Who Will Cope in a Crisis?
The World has seen many different crises. We are going to talk here about the recent financial one, that occurred with several recent talented activities. Why did it happen and what should be done? Some know. Today, the world economy is like Russian roulette. You never know what you’re gonna get. If you enjoy gambling, you can always test your luck by playing IviBet.
In general, if the world economy survives the current crisis without too big failures, then apparently the experiment with filling any problems with money through quantitive easing (QE) will be recognized as successful. This will be clear in the next 3-4 months. We should not forget that the QE policy not only allowed the global economy to compensate for the losses from lockdowns but also gave good recovery growth after.
Now we are witnessing the last phase of the experiment. What exactly is all this fraught with? If it turns out that the price is not too high, the method will probably be adopted on an ongoing basis. Although it is calibrated. It is unlikely that we will see the same volumes as in 2020-2021. But that’s what it’s an experiment for.
What Will It Become?
What all this will lead to in the long run is approximately clear. Inflation will become a constant factor. Therefore the real incomes of the population of developed countries will either fall or stagnate. In parallel, this will be accompanied by the growth of stock markets, digital assets, and raw materials. In general, everything is traded on exchanges.
Why did we come to this at all? Because apparently the limit of growth of developed economies with low inflation has already been reached. Then either near-zero growth with low inflation, or growth with inflation.
Overall, the choice in favor of the second option is understandable and more likely true than not. The world has changed. The world economy has changed. The old recipes for growth do not work, but the new ones are like this.
Working Hypothesis
Let’s assume that the world economy will pass the next six months with relatively small losses. In this case, the economic experiment with QE will be unequivocally recognized as successful. The losses from the lockdowns have been compensated, 2021 was extremely successful, and all this did not lead to a disaster in the end. So you can continue.
What would such a QE look like? For starters, as already mentioned, inflation will take hold as the new norm. Not 8-10% (this is an unacceptable level for large economies) but 5-6% as a standard background.
Who will benefit? Everything related to speculative and stock trading. Because excess money will flow exactly there. The stock market, cryptocurrencies, digital goods (and therefore metaverses), and also raw materials. For Russia, for obvious reasons, this is a good scenario. It guarantees high prices for oil and gas for a long time.
Who is at a disadvantage? Everything related to the production of physical goods. Because it will suffer from commodity inflation and the degradation of production chains. The Western countries of the second tier (the first is the United States) will definitely be in the red. Firstly because of the strong dependence of their economies on industry and secondly because such a policy will lead to a further weakening of their currencies against the dollar. We saw the first round last year and, consequently, a decrease in their share of world GDP.
The United States will definitely benefit from this as the owner of the world’s main stock market and the best IT industry. China will move in the same direction, and most likely quite successfully.
In total: the main world economies such as the USA and China, as well as commodity-producing countries, will win. The losers are the economies of the second tier such as Europe, Britain, and Japan.