The Global Economy Is Caught Between A Rock And A Hard Place!
Ever heard the saying, Caught between a Rock and a Hard Place? This signifies someone or something that is facing an “impossible” choice in the face of a “pincer” of a “double whammy” of sorts challenging situation. In such cases, there is no escape and no exit, dooming anyone and anything who find themselves in a tricky spot, bereft of any shot at getting out of it. Remember that you are not alone if you are in such an “unenviable” position. The Global Economy is also in the throes of the Great Stagflation, caught between stagnation, low growth, and high inflationary recession. It certainly leaves policymakers with little choice and no meaningful way out of the impasse. Next time you fret about how life has been too complex, spare a thought for Central Bankers and the governments worldwide who are confronted with a Hobson’s choice.
How did The Global Economy Come To This?
To start with, five decades of monetary “excesses” where neoliberal policies of low-interest rates and deficit financing (aka printing money for the layperson) have led to a “glut” of liquidity in the system that is now “drying up” as Central Banks raise rates in response to skyrocketing inflation. This is The Great Unravelling, where the Global Economy, which was on “steroids” due to the regimen of “easy money”, now finds itself having “withdrawal” symptoms much like a “junkie” addicted to psychotropic substances behaves if they don’t get the “fix”. Moreover, neoliberal policies that pursued growth “at all costs” now face a reckoning as the Pandemic and Putin have dealt a “double whammy” to the Global Economy. The “taper and tighten” moves now being pursued have led to “all hell breaking loose” in global markets in The Great Derangement where “divorced” from reality, they gyrate “wildly” and swing between euphoric highs and manic lows.
What Can Be Done To Fix This?
There is no choice but to “reboot” the Global Economy and “rebalance” it by pursuing more “compassionate” capitalistic policies. While this sounds Utopian, remember that everything from the “virus to the weather” has become so unpredictable that even a minor event somewhere can “trigger” a systemic collapse. Indeed, the “slow motion” trainwreck that the Global Economy is going through can be avoided by The Great Reset, where “funny” money gives way to “asset-backed” stable currencies. Of course, a complete “overhaul” of the Global Economy sounds radical and extreme. However, there is no choice if we have to “transition” to a more sustainable Global Economy that is not a “race to the bottom” game, where only the Top 1% make it, a fact acknowledged by the Davos “crowd” as well in this year’s edition, where the prominent theme was the “darkened” economic environment and the “alternatives” to emerge from this crisis.
Will The Solution Be Implemented?
Hard to say! Deja Vu feels as if each recession brings forth many such “solutions” only to be forgotten when the storm passes. Maybe it is human nature to stay within the comfort zone of the status quo. Maybe, we are “jolted” into action only when confronted by danger, triggering the “fight or flight” response. More so, when similar “utopian” projects, like The New World Order, were tried before, and instead of the “promised” utopia, dystopia was delivered, leading to more chaos and disorder. So, The Great Reset can be another such “false dawn”. However, The Global Economy is in the throes of a “bottomless” recession where “everyone and their dog” warn of turbulence and a “perfect storm” with economists such as Nouriel Roubini, dubbed Dr Doom, predicting a “long and painful” downturn with markets falling by as much as 40%. There you go, and the reasons for the solution become apparent.
What Happens If We Persist With The Status Quo?
Well! Be prepared for more “zaniness”, where we routinely hear about a “nuclear winter” or “winter from hell”, and where the chances of a “new world war” increase by the hour. Moreover, the ordinary person would be hit more than the wealthy (as always), leading to social unrest and anarchy. The pandemic has left us with no choice but to implement The Great Reset, as The Global Economy is beyond redemption. Lest we forget! Covid has made us all “nervous and edgy”, and the lawlessness we see around us would almost certainly lead to an “implosion” of the Global Economy. With globalization in retreat, it is everyone for themselves in this Zero Sum world, making us all “vulnerable” and prone to daily crises. A “BIG” IF here is the lack of “resilience” left in the Global Economy, unlike in 2008 when The Great Recession was met with a “forceful” response. Just to note that this year’s Nobel Prize in Economics was awarded to a trio of economists for their “research” into Financial Crises, and so, as another such crisis looms, it is “inevitable” that “business as usual” simply doesn’t work!