I'm gonna guess an 'L' shape and only coming back up after a major change to the monetry system/the world. it could be a UBI, or going into a global digital currency or could raise minimum wage to around $25 with all lower and middle income earners getting major pay rises...
Whatever we do to fix this is gonna be a huge change and it will have to ultimately benefit the masses.
For an economy to be bulletproof then the masses need to have disposable income so the money keeps flowing.
Instead of lending more and more at cheaper interest rates we desperately needed real wage growth and interest rates to get back to a healthy 6 - 8 %.
I've been preaching loudly for over a year that while this is the best system the world has ever had, it has its limitations... Which we are at now.
Housing doubling every 10 years while wages double every 35 years (and for decades has barely kept up with inflation) is inherently unsustainable.
This crash has been set up by decades greed and corruption.. Kind of like a bubble that has had all previous bubbles within it. I thought there would be a straw to break the camel's back but Corona has been more like a building falling onto it.
- World debt is at 330% world GDP.
- A stimulus before we have finished crashing isn't going to get anyone spending.
- The world cannot print endless amount of money without causing inflation, especially with unemployment rising sharply and with zero real wage growth. To fight inflation we need to raise interest rates.
- QE with the US at 0% and the EU into negative territory is a disaster... But there are no other options.
This is going to take a whole new thing to fix it.
- Declaring all out war on climate change is a better idea. If everything is going to melt down then at least we can work on an existential threat.
My prediction is a painful year or so, the housing market to lose minimum 50% value, bank/insurance company to go bust and then (similar to Germany fixing hyperinflation) basically rebuilding the system, hopefully to a new and improved 2020, blockchain uncorruptable one.
Eventually a net positive for the world.
The world is moving fast and we've gone well past this ancient system.
Time to start electing STEM and tech gurus instead of lawyers and career politicians.
