In April, 2020, people were actively buying oil contracts, silver and stocks that have no clients and income. And this is despite unemployment growth, pandemic and global economic crisis.
Financial uncertainty makes people do crazy things . Silver plays no role in the current economic situation, and we have enough oil to hold on for six months or even longer, if the economy stays closed. The companies that have no clients and income are unable to make money. Still they believe we are crazy about crypto. Are they getting prepared for the Great Depression or mild recession? Or maybe they know something we have no idea about? Millions of people have lost their jobs and businesses over the last two months. The total production volume has declined. Some of the national currencies have crashed. Countries with the emerging market economy meet unavoidable debt crisis. But no matter how tremendous some poeople’s views on future are, the world will hardly fall apart.
Deep and long-time crisis do not occur because of short economic recessions even if downturns are significant. People are very resistant, and economy generally adapting better than we used to think.
On the contrary, the destructive, long-standing and threatening collapses happen when “safe” assets are quickly losing their value. Until safe assets remain
The modern economy provides the basis for all financial activities. In the USA, just like in many other countries, safe assets include money, residential properties and treasury notes. Households, enterprises and governments constitute various financial agreements depending on that these assets bear relatively low risks. Countries are building economies on this supposition. Banks and financiers are making trillions of dollars in business. And there is a reason why the fall in oil prices does not pose a threat to the world financial system. People know this is risky and unstable, and they take this on consideration while making decisions. “] No one will even make loan obligations from oil contracts. Mortgage lending? Easily.
This is about safe assets, not the risky ones. Let us remember the three past global economic catastrophes – 2008, 1929, 1873. What caused the 2008 crisis? The collapse of the US estate market. As for 1929, this was the crash of American and British stocks. In 1873 – railways and gold. At that time people considered these assets to be reliable bets that would never collapse. And then they failed. All hell seemed to be breaking loose. Apart from these three crises, we saw a lot of economic recessions and regional financial crises. These periods seemed terrible but none of them was a real threat to the world economy.
You can meet all these difficulties and turmoils with no system failures. People suffer but then they recover. Life goes on, and we should take the right decisions. Despite the popular belief, most of the economic kickbacks last for about a year. Yes, some of them can last much longer but this happens rather seldom. You should also bear in mind that none of the previous kickbacks ever faced coordinated global financial intervention. There are many people trying to save the financial system. So why are you convinced they will fail? And this is crucial for cryptocurrency sector because…