Mother of all Criss

Financial crises occur following either bank runs or a sudden severe drop of asset prices in capital markets, both of which will consequently cause the collapse of big financial and non-financial firms. We first observe these problems in the banking sector or in capital markets. This leads to a contraction in credit supply, which has an impact on other sectors, causing the recession in the real economy.

The first is the sunspot theory, in which bank runs are caused by random deposit withdrawals that are unrelated to changes in the real economy. Which Happened in Lebanon.

The second is the business cycle theory: bank crises are not random events, but a response by depositors to the arrival of sufficiently negative information on the unfolding economic circumstances. Which is yet to happen from the cryptocurrency.

Financial liberalization and significant credit expansion occurred before many of the financial crises. There was too much liquidity in the system. Liquidity refers to the ability to convert assets into cash at a price and time of your choosing. Too much liquidity in the financial system provides incentives for investors to take unnecessary risks, and the excess liquidity caused asset price bubbles to build up.

We will be living in age soon enough where governments will be forced to increase the taxation in a different approach other than what we currently know.

Problem is that Law legislations will not be able to cope with and new laws will be amended. Someone will have to pay the price, and these will be the people who are living their lives on Cards and money they don’t have and especially the ones who are so-called “small investors” cryptocurrency and shares they have no idea where the companies are.

Yet to come in the next few months from the Mother of all crises “cryptocurrency crises” which will create a huge struggle in the Banking industry and the financial markets that are connected in such field.