Daily Times

US President Donald Trump seems, sadly, spot on in warning Americans to brace for “a hell of a two weeks” going forward as the White House projected that there could well be 100,000 to 240,000 deaths in the US alone. That is why markets tanked again, in what now seems the new normal, and sent yet more millions and billions to Money Heaven. That means this money will never come back. It has just been lost to the ravages in the market. And none of this was caused by any inherent fault in the global economy, or a systemic crisis in some sectors like the 2008-09 Great Recession, but an out-of-the blue virus that has turned the world upside down in just three to four weeks; truly a Black Swan event.

It is important to keep an eye on financial markets, indeed on money, because if they stumble for too long they will take a lot of the global money supply down with them. Already, according to reports in the foreign media, this crisis has wiped approximately $16 trillion from capital markets; and this seems just the beginning. Financial market experts now fear, and quite rightly so, that the worst is clearly yet to come since some of the world’s largest emerging markets are only beginning to feel the full force of the COVID-19 onslaught.

That is why policymakers are scratching their heads around the world. They have done all that could be done. Much of the planet – more than three billion people according to some accounts – is in lockdown. Governments have thrown what they could at markets to ensure solvency and also come up with nice relief packages to see the storm through. But all that will last only so long as economies will have spare money to stay afloat. If much of that money keeps disappearing at such a fast rate, the global ability to stay locked down will be compromised to no small extent. So it is crucial to keep an eye on the money. The markets go easy for a while whenever governments step forward with relief packages; but the optimism peters out sooner rather than later. Even America’s $2.2 trillion sweetener could breathe very little life into the market. Everybody must understand that even the best policies will work only as long as there is money in the system. Once that dries up, governments will be unable to afford the lockdowns, so to speak, and people will be forced out on the streets once more. Watch the money, then, to see how long the fight can be sustained. *