In addition to the health and humanitarian dramas, the economic hardships and the deprivation of our freedoms that they caused from 2020 to 2022, the pandemic and the management that was done of it also had particularly harmful and above all lasting consequences on the behavior of human beings and on the proper functioning of our companies. Thus, all over the planet, more and more human beings have wanted to leave their jobs, even to put themselves on the margins of society. This phenomenon even gave rise to a formula: The great resignation (in French: the Great Renunciation).
But who exactly are these dropouts? According to a study by the St. Louis Federal Reserve, they are mostly young and old. Thus the former often resumed their studies or decided to speculate on the financial markets. The latter generally left … in early retirement. How did they manage to take such a risk? For some, household help in the form of checks has been able to give them a breath of fresh air. For others, the performance of the Exchange Socks and cryptocurrencies have also allowed them to inflate their wealth… temporarily…
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These mass movements have therefore logically led to labor shortages in almost all sectors of activity. As a result, more and more companies around the world, mainly in the developed world, have had to turn down orders due to lack of manpower to fulfill them. And this is where the coronavirus pandemic, the confinements and the measures that have been taken by the public authorities have completely broken the scale of values.
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Indeed, if in 2020 the development of teleworking and aid of all kinds was useful, at the beginning of the pandemic, their excessive use simply polluted the value of work. Surreptitiously, the fact of “working” from home, almost alone in your corner or not working at all and still receiving an income has started to make some forget that the salary is paid for the work. In France, it may even have caused an “epidemic of laziness”…
Likewise, more and more employees have forgotten that teamwork and face-to-face work are an exceptional source of value creation and therefore income and wealth. Here too the scale of values has been broken. Indeed, the rapid and impressive rise of cryptocurrencies and also the valuation of digital companies or even “unicorns” has completely undermined the model of gradual long-term, pulse-strength success.
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Since then more and more citizens, especially young people but not only, have been able to believe that they have discovered a new “martingale”: what is the point of working for years, when in a few months it is possible to pocket what some will never even touch in a lifetime?! This new lifestyle based on the very short term and on an irresponsible call for income has therefore been able to encourage some to leave the job market to find a place in the sun effortlessly.
Only here, if anyone has been able to benefit from it for a few months, even for a few years, most have bitten the dust with the collapse of the valuation of cryptocurrencies, many digital stocks and unicorns. For those who have forgotten, we recall that the latter were valued at least 1 billion dollars, while they had never made a cent of profit and that, for the vast majority of them, they would never have noticed it.
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It should also be noted that these bubbles, or rather these collective blind spots, have been made possible by the profusion of liquidity injections by central banks, also known as “money printing”. This strategic error made it possible in particular to keep interest rates on government bonds artificially low, sometimes even negative, while public debts reached stratospheric levels.
Once again, this reign of the “magic currency,” with negative interest rates, has helped to break the value ladder, fueling financial bubbles of all kinds and making the majority believe that the valuation of loss-making companies or cryptocurrencies does not had limits. But, very fortunately, all excesses come to an end and the clocks are adjusted regularly. So now that those bubbles have burst, it’s clear that those who thought they were done with the job are losing their minds. Worse still, with the return of high inflation, developed countries are slipping back into a severe recession.
As a result, after having been masked by bubbles of all kinds and by labor shortages, unemployment will, unfortunately, start to soar again. Against this backdrop, employees who have been picky and held auctions with companies desperate for hard-to-find labor are likely to be disappointed. For anyone who has lived through the Internet bubble and/or the subprime bubble, this phenomenon is not new. But the human being forgets. He forgets that bubbles are always followed by crashes and phases of reconnection to economic reality and common sense.
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It is true that by breaking the scale of values, the pandemic, or rather the political management that has been made of it, has prolonged the bubbles and the grip of the unreal. Didn’t we manage to sell millions of dollars worth of simple computer files on the Metaverse? Without the collective blindness born of the pandemic and the billions of euros and dollars squandered needlessly, all these excesses certainly would not have been possible.
Only here, due to lack of discernment and ease, do the leaders of the planet and a part of humanity allow themselves to be imposed. To the displeasure of economic rationality but also of future generations. Because, let’s face it, contrary to what some would have us believe, we are now going to have to pay the bills.
Marc Touati, economist, president of the ACDEFI company and author of 7 economic best sellers
His new book, RESET II – Welcome to the World After, released on September 1, 2022, is the best-selling paper on Amazon.
You can also find his video chronicles at his Youtube channel the last of which: Stock Exchange, Euro, Cryptocurrencies… will the roller coaster last?