The world economy in quarter 2
The further economic development is highly uncertain because of the pandemic. - This is also the opinion of the US Federal Reserve Chairman Jerome Powell.
Global economic data fell like a stone in the first quarter, only to come back with a "V" shaped recovery afterwards. - Not without the help of the central banks.
Since the beginning of the crisis, the US Congress has passed economic stimulus packages worth almost three trillion dollars. That corresponds to more than ten percent of the annual economic output.
What on the one hand supports the economy harms the common man. The starting of the press and the radical rate cuts on a global level are certain death for the existing monetary system.
Assets are artificially pushed. The central banks launched various bond purchase programs to support the capital markets. - In short, money is printed in order to buy government bonds so that the state can act more effectively. The question here is - who should pay for it?
Since even the junk bonds hardly yield any interest, investors take refuge in already overpriced stocks, real estate, gold, or speculate with derivative financial instruments for a short time. Everyone wants to protect their capital.
There is a risk of hyperinflation! If you look at the consumer price index, you quickly see that there was little inflation despite the enormous flood of money. People are afraid and hoard their wealth. This trend will be massively reversed with a Covid-19 vaccine at the latest. If humanity defeats Corona and returns to the "normal daily routine", spending will rise again and the economy will recover sustainably. However, the excess liquidity is still in the market, which can subsequently lead to hyperinflation with massive effects. This increase could be counteracted with an interest rate hike. The already ailing companies that had to take out emergency loans then collapse completely.
Because of this situation, the gold price is increasing without end.