Now a days whenever you will take a pain of reading news in news papers or in social medias you will often find the headlines with two shocking news, one is incoming recession and another is great lay off by the top companies particularly the Tech giants like Google, Amazon or Face book to our home grown Byjus and now Adanis etc. Now these two issues remarkably are interlinked and cause of action is the same. What is the cause of action? The answer is simple. It is the gradual drying of easy money or printed money from the market. In my previous article I adumbrate that recession started as early as of year 1997 which witnessed the great falls of Asian Tigers like Thailand, Malaysia, Vietnam, Indonasia etc particularly although world wide recession started in 2008 with the fall of major banks in USA. However luckily that recession was short lived and within 2011 world economy was on unprecedented fast track of development particularly in digital technological front. The grand growth received further momentum by the COVID in 2020 which although was prejudicial to world economy but was god send for tech companies and their unprecedented high growth generated huge job opportunity thus mitigating the excarbated unemployment problem due to COVID in large extent and helped the world economy. Now two mysterious issues must be analyzed. First the reason for fast recovery of world economy from the deadly clutch of recession. Actually recession since 1997 is continuing still now like the hidden flow of stream under the sand and it assumed serious proposition in 2008 accelerating the fall of American banks one by one. Now to stem the said financial disaster USA took the path of printing huge dollars for financial stimulus of sagging economy as well as to recapitalize the banks. So the rest of world followed the same way except China who followed the way of recovery through exports instead of following suicidal USA way of recovery. India too being crony of big brother took the two steps as such huge printing of money and cheap bank loan to the corporate sectors by reducing the lending rate drastically. So the said two steps worked wonders by boosting the domestic market for having good amount of money in the hands of people and on the other hand big expansion of corporate sector by making huge investment with cheap bank loan. Government too has benefitted by huge tax collection thus mitigating the chronic huge fiscal deficit most successfully particularly the developing world. So the momentous growth of GDP as high as 9 to 12% like India thus giving it a acclaim of fastest growing economy.
But from mid 2022 world economy started to witness unprecedented inflation. At first the cause was thought to be COVID effect but latter the acknowledged reason was excess pumping of money in the market by the governments. So the FED in USA started to raise interest rate for soaking out the excess money in the market which is still going but threat of inflation appears perpetual. Our Indian central bank naturally followed the same foot step with equal vigor of FED master by regularly raising Repo rate but no seemingly positive result is in horizon. Inflation like invincible ZEUS is shinning glorious in the gloomy sky of world economy. Now these corporate world being enriched by the cheap huge funding from banks and stock markets has started to shrink beyond imagination from its huge size particularly the tech giants who are the maximum beneficiary of this cheap money. As a result huge lay off has started beyond our imagination and also the fall of fortune of many new born billionaire like Elon Musk, Buzz or our home grown Adanis. More and more heads will roll on ground in very near future and with them many banks and other financial institution.
Now question is why am I calling it a gossip of recession? Because recession was real and existed since 1997 but it was forcefully kept under carpet by pursuing the suicidal path of printing huge cheap money by the maximum governments to save their chairs. Now this cheap money is acting as a double edged sword. One hand it has enhanced the purchasing power of people thus contributing serious shortage of good thus resultant growing inflation. On the other hand counter step to contain inflation is acting like death knell of companies by gradual drying up easy funding, so the employment scenario. What is most worrying that there is no immediate way out from it. Because for keeping economy going every government has to keep the supply of good amount of cheap money particularly for developing world where government welfare spending can not be compromised . So the result is burgeoning inflation and gradual fall of financial institutions who have financed the corporate generously. My analysis will be strengthened by three authoritative opinions as such Oxford University which opined the same as of mine for inflation, secondly the opinion of a great British economist who opined that this picture will continue even after 2037 with no solution and lastly opinion of a great Indian statesman Subramanian Swamy who contradicted our FM opinion that recession is not from 2023 but it existed much more earlier. Now all national government are busy to shifting the blame on the recession who can not speak but act deadly. so to hide their grave crime of gambling with law of economy which is hard and unsparing to all who violate it. History is great witness.
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