Like, the profits can't keep coming if production doesn't keep coming. Can the government just borrow against future production and keep the ball rolling indefinitely, or is it going to come crashing down very soon?
Econ nerd pls help, my humanities degree did not prepare me to answer these questions.
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I’m by no means an expert on the economy, but “a crash is coming soon” is the default state of capitalism lol
Lol true as hell. Cant predict the crash when it's constantly around the corner 24/7!
Econ major here.
When covid first hit and the US went into semi shutdown mode there was a massive drop in the market across almost all industries. The Dow Jones (a popular index of the market) lost almost a third of its value over the course of a month. This is when the fed starting pumping out massive amounts of $$ in the form of low interest rate loans to prop up the market and banks. They printed so much money that now 20% of all currency currently in circulation was printed in 2020
If the fed does not intervene in such a heavy handed way I think the market is headed towards a correction but with the current administrations close ties to capital/finance I wouldn’t be surprised if they pulled out some more fancy maneuvers.20% of all currency currently in circulation was printed in 2020
Wow, really? Thats a lot of money. Is this causing inflation or has the fed found a way around it somehow?
I think the US gets away with it because it's the world reserve currency (for now), so there's enough demand for it that it doesn't affect its value too much
No, something that has been exposed by COVID is that the financial economy has become completely disconnected from the productive economy. American high finance has become so hegemonic and industry offshored overseas that supply chains are being badly disrupted but the financial economy is hitting record highs, largely due to government subsidization. What the government took away from 2008 is that the financial economy must be propped up at literally any cost.
Seems to me like it's already a crash, just not a fatal one for the existing system.
It doesn't look like the 2008 crash because it's not caused by a finance crisis, rather by a production and profit crisis. Much more delayed, diffuse effect (I think?).
By comparison the Gamestop fiasco caused a liquidity crisis in one firm in a matter of days. Much more drama, headlines, and thinkpieces, since it's rich people's money.
i mean the real production kept going. anyone deemed an 'essential worker' didn't get any of the actual benefits that people who weren't essential got, like the guaranteed unemployment 600 bucks a week shit, they just had to fucking to to work for the same wages and shit.
there were a couple options for companies that had employees deemed essential in certain states, where they could apply for something that would grant their employees extra hazard pay but it wasn't required and mandated, and a lot of companies just didn't do it.
point being, actual production never stopped, so even if the shit doesn't crash that doesn't disprove marx.
Michael Roberts has been writing a lot on COVID effect on capitalism.
https://thenextrecession.wordpress.com/2021/01/25/covid-and-fictitious-capital/
https://thenextrecession.wordpress.com/2021/02/14/deflation-inflation-or-stagflation/
Some economists keep predicting (read: coping) by claiming something like a v-shaped recovery. In practice, any "recovery" is going to be to a lower level than it was before COVID. There has been massive increase in corporate debt, and growth was already at low levels prior to COVID. Much of the money from stimmy has gone to speculation and stock buybacks. The market has already been going through a massive crash for all intents and purposes. The economy was already fairly stagnant post recession. It will be even worse going forward.
Short answer: no crisis if demand and supply both decrease simultaneously.
