No period of growth ever lasts forever and, invariably, after a boom must come a bust. Meanwhile, the task of forecasting when one will turn into the other is at best a challenge and, at worst, an impossibility. How can one prepare for the next financial crisis?
We all remember the 2008 crisis, the bursting of the dot-com bubble at the dawn of the millennium and the Black Monday of the year 1929. The history of financial crises is much more eventful than to include only the aforementioned three examples, however, and if history is any guide, we can say with certainty that there will be more crises within our lifetimes.
We would all wish that economic booms could last forever, production remained high as would earnings, purchasing power, demand and interest rates to boot. Unfortunately for us, the economy is not merely a binary system and everything tends to be much more complex. To make matters worse, a delicate balance must be maintained at all times.
What goes up, however, must come down and after a time the market becomes saturated, demand for goods falls, businesses are willing to invest less and less and production slumps. Low unemployment determines high earnings and at a time of low demand, it translates into the bankruptcy of businesses and, subsequently, a spike in unemployment.
As demand falls and investment stanganes, businesses strive to become more competitive leading to falling prices and interest rates. The falling prices incentivize investment which leads to economic growth and the circle is thus closed.
This cyclicality is a natural occurrence and has been a fact of life for centuries. Given that there will be a slowdown in the economy, one is wise to prepare for it by investing in assets and products immune to the damage economic crises bring with them. Some assets can even exhibit appreciatory tendencies during a slump.
One such asset has always been gold. With its limited supply and difficulty of production gold has enjoyed the reputation of the perfect store of value for centuries. Central Banks predominantly work to magnify their gold reserves which serve as a durable asset immune to inflation.
Investing in gold is not the easiest in the world, however. CFD contracts usually are not backed by real assets and to buy and store your own physical gold would be somewhat cumbersome. The answer — cryptocurrency.
Bitcoin came into being as a direct response to the 2008 financial crisis. We know this because Bitcoin’s genesis block is time-stamped to match the headline of The Times reading “Chancellor on brink of second bailout for banks” from 2009. Additionally, the symbolic birthday of Bitcoin creator Satoshi Nakamoto falls on the same day as FDR’s Executive Order 6102 which forbade the hoarding of gold in the United States.
Bitcoin is often referred to as digital gold with a corresponding mining activity and scarcity. The crises in Cyprus, Greece and Venezuela have shown that when there is hardship in the financial sector, people are willing to use cryptocurrency as a bulwark against it.
To expand on the aforementioned, when the economy tanks and unemployment rises, the less affluent members of society are more apt to want to take out loans. Banks, meanwhile, are more than willing to grant loans when interest rates are high but in a crisis situation, when they fall, banks are much more restrained.
For that reason Marshal Lion has decided to bring the strongest points of digital currency to the loans market. The tokenization of the non-bank loans market by Marshal Lion and its proprietary MLGC tokens allow investors from all over the world to locate their funds in a market which offers outstanding opportunities not only during the boom but also when the economy is struggling.