In the dark corner of the Internet, the haze is spreading wantonly, and rumors are quietly spreading everywhere: the global economy is about to collapse, and its disaster degree is not comparable to the Great Depression. In the face of this economic collapse, the Great Depression seems to be just an insignificant skirmish. Conspiracy theorists argue that the government is covering up the truth and trying to maintain the illusion of normalcy, but the global economy has reached the brink of collapse and is on the verge of collapse.
However, is this just another untenable viewpoint? Or is there a hint of truth behind these ominous warnings? Let's delve deeper into these statements and see if we can uncover the underlying facts.
A common saying is that the government intentionally downplays the importance of economic indicators such as unemployment and inflation rates to avoid causing public panic. Conspiracy theorists argue that central banks are painting a beautiful picture, but the reality is that the global economy is on the brink of collapse.
Another theory is that the government is secretly manipulating the stock market, artificially supporting asset prices to delay the inevitable collapse, which is a very risky gamble that may ultimately backfire.
Although these statements often lack concrete factual basis, they have gained increasing support, especially from those who question mainstream media and financial institutions. The widespread dissemination of these remarks has exacerbated anxiety and uncertainty in society, exacerbating the already precarious economic situation.
Before falling into the wave of fear, let us take a step back and examine these statements with a critical eye. Perhaps we should seek help from experts at the earliest opportunity, such as economists, financial analysts, and policy makers, who have spent their entire lives studying the complex workings of the global economy. Let's take a look at those independent voices that are not related to the monetary system and do not have personal biases.
Nouriel Roubini is an economics professor at New York University who gained fame for predicting the 2008 financial crisis. In March 2023, Nouriel Roubini made some statements that were widely cited by major media outlets
The global economic situation is precarious, and the risk of economic recession is enormous. The severity of economic recession depends on various factors, including the impact of the Russia Ukraine war, the sustained rise in inflation rates, and the tightening monetary policies implemented by central banks around the world
Paul Krugman is an American economist and columnist for The New York Times, known for his research on international trade and economic inequality. About a year ago, Paul Krugman said:
The global economy is facing many challenges, including the Russia Ukraine war, supply chain disruptions, and rising costs of living. Although these challenges may lead to economic recession, the economy may not necessarily decline. The ultimate outcome depends on how decision-makers respond to these challenges
Harvard International Finance Professor Carmen Reinhart seems to agree with the above viewpoint, stating in September 2022:
Governments around the world are closely monitoring the economic situation and taking measures to reduce the risk of economic recession. These measures include fiscal stimulus, loose monetary policy, and structural reform. Although these measures may not necessarily be effective, they are indispensable in reducing the risk of severe recession
That's the fact. These three experts have repeatedly emphasized the above viewpoint for over a year and have never changed. These views are not absolutely optimistic and can shatter conspiracy theories. In addition, since these views were made public, large-scale conflicts have erupted again in the Middle East, and the situation is severe.
Most experts emphasize that the severity and timing of the next economic recession are still uncertain, and governments around the world are closely monitoring economic indicators and taking measures to mitigate the impact. These measures include monetary policy adjustments, fiscal stimulus plans, and regulatory reforms. But are these solutions just smoke bombs?
If we look back at the last economic recession, we will remember that with the help of various monetary policy adjustments and stimulus plans, the economy successfully recovered.
The United States took the lead in implementing a $700 billion bailout plan aimed at purchasing toxic assets from banks and other financial institutions. The Troubled Asset Relief Program (TARP) helps the financial system restore liquidity and prevent further economic collapse.
Following closely behind is the 2009 American Recovery and Reinvestment Act (ARRA) - an $800 billion economic stimulus plan aimed at creating job opportunities, providing tax breaks, and investing in infrastructure projects.
In addition, the Federal Reserve has implemented quantitative easing (QE) monetary policy, which involves the central bank purchasing a large amount of government bonds. The goal of quantitative easing is to lower interest rates, ultimately lowering the borrowing threshold for businesses and consumers.
In other places, the European Central Bank (ECB) and most other central banks in the world are implementing similar monetary policies with similar objectives. If these measures can promote economic recovery, then we can confidently believe that these measures can effectively achieve the so-called economic soft landing. Therefore, we should not completely reject these solutions.
In today's interconnected world, information keeps spreading everywhere, and we are easily carried forward by misinformation and panic. But we must remember that not all sources of information are equal.
Despite the flaws of mainstream media, they all adhere to strict news standards and verify facts and information before reporting. Editors are well aware that as long as their media outlets publish a false report, they will face various criticisms on social media. In the eyes of those who are called 'anti mainstream media', the credibility of news media is no longer as good as before. If the news media releases false or misleading information, especially those that can cause market fluctuations, it will not only further reduce its credibility among the anti mainstream media faction, but also face serious consequences.
Despite this, the media will still report based on the information obtained, and it is difficult or almost impossible for the media to verify the facts of the predicted information. In the coming years, revisionist economists may be able to prove the truth of conspiracy theories, but for now, the media has no choice but to treat official statements as facts and edit them.
So, are we on the brink of economic apocalypse? The answer is: this is a complex and intricate problem. Although there are challenges ahead, it is far from a dead end. Governments and financial institutions around the world are taking measures to cope with the approaching economic recession, and we have reason to believe that the global economy can withstand this storm.
But as individuals, we must also play our role. We need to maintain appropriate attention, rely on reliable sources of information, and avoid the temptation of conspiracy theories. We need to make wise financial decisions, expand the diversity of our investment portfolio, and avoid impulsive actions.
Most importantly, we need to approach the future with a cautious and optimistic attitude. As I have mentioned in multiple in-depth articles, market sentiment has a huge impact on the global economy. If mainstream media begins to predict a bleak market outlook, it could become a self fulfilling prophecy with terrible consequences.
No one wants the global economy to collapse. The difficulties caused by economic recession may last for several years. Every widely spread conspiracy theory will fuel a dark future. Therefore, even if these conspiracy theories are true, worrying about them or even spreading them to others is asking for trouble.
We are currently facing challenges, but these challenges are not insurmountable. As long as we are positive, optimistic, work together, and think rationally, we can overcome economic and political turmoil and become stronger.
Although many people may encounter difficulties during the transition period, some visionary and wise individuals will emerge from the encirclement and achieve greater success. Economic recession often leads to a redistribution of wealth, so the real challenge is which side of wealth distribution you tend to lean towards.
Whether you plan to short the market before a sharp decline or go long during a long economic recovery, trade with caution. Please remember that economic recession is not destructive to everyone.
