The coronavirus pandemic is the only thing on most people’s minds right now around the world.
The pending economic fallout is only surpassed by the anxiety induced by surging cases in both the United States and Europe. People remain firmly in quarantine around the world, and consumer demand has fallen off a cliff as people are holed up with only basic necessities.
Paired with the awful Purchasing Managers’ Index numbers published by the National Bureau of Statistics and the China Federation of Logistics and Purchasing, as well as early U.S. indicators, we’re about to experience a double-pronged, concurrent supply and demand shock. The Federal Reserve has thrown the kitchen sink at the problem, and when paired with the pending fiscal relief, is set to reach $6 trillion in total relief injections into the U.S. economy.
But the fiscal stimulus package and $4.25 trillion Fed lending facility, which is only capitalized by $425 billion, is largely at the discretion of the Fed when it comes to allocating relief funds and zero-interest loans. We already know how that story goes. All you need is a brief primer on a similar Troubled Asset Relief Program package in 2009.
Once again, it appears that small businesses — which cannot participate in the $4.2 trillion party — are neglected to the side of the road. Small businesses are only allocated $300 billion in their own program, a clear signal of what’s about to happen to the lifeblood of American business.
Only $300 billion is allocated to support a sector of the private industry accounting for 44% of U.S. economic activity. Is more debt really the solution for restaurants, mom and pop retailers, and other small businesses as they watch their cash flows annihilated under quarantine and social distancing? Probably not.
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Tokenized assets have undergone several hype cycles since the meteoric rise of the initial coin offering in 2017. First utility tokens, then security…