The global economy is more likely to experience a deflationary shock – BeInCrypto


The global economic crisis has all the elements of a deflationary shock that has not been seen in decades.

Many press releases have been released that reflect the tireless pressure from the Federal Reserve (FED) on new USD. Some concerns are justified; After all, the Fed has spent new dollars in record amounts. He even tried to calm fears by arguing that he had “unlimited money”.

Although a possible inflation spiral would be expected, the real threat could be a deflationary shock.

Federal Reserve Bitcoin

Dangerous deflationary area

Bloomberg reports that much of the world’s population is protected in their homes to help fight the pandemic. The most likely scenario is a deflationary spiral. The price of everything from oil to copper to food has dropped dramatically since the start of business closures.

JPMorgan Chase Global Economist Joseph Lupton said to Bloomberg: “A powerful flood of disinflation is now being born.” [Bloomberg]

Although this seems theoretically good for consumers, it actually points to a deterioration in the economic situation. With record layoffs, consumers lack the purchasing power they once had. Therefore, most cannot even enjoy the low prices. As a result, most companies see a drop in profits. That is the essence of the current deflationary spiral, and the falling consumer confidence index is evidence of this.

The result of the deflation crisis will be diverse: companies can postpone investments due to limited profitability. Households will spend less due to lower purchasing power and anticipation of lower prices. Debt is becoming more expensive for governments and the private sector. With the Federal Reserve’s interest rates already at the bottom, monetary policy has also tied its hands.

Inflation crisis seems unlikely

Talks in the cryptocurrency industry focused on the Federal Reserve’s endless money pressure. Of course, this is important: As BeInCrypto recently reported, the Fed prints about $ 60 million every minute.

However, given the currently depressed outlook for global demand, an inflation crisis seems unlikely. Instead, profitability is likely to suffer and economic growth will weaken in the coming years if this crisis continues.

This does not mean that inflation will not be reflected in the coming years. In the short term, however, the dollar does not appear to be on the brink of collapse. Instead, the world’s companies are on the brink of bankruptcy as investors flee the dollars to escape the storm.

It remains to be seen how it will react. Bitcoin

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As a leading blockchain and fintech news company, BeInCrypto always strives to comply with strict editorial guidelines and the highest journalistic standards. With this in mind, we always encourage and encourage readers to do their own research into the information contained in this article. This article is intended as news and is for informational purposes only. The topic of the article and the information provided may have an impact on the value of a digital or cryptocurrency asset, but is never intended. Likewise, the content of the article and the information contained therein do not intend and do not intend to provide sufficient information for a financial or investment decision. This article is not expressly intended as financial advice, it is not financial advice and should not be construed as financial advice. The content and information in this article have not been prepared by a certified financial professional. All readers should always conduct their own due diligence with a certified financial professional before making an investment decision. The author of this article may have any amount of Bitcoin, cryptocurrencies, other digital currencies, or financial instruments at the time of writing, including but not limited to those listed in the content of this article.


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