Blog

Coronavirus infects the economic system!

By Ardian Lekaj

For the ancient Romans, March was the first month of the calendar year when they celebrated the New Year. Apparently spring used to wake them up from hibernation and gave them new energy. However, today we cannot say the same thing for this March 2020, in this year when the COVID-19 pandemic has spread over 140 countries.
Even though the situation is quite tense, there is no time for pessimism. Optimism is the best mechanism to survive. It is easier for an optimist to find a solution to a situation like this today, than one that only looks at problems.

In the late 1900, the world was tense about how digital change would turn out in the 2000s. This situation passed easier than anyone could think of. 10 years ago we coped with the financial crisis, so today it is not necessary to be an economist to understand that what we are living today is just the next crisis.
Obviously, after the financial crisis of 2008-2010, the World Banks and the Governments have fewer reserves to cope with the new crisis, thus old economic theories are used in the market. Such theory is the “helicopter money” theory. The economist Milton Friedman presented it for the first time in 1969.

He tried to explain the “falling from the sky” money effect in economy. This theory revived in the early 2000s by Ben Bernake, the Former Governor of the Federal Reserves, who claimed that such way of putting money in the market would prevent deflation. This initiative was recently implemented in countries like Hong Kong, Macau or Singapore. For every citizen over 18 years old and resident in Hong Kong the government gave 1200$. This is a monetary scheme of the government to redistribute the revenues without any monetary implication, which results probably will never come to light.

* The author is the chairman of the Albanian Diaspora Business Chamber

Support