Year of the Covid

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Covid-19 has taken the year by storm, and I’m betting nothing that will happen this year will be able to take that away. (Outside of maybe Joe Biden appointing Barack Obama as his VP, and wresting back the Presidency from Trump).

Covid has taken over global headlines since January of this year, and looks to continue that trend for at least the next two quarters. A vaccine is nowhere on the horizon, millions of jobs displaced, companies in distress or in the process of winding down, and healthcare everywhere is being stretched to their limits.

I myself have seen potential offers evaporating in the name of hiring freezes and revenues bottoming. Suddenly, everything has stopped. Human traffic has come to a standstill. Social interactions are happening via our screens. And it’s just the beginning.

Downstream impacts of Covid

What are some of the downstream impacts of covid?

Unlimited Quantitative Easing (QE)

I’m no economist, but I know that the quantitative easing this time around, dwarfs that of the 2008 housing crisis. In fact, on 23 March, the US Federal Reserve essentially said QE was unlimited. Meaning they will print however much money is required to inject liquidity into the markets. You know how Oprah once gave a car to everyone in her audience? Yeah, it’s like that, except this time, it’s printing unlimited amounts of USD.

During the 2008 crisis, the Fed stepped in with QE amounting to 2 Trillion Dollars over the course of 6 years from 2008 -2014. This was caused primarily by banks on mortgages.

This time round, it’s as much a global health pandemic as it is a total economic meltdown, and the Fed has to support a much bigger base, since almost everyone across every industry will be/ has been impacted. The Fed has pledged 6 Trillion for a start, but also said they will spend whatever is necessary to tide over the times.

Hyperinflation

This QE isn’t unique to the US. Everywhere, governments are opening up their reserves, or their printing machines to drum up new money to stimulate the economy.

Singapore has pledged an unprecedented $60B to fight covid, potentially dipping into our reserves in order to do so.

When all is said and done, the amount of money, real and magical, flooding the global markets will be unprecedented. What does it mean, when a country can print money at will? Why do we have to pay any taxes with our money, when the government can magically whip them out whenever they want to?

Will US retain the global reserve currency after this fiasco?

Flight to safety, then what?

The equities markets have been ravaged, oil has fallen off a cliff. So far, the US dollar has risen in demand and price because everyone’s flight response has been triggered, and everyone is selling whatever they have for dollars.

But with QE in play, there’s gonna be more of them dollars than virtually anything. What then? Gold has held steady, but what about digital gold AKA Bitcoin?

This global pandemic is on a head-on collusion with one of bitcoin’s most anticipated event, the halvening. This is where the supply of bitcoin halves with each block mined. This having occurs typically once every four years, and is considered to be a bullish event, assuming demand for bitcoin either remains the same, or increases.

The previous halving in 2016 catapulted bitcoin from sub $1,000 to $20,000 over the space of a year.

This time around, under the lens of deep economic uncertainty, bitcoin faces its first real test as an uncorrelated asset and a safe haven asset.

The bitcoin halving is slated to happen 11 May, and will bring the bitcoin mining block reward down from 12.5 to 6.25 BTC per block. I’m curiously watching to see how it all plays out.

How the Tans are managing Covid

As for us, we’re holed up like the rest of the world, waiting for all this to blow over. In between blogging, working on a new ecommerce project, and applying for jobs, I’ve also become a part time home school teacher to my boys, as the wife works hard to bring home the bacon.

During the day, I try to cover their learning objectives as best I can, while learning not to lose my temper, and trying different strategies with each kid. They are different as night and day.

They also get plenty of play time and physical activity, such as going down to the park to catch insects! (We let them go the next day, of course)

And when melancholy strikes, we step out into our balcony and solemnly wonder when we can go out again.

So, all in all, handling it quite well. I just hope a job is incoming soon! When this is all over, I hope we’ll all look back upon this crazy time and say “hey, at least we got to spend a lot of time together, and that helped bring us closer together as a unit!”

It’s always the darkest before dawn. Let’s hope we get to a vaccine sooner than later.

How are you guys spending this lockdown together?