It may have slipped under the radar for some, but the IMF (International Monetary Fund) gave a stark warning about the global economy last week. This article looks at why this was kept quiet, the justification for a crash and how you can financially safeguard your future finances.
Head of IMF, Kristalina Georgieva, warned of a major Western financial crash being both inevitable and reasonably imminent. When an announcement like this is made, it should have made headlines worldwide. However, when Georgieva gave her first speech of 2020, her warning of imminent economic danger was largely been swept under the carpet by the mainstream media.
Her detailed speech spoke of some optimism but was largely overshadowed by her main message of global uncertainty. She makes a comparison between how growing inequality will lead to a new great depression. The big difference between now and the great depression in the 1920s is this time, we'll also be facing climate change; another driver of uncertainty. The optimism for change was very much apparent in her 'positive wake-up call'.
Here are some reasons that a new great depression could be inevitable:
- Increased wealth gap
- Too much debt over the past decade
- The rise of concerning bubbles (stocks, property markets, oversized tech valuations)
- Ageing workforces
- Higher living costs and stagnation of wages
- Disruption to industries through tech innovation
Why Suppress this Story?
The western reaction has been relatively quiet, but why keep this from public knowledge? The story wasn't even covered in the Financial Times or The Economist. We know that these media outlets typically have a neo-liberal economic stance, so it could be argued that they'd have an agenda for keeping this from going mainstream.
To some degree, investment trends would change as investors would be way more inclined to safeguard their assets now. Maybe the main goal is not to alarm the public or disrupt the workings of the current global economy. This 'ignorance is bliss' mantra often emits a comforting but false reality. The more likely they are to believe that nothing is about to go wrong, the harder their world will shake when it inevitably does.
Russia Ready and Waiting
Moscow was one place where Georgieva’s speech was definitely heard. While most large Western states are vulnerable to this crisis, Russia has been preparing its defences. Georgieva’s warning merely confirmed what experts had been saying for years, and that it'll make the 2008 meltdown look mild in comparison.
Russia has been a great example of a global superpower wanting to make its economy less reliant on the U.S. dollar. Others too have been making moves to make this a reality. A big determinant of this is watching how central banks have been moving gold around. "Nations have expanded gold holdings by about 14% since 2009," (Bloomberg, 2019).
Basel III Will Save Us
Some have argued that is unlikely that anything that extreme will happen again because we have new banking frameworks in place that protect us from financial catastrophe. This is of course yet to be seen, and only time will tell. What we do know is that experts have been using very similar rhetoric for some time and it seems now there is an even bigger sense of urgency now more than ever.
The 1920s great depression is far removed from our current realities, it just feels like it would be an impossibility at this point of our thriving civilisation. Few westerners have witnessed the effects of hyperinflation on their savings or gone through one of the darkest times in financial history. Does that make us even more detached from this inevitable reality?
"In 17 advanced economies, every financial crisis from 1817 to 2013 confirms that widening income inequality is consistently a strong predictor of another financial crisis and this can have an ever-lasting effect". Reflect on Kristalina's words and ask yourself if anything is actually being done about this.
Safeguard your finances using physical precious metals today. Call a member of the Bleyer team now (01769 618618) to chat through your current investment choices, email the team [email protected], or order online through at a time of your convenience.