom's #Bitcoin and #crypto volumes spike due to this crisis. More people are looking to protect their money and wealth from debasement, and in a world where "risk-free" no longer exists, many are now exploring #cryptocurrencies.
The USD has been the reserve currency of the world for many decades, but not centuries. I don't know how long it will last but no reserve currency lasts forever.
Regardless of what happens, a change in reserve currency isn't going to solve the world's problems. And for the crypto lovers out there, Bitcoin isn't going to miraculously solve all the world's economic issues.
My strong belief is that most of our challenges in the world stem from a lack of unity, from not acknowledging that humanity is one and from failing to see that solutions lie in working together rather than against one another, particularly at the national level.
I think this health crisis turned economic crisis will soon turn into a social crisis and in turn a political crisis. I think it's going to test us as a human race and make us question so many of the flawed assumptions we have about who we are and how we and our systems operate.
I pray the difficulties we're experiencing will ultimately bring us closer together and I have no better words to leave you with than these from the Univesal House of Justice.
