Like, the profits can’t keep coming if production doesn’t keep coming. Can the government just borrow against future production and keep the ball rolling indefinitely, or is it going to come crashing down very soon?
Econ nerd pls help, my humanities degree did not prepare me to answer these questions.
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I’m by no means an expert on the economy, but “a crash is coming soon” is the default state of capitalism lol
Econ major here.
When covid first hit and the US went into semi shutdown mode there was a massive drop in the market across almost all industries. The Dow Jones (a popular index of the market) lost almost a third of its value over the course of a month. This is when the fed starting pumping out massive amounts of $$ in the form of low interest rate loans to prop up the market and banks. They printed so much money that now 20% of all currency currently in circulation was printed in 2020
If the fed does not intervene in such a heavy handed way I think the market is headed towards a correction but with the current administrations close ties to capital/finance I wouldn’t be surprised if they pulled out some more fancy maneuvers.
20% of all currency currently in circulation was printed in 2020
Wow, really? Thats a lot of money. Is this causing inflation or has the fed found a way around it somehow?
No, something that has been exposed by COVID is that the financial economy has become completely disconnected from the productive economy. American high finance has become so hegemonic and industry offshored overseas that supply chains are being badly disrupted but the financial economy is hitting record highs, largely due to government subsidization. What the government took away from 2008 is that the financial economy must be propped up at literally any cost.
Seems to me like it’s already a crash, just not a fatal one for the existing system.
It doesn’t look like the 2008 crash because it’s not caused by a finance crisis, rather by a production and profit crisis. Much more delayed, diffuse effect (I think?).
By comparison the Gamestop fiasco caused a liquidity crisis in one firm in a matter of days. Much more drama, headlines, and thinkpieces, since it’s rich people’s money.
