Global economy: The calm before the storm

By Ernst Wolff

We are experiencing these days the literal calm before the storm in the world economy and the global financial system. The slump on the financial markets in March has been pushed into the background of public attention just as much as the shutdown of entire branches of the industry and the interruption of global supply chains in March and April.

Although it is now common knowledge that we are currently facing the worst recession in modern times, that this time the financial system could only be kept alive by trillions of dollar injections and that never in the entire history of the economy has there been such a wave of redundancies and so much short-time work as this year – but this does not seem to be an issue for the majority of people at the moment.

There are probably two main reasons behind this attitude: Firstly, for months now, politicians and mainstream media have been concentrating with considerable success on pushing the fear they have generated about the consequences of Covid-19 to ever new heights. On the other hand, both act as if the economy is now back on the road to recovery and an improvement is already in sight.

Since the reputation and credibility of both politics and the mainstream media have suffered greatly in recent months, the number of people who actually believe in such a miraculous economic recovery is unlikely to be very large. The fact that the majority of people tend to avoid the issue, however, is probably due to the fact that the panic-mongering of recent months has now created a deep-seated general fear of the future among many people, causing the majority to bury their heads in the sand.

The most important task at present is therefore to break through this paralyzing rigidity. But how? There is only one way: By giving the insecure majority, even if they don’t want to hear it, a glass of pure wine, informing them relentlessly about current developments and thus gaining their trust exclusively through correct analyses. This requires patience, but is a process that cannot be artificially accelerated.

In order to get things moving, it must first be made clear to people that the lockdown has initiated a chain of developments that is currently unfolding with an inexorable logic and which – unless someone effectively opposes it – will destroy our society in its present form, trigger enormous social upheavals and give a numerically tiny triumvirate of politicians, financial institutions and digital corporations the opportunity to establish a digital-financial dictatorship on the ruins of the existing system.

What awaits us all is this:

The economy, which has been squeezed by a collapse on the supply side and a simultaneous demand shock from two sides, will not recover. In Germany alone, hundreds of thousands of jobs will be lost in industry this autumn and winter. Mass layoffs are imminent in both the automotive and aviation industries as well as in tourism, retail and banking. More than half a million businesses will only be able to service their debts by taking on new ones, and tens of thousands of retailers and catering businesses are on the brink of bankruptcy.

Due to this situation, the banks are sitting on a steadily growing mountain of bad loans – with the consequence that savings banks and cooperative banks, which mainly live from this business, are being dragged deeper and deeper into the abyss. To counteract this, the government has already extended both the short-time work allowance and the suspension of the obligation to file for bankruptcy.

However, neither of these measures solves the underlying problem, but merely postpones it and creates a new problem in return: the resulting expenditures, together with the collapsing tax revenues, are widening the already huge hole in the state budget and creating the conditions for us to experience a much sharper austerity policy in the future than we have seen so far, and that means first and foremost: drastic cuts in social spending, especially in the areas of education, health care and public infrastructure.

Since all these developments will reduce general purchasing power, those responsible will have no choice but to resort to helicopter money. This will very quickly lead to ever greater currency devaluation, against which there will be only one remedy: the introduction of digital central bank currencies. Since these currencies will be semi-private money, it would be a transition to a system in which we would be regulated, controlled and manipulated by a cartel of digital corporations, financial service providers and central banks, and from whose clutches we would find it very difficult to escape.

Must we not despair in the face of this development, which is foreseeable at every step, and the enormous power of those who drive it forward? Is the fight against it not long lost?

Certainly not, because the time when the expediency of economic recovery can be maintained is coming to an end. We are at a historic turning point in the fall of 2020. We are facing economic and financial collapses of monumental proportions. They will ensure that millions of people will feel the devastating consequences of the Corona policy on their own bodies. Not only will you lead these people into a very personal, often existential conflict with the existing system, but you will also open their ears to voices they have not heard or did not want to hear.

We all have a historic opportunity ahead of us – namely, to reach a large number of people, not by force and not by slogans or propaganda, but by systematic educational work, and to make it clear to them that it is time to reorganize the world of business and the social structures based on it – not in the interests of a tiny greed-driven minority, but in the interests of the working and tax-paying majority of people.


Thanks to the author for the right to publish.


Image source: Nadiia Ruda / shutterstock


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