Post
Topic
Board Economics
Re: Global Financial Crisis scenarios
by
CoinsCoinsEverywhere
on 03/07/2014, 16:58:33 UTC
In a case of global financial crise, as the 2008 one, the price of each and every financial asset and commodities will go down (oil will go down, stocks, precious metal, and also bitcoin). In such a scenario the only safe haven will be cash and money market securities. (all the rest will crash)

It's generally true that assets and commodities go down during economic crises, but that's not true all the time.  In 2008, oil did crash, but only after it spiked to all-time highs.  US Treasuries, because of their safe haven status, went up in value quite a lot.  It just depends on where people decide to put their money.  If everyone decided to pile into bitcoin during the next crisis, it could shoot up.  But if people need fiat to pay their bills, bitcoin might crash if everyone cashes out.

And btw, there's still some risk in money market securities.  We haven't seen a crisis bad enough to really jeopardize the money markets, but it's possible.

However government will never let it happen, and they are ready to print even more in order to avoid this situation.

This will only work as long as investors have faith in government, the world reserve banks, and that there's enough room to print more money.  The US has been printing money at an insane rate the past several years, and it's worked so far, but it can't go on forever.  No one knows exactly where, but there is a tipping point at which investors will seriously start to lose faith in the ability of the US to repay its debts.  If that happens in a disorderly, crisis-like fashion, the whole world is screwed.  No amount of money printing will be able to save the situation.