Apr 17, 2020

Deflation Ahead!





Globalization has generated hyper-specialization  in local and regional economies, stripping them of resilience. Fully  exposed to the demand flows of a globalized class of consumers with  surplus discretionary income, regions specialized in tourism,  manufacturing, commodity mining, etc.
All these regions are now facing a structural collapse of global demand, and they have no  diversified local economy to cushion the blow to jobs, incomes, profits  and tax revenues.

This is the future of vast swaths of the global  economy: labor, commodities, assets, goods and services, and the tax revenues that are skimmed from the private sector, will all crash as supply far exceeds demand.

The price of a great many assets will crash, out of proportion to the decline in demand. Only the global top  10% can afford to buy pricey vacation homes, for example, and as the top  10% own 90% of the assets that are melting away like ice cubes in Death  Valley, when their ability and willingness to buy assets they can no  longer afford vanishes, the market price of those assets can fall 90% or  even to zero.

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