What to expect in this article?
- What will the world look like after the COVID19?
- What to expect in the new post COVID19 world?
- Our speculations
World is in a war at the moment with a sneaky enemy called COVID19. The US is expected to reach its peak in the coming two weeks. This means two things – one: devastation will be more tragic than what we have seen so far, and two: we will eventually start recovering as a nation and the world from this pandemic.
Will the world ever go back to the pre-covid ‘normal’?
Many things might be the way they were but many things will not be the same. Here are 5 things that, in our opinion, are going to be forever different in a post-COVID19 world.
Central Bank Digital Currency (CBDC)
The US stimulus bill flirted with the idea of the digital dollar. A digital dollar just makes sense. Not the kind that is ‘digital’ in its current form that is difficult to trace (once cashed, you lose track) – however – a digital dollar with no paper alternative is a totally different ball game. You can track the journey of every single penny.
A digital currency will help Governments:
- Curb money laundering
- Implement better tax protocols
- Trace every dollar’s journey
- Crackdown on illegal activities since everything is digital
- Help reduce community transmission of diseases
Deutsche bank seems to agree with us. They recently tweeted this:
The COVID-19 pandemic is accelerating the rise of central bank #digitalcurrencies as many governments see the handling of cash as a potential risk factor. This will likely add to calls to move towards #digitalcash according to our #dbresearch colleague @MarionLaboure
Whether this CBDC will be based on blockchain or not is something we have to wait and see. If we have to call it – we would think it will be on a hybrid blockchain that is ‘highly centralized’.
Speculation: we will see governments across the globe issue national digital currencies. Most governments will not use a public blockchain ledger as that would be the end of ‘nefarious’ activities committed by bureaucrats. We expect use of hybrid blockchain technology that is heavily guarded and highly centralized.
You might be thinking that Bitcoin, Gold, Real Estate are three things and why would we club them as ‘one’ thing that will change in a post COVID19 world? All the 3 have one thing in common. They are all investments and all of them are deflationary. We can debate whether or not Gold is truly deflationary since we make it every year, however, for the purposes of broad categorization – there is only finite supply of Gold in the earth’s core, so that qualifies it as deflationary.
In our opinion, Bitcoin and Gold will rally higher. Real Estate might face the brunt of job losses and might lose some steam in the near short-term (6 months to 18 months) but then when the hyper-inflation (see below) kicks in – Real Estate may pop into new highs in fiat terms.
In fiat terms, Bitcoin along with gold might become the ‘reserve’ backing the global fiat currencies.
Employers will learn a valuable lesson: they don’t need as much real estate that they once thought and they will adopt many novel ‘remote’ working models to cut down on real estate spending. This will impact commercial real estate space more than the residential real estate space.
Speculation: Bitcoin and Gold will see a surge in value in the coming years (1-3 years); Real Estate will face ups and downs to eventually get caught up with the values in inflation terms. Employers will cut down on ‘real estate’ spending and will adopt more ‘remote’ working models.
Conspiracy or not, we expect that we will move into a global mandate on vaccination. As the COVID mutates and evolves into a more complex organism, we may all be required to be vaccinated annually for the COVID and its subsequent strains. It will be mandated and probably will be tied to government benefits and may be made as a condition to ‘employment’. Insurance companies will play a vital role in implementing this mandate with threats to ‘deny’ any claims if the individual is not ‘vaccinated’. Vaccination details will be required to be made available to government agencies, insurance companies and employers.
Speculation: vaccination will be mandated globally in the next year or two
Hyper-inflation: return to reserve system
Governments around the globe are printing their way out of this global crisis. In our view, this printing frenzy will go on at least a few more times. That means, by the time we are done with this crisis, we would have printed as much (if not more) fiat than our current debt. This will create hyper-inflation around the world and most fiat currencies might lose their purchase power to a great extent. The US Dollar may be one of the last currencies that will lose its power. To keep the sense in continuing fiat currency – IMF (and other agencies) will probably re-introduce the ‘reserve currency’. That is, we will transition from fiat currency that is backed by nothing to reserve fiat currency that will be backed by gold and other assets. We expect Bitcoin to be part of this ‘reserve’ in at least some countries.
Speculation: we will move back to some kind of reserve mandate for issuing fiat
New Highs in the stock market
A loaf of bread cost 9 cents around 90 years ago. Now it costs about $3. That is a 33 times increase in the price of the bread. Whether you paid 9 cents or $3 – a bread is bread. When the hyper-inflation pushes the ‘price tags’ of everything – the stock market may go from its current lows of 21000 to 50000 in the next 3 to 5 years.
Companies will also pay more dividends in fiat terms, however, in true purchase power terms, it may be lower or similar to current levels. For instance, let’s say you receive $10 on a $1000 stock today. With $10, you can theoretically buy 4 loaves of bread. Let’s say this stock grows to $2400 in 3-4 years but due to inflation the price of bread is now $6 per loaf. Assuming the same level of dividends pay out, now you receive $24 in dividends and you can still only buy 4 loaves of bread.
This is the best case scenario.
If something like Zimbabwe were to transpire then your loaf of bread might actually cost $50 or $500 or worse.
We believe the US will not fall into the same dark hole as Zimbabwe and the scenario from the above example might hold up.
Speculation: Dow Jones will hit new highs of up to 50,000 in 3-5 years – however – in an inflated fiat terms – this will be comparable to the change in fiat’s purchase power.
Robotics & AI
Companies that have faced difficulty in procuring the green signal to engage in drone deliveries will start getting approvals. Amazon and companies like it will be one of the biggest beneficiaries of this change.
Drones will initially deliver food and essentials, stuff from online stores, police malls and drive cars for us.
Eventually, drone based delivery will be adopted by the private delivery services like FedEx, UPS, etc., and government postal agencies will be forced to embrace the technology to stay relevant and cost-efficient. This will have a great impact on the jobs dependent on the supply chain system.
AI will be perfected to deliver basic medical care at home via apps and other care like giving an injection, taking pulse, etc., We should see a spike in ‘at-home’ medical consulting through apps in the near future.
Speculation: Drone delivery will impact supply chain and postal jobs. AI based services will receive warm reception in the Post COVID pandemic world
Only time will be the judge of whether our speculative opinions will actually come to pass or not. If the world has learned anything from this pandemic it is that ‘nothing is certain’.
Thank you for reading and sharing this article. Stay safe and healthy!
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