The Covid-19 pandemic has resulted in the economies of nations across the world to plummet at scales last witnessed during the Great Depression. Governments embarked on implementing measures to restrict social interactions, which saw the closing down of businesses and industries that posed higher risks to the spread of the virus.
Months later, governments are slowly allowing the reopening of some businesses. Still, millions have a hard time getting back to the new normal, which has been defined by a massive loss of jobs and business, some indefinitely even.
Policymakers all across the world have implemented economic stimulus measures to guarantee that individuals can meet their basic needs and that businesses can get back up as they open up. Governments are pumping monetary aid into their citizens’ pockets. It is becoming a growing concern among investors that these policies might result in inflationary effects in the not so distant future.
The immediate impact
Buyer spending is a significant part of the demand that drives any economy. Because of the vulnerability brought about by the pandemic and the domino effects, customers have cut spending and increased their savings, businesses are experiencing falling profits and as a result, are reducing costs, and wages are feeling the squeeze.
This hoarding of money by consumers means that there will be a shift in demand, and supply and demand will do down, resulting in businesses cutting down their products’ costs. While this does sound like a win for the consumer considering they will be paying the bills with unemployment benefits from the government, it is not a win. This is the heralding of a deflationary economy.
In an attempt to cope with the deflation, businesses will likely slash wages and layoff more employees, which will fuel the cycle of inflation, as more would-be purchasers have less to spend.
Weathering the storm
As the world braces for even tougher economic times from the lockdowns, the fiat currency’s inflationary nature is becoming more evident as governments around the world are injecting more fiat into the economy.
So how can individuals do to protect their wealth in times where the fiat is unreliable? Cryptocurrencies. Specifically, Bitcoin (BTC). Central Banks do not control bitcoin, and this dramatically reduces transaction fees incurred from having middlemen.
The other option is gold. Gold isn’t being mined at levels past surrounding utilization. However, a significant value climb would bring out dealers, and there is a great deal of gold out there. All things considered, gold is the most preferred hedge that most people who have a higher probability of losing their wealth opt for as a meant.
The main concern is regardless of whether to broaden your riches further in this incredibly unpredictable times, precious metals are an absolute necessity, and on the off chance that you can get your head around it, bitcoin is an exceptionally ground-breaking alternative.
While stimulus packages have come in a clutch to many, the impacts will soon start to be felt; individuals ought to look into ways to cushion themselves from the fallout.