The “Solid ice” deflation and the next recession

Published on: April 2, 2021
Author(s): Mehiddine El-Chehimi
Keyword(s): Recession
ISSN: 3036-9495

A citizen weighing 100 kilograms can carry 10 kilograms in harmony and ease, but if we assume the contrary, that the citizen himself weighs 10 kilograms and is therefore forced to carry 100 kilograms, ten times his real weight, then we have no doubt if it is a big problem and a social and realistic tragedy, those that knocked the doors in the wrong political and economic atmosphere and thus threatened stability, balance .
Imagine yourself living with your salary allowance mentally and not realistically, you have not yet recognized the real material reality of the value of your currency and your criticism, which decreased zero on the right explicitly in the compulsory exchange rate, which turns your paper block from just paper in your hands or a number on the screen to a productive capacity spent and consumed, where the citizen lost the nine parts out of the total ten of the value of his purchasing power drained by the stimulus This is only part of the series of currency loss, and put him in an embarrassing situation thus the impossibility of continuity with the same fan of consumer capacity and standard of living and deprived him of his ability to save, he barely secures his needs.
The nine parts have been reduced and evaporated, and remained a single part of the citizen’s percentage of his salary and pension, which is practical that he lives from, but he is still mentally and intellectually immersed in the absolute stage of his previous stage of living, and he could not or did not want to believe rather about what happened to him, because once thought will leave him a deep gap because he is now suffering under the burden of fighting to live at the same level but for the only remaining of his salary 10% But now he has to go back to his senses and look for new alternatives and get used to a new style of living that relieves his real burden, he is to this time under the pressure of securing a balance of exchange for his normal life model but with a production capacity lost to 90% of its real value.
The systematic continuation of the rise in non-transparent indebtedness and the so-called ‘non-financial’ sector debt in an unbalanced manner, specifically in the major countries characterized by enormous financial capacity and also characterized by an unbeatable economic power and enabled by first world governments and high incomes, will increase the uncertainty of near recovery.
While the emerging economies of the developing countries are not at all immune, they seem to be in a cycle of stability and exposed to a hybrid risk of a different kind, as this category of countries is characterized by the specificity that most of its loans are denominated on the basis

of hard currency and therefore non-domestic provision, which causes a state of negative hyperbole and sectorial proof, which in turn leads us to an imbalance in the position of currency conformity and technical imbalance in balance sheets. It is therefore encouraging to strengthen the methodology of political risk of criticism, which is firmly exhausted despite the rules that are orderly and do not recommend this at all, and this is an additional encouragement for the survival of the uncertainty and the overall instability.

The world has more and more generated all these economic pressures challenged and by the model of ‘balance rams’ to stabilize the exchange rate of currencies steadily on the one hand, and to accustom and for a long time to the levels of inflation stable settlements and sometimes low agreements, which has already led to the erosion and ratification of imaginary facts and not realistic, most notably of course the stability of inflation and that it will not rise or fall again.
This is despite the high and worrying levels of unemployment and the turbulent increase in the number of job leavers and job drop-outs due to the crisis, and this is related to the controversial relationship between unemployment and inflation. As the sudden inflation serves only the state and its dark eras in getting rid of its losses and discharging it from responsibility and burdening the citizen, especially in its public debt, by dissolving the amounts and reducing the public debt. However, this approach will be devoted to a relative rise in the nominal benefits of the long term, which will really increase the weights, troubles and logistical burdens on the citizen and the people and all of course to serve the debt, the reality that leads to tension in public squares and in labor relations and make them more vulnerable to conflicts and the possibility is the same for politics, which will create chaos and crisis that causes and eventually reaches additional disturbances of the currency to the point of getting away.
We will be in a state of anorexia in terms of cooperation with public institutions as well as a state of loss of confidence especially for banks and central banks which warns us that the end of this game will be a great recession and not just acute it’s a ‘hard ice deflation’.
The beginning of the march to this perception will be through a severe global economic shock, there is an additional imbalance in the balance of power to the standard of international relations and we are currently in one of these stages as a fierce trade war and excessive protection of national industries or even disturb the serenity of public financing and ways of special support for large institutions, it is worth mentioning here that all the regions of the world economic and financial markets and ways of their currencies are threatened there is no area exempt even partially The dollar is in deep trouble and the euro zone is in deep trouble, and the same for the Asian region, where the ruling central bank is constrained, a marked path will inevitably end in recession, deep recession with the additional flash of the debt burden.
The difficulty here lies in the increase in global losses and more compliance with the situation of uncertainty, in addition to the weakness of the correct diagnosis, which helps us to reach the recommendations that enable us to reach the solutions of how to respond to this crisis,

coupled with high interest rates and compatibility of non-traditional mechanisms in the purchase of assets, which are of course insufficient and feasible.
This will give us a high probability of lower interest rates so that they can touch the negative for some medium times, with banks’ lending at a rate of interest rates less than what they decide and the governor’s check on his deposits and buying a large pool of assets including foreign currencies, which is an additional case of uncertainty and uncertainty.
Of course, there is additional access to the poor technical, political and social problems in the numerical economic axis, so the situation imposes us closely interlocking cooperation from governments by following non-traditional leadership methods that trade and parallel the model of innovative governance, which is based primarily on bridging the gap between power, society and the people, and restoring the remaining confidence and working to strengthen it with comprehensive changes plans for the current economic model, and in case governments slowdown in taking any remedial steps, the Great Depression is the next comprehensive and successive With a fierce debt and additional hierarchical burdens according to the frequency of the stages.

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