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April had the worst unemployment rate (USA) since the Great Depression! What does that mean?

May 10, 2020

Over the past decade, the longest boom in job creation, 20 million new jobs have been created in the United States. In just a few weeks, the United States lost all of these jobs due to the effects of the corona virus. From mid-March to April 23, 26 million people in the US applied for unemployment benefits from the government, a record. A coup d’état of this size could lead to a crisis at the level of the Great Depression of the 1930s. An unemployment rate of 14.7% is no small matter. Just two months ago, the rate was 3.5%, the lowest level in 50 years. The contrast is incredible. What does this mean for the economy and for Bitcoin?

We enjoy the honeys of prosperity for a long time. We knew exactly that this could not take forever. The economy obviously slowed down, even though the macro data were not bad at all. However, the gross domestic product appeared to be stagnating somewhat and the stimuli were not working as before. The ratings were too high. And it was obvious that there were financial bubbles everywhere. The only thing that was low due to overproduction was oil. But to be honest, The S P 500 was very inflated. And what revealed the truth was GDP. Such assessments have not been justified.

Read on: How bad is the economy in Spain? Opportunity for the fintech and blockchain sector

April had the worst unemployment rate (USA) since the Great Depression! What does that mean?April had the worst unemployment rate (USA) since the Great Depression! What does that mean?

The most worrying, of course, was debt. That is public and private debt that has reached alarming numbers. The problem with debt is that you live on illusions. I mean Debt doesn’t weigh that much in a boom phase. As the money comes in, bad or good debts can be paid. When valuations are high, collateral returns loans. Everything is cute and beautiful while the cows are fat. Of course, the thing takes on the ant color when the situation changes and these cows start losing weight. Income falls and the price of collateral collapses. And then we started to regret that we paid for this trip to the Bahamas with a credit card. Now the memory of these shellfish on the beach is not so pleasant for us because we have to pay debts with the low income. And we feel the rope around our neck.

The fact is that human nature appears to be persistent as a mule. As such, debt is not bad. In fact, they are very useful and beneficial to the economy. With credits, resources are not hoarded and circulate again in the economy for the benefit of all. Here the problem is not the fault itself. The problem is bad debts. And that’s the culprit for consumption. Because consumer debt is bread for today, but hunger for tomorrow. It is true that we have greater purchasing power at first, but this power diminishes when debts have to be paid.

Good debts are different because the loan is used for investments. So it is cultivated today to harvest tomorrow. Of course, we will have to repay the loan in the future, but it will be possible to do so without major problems, because we will be more productive and more solvent in the future. In other words, Good debt makes us grow, and bad debt creates the illusion of prosperity and then becomes a yoke. Unfortunately, modern society is dependent on bad debts, so we are in the situation we are in.

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