The negative economic repercussions of the coronavirus pandemic lead to enormous financial difficulties, which could probably be worse than the Great Depression of 1929. Covid-19 causes total chaos in the world with millions of people locked in and businesses going bankrupt. The following scenarios show the magnitude of the problems and challenges we face.
Record unemployment and, consequently, a significant increase in crime, bankruptcy and homelessness.
A money-hungry population that has not received its financial assets during past growth phases is likely to be covered by its federal government in times of trouble. Some countries will of course be able to do this much better than others.
Banks fail and restrictions on holding or withdrawing cash. Federal governments will find it very difficult to insure their bank deposits, and some people could even lose their savings. It could be a repeat of the 2008 banking crisis, but only a little more serious.
Massive government bailouts that won’t change the trend until it starts.
Deflation will occur, which will inevitably mean lower participation rates for some items, but also lower wages. This means that the value of money goes up relative to the things you can buy, like stocks, houses, and groceries. However, there will be less money to travel.
Significant debts written off and numerous bankruptcies. Deflation occurs because the mass of financial obligations accumulated in the last years of growth has been removed and the actual amount of money in the system is therefore less. Central banks will not be able to avoid this by printing cash because commercial banks have to borrow a lot to increase the money supply. As a result, individuals and businesses will no longer take out loans for fear of the future.
Possible long-term and double quarantine and disruption of regular business processes for a period of 3 to 24 months. Although longer durations are less likely, it is still possible. Fear instead of science can lead to barriers, especially if federal governments are motivated to be as tough as the next country to avoid bad looks. There are a lot of unknowns at the moment, with leading scientists tending to say how much they don’t understand and therefore be cautious.
Uncertain feelings in society and a less inclusive state of mind. People will be linked to smaller groups that are more alike and are increasingly reluctant towards people who are not part of these groups, be it political, ideological, racist or even food.
An increase in mistrust and guilt between nations with restrictions. The degraded relations between countries are expected to intensify. National self-preservation will increase instead of working together as a global community. Aid from other countries is seen as an ulterior motive.
Government control. Many countries will have developed precedents and laws to increasingly monitor and verify residents, which is supported by more draconian measures. It will be an attempt to keep society healthy, but those who do not advocate for authoritarian control are also expected to be aggressive against it.
A backlash against big business and the rich, especially the former big winners who had questionable ethics. The role of conglomerate platforms such as Google and Facebook, as well as the banking industry, which works in secrecy, could be examined in depth.
A huge increase in mental stress and mental disorders in people as the pressure of life increases, and people find it difficult to adjust to difficult personal financial challenges and rapid, unpredictable changes.