The Price Is Right In A Panic Buy

Hey Jessinvestors

As I mentioned in my post yesterday, the chase for cash is on and the quest for money is eventually used to chase goods and services. When panic sets in be it a war, be it a pandemic, be it civil unrest, be it a resource shortage people flock to stockpile goods. They think they will need to survive, and in doing so, they feel they are guaranteeing themselves a lower price than purchasing in the future. However, businesses aren't charities, and when consumer behaviour changes so do their strategies.

As the pressure mounts on fast-moving consumer goods, we see capital-driven into these spaces to keep supply chains moving and in doing so put further markups on products which are transferred to the consumer. This sees price inflation skyrocket for certain goods and services, while products and services are not deemed a necessary will have their market share eroded.

There was a time when luxury goods and services could absorb the knock-in demand or close certain stores to maintain their income relative to their expenditure. Still, in uncertain times like these, that kind of arrogance doesn't work, and many of them will either have to discount or go bust.

Image source: - quickmeme.com

Asset price plunge

When the focus is placed on a lower spectrum of human needs, the sectors on top of the pyramid will take a knock as capital cannot be bothered to flow up the needs hierarchy. This means asset prices will have to fall along with financed products. Car prices will have to fall; home prices will have to fall, education prices will have to fall, insurance premiums will have to fall as people don't deem these purchases necessary.

This will also have a knock-on effect as jobs in those sectors will be cut, and we will be sitting with workers that have skills that cannot be put to good use in places where it is now needed, such as necessaries. A car salesman isn't going to jump into agriculture, while it's not impossible; people have pigeon-holed themselves at their peril.

Financial to productive

I realise what I am saying sounds gloomy but it's far from the case, in fact, its a good thing. For many years the financial economy has grown without any restrictions, and we had no way of stopping it from stripping real production out of the economy in favour of its fake money-making.

The capital was hoarded and not put to work through various schemes, and now its time to reverse the trend. As wealth is stripped from assets and speculation and set to work, we can see better price discover, more money velocity and more decentralisation.

While it won't be pretty in terms of quality of life for many, it's like taking medicine; we should have been taking a long time ago. It will get to work, and you will only feel the effects at a later date, but you have to take it and allow yourself to recover even if it's bitter as hell.

Have your say

What do you good people of steem think? Is this the purge we need to build a healthier economy in the future?

So have at it my Jessies! If you don't have something to comment, comment "I am a Jessie."

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