Hello, my name is Henrik
Recently, a report was released, indicating
that Swedens GDP per capita is the lowest in Europe
TOday I want to explain what GDP is
why growth is good, and what YOU can do to survive a recession.
Stay tuned!
IMF - the international monetary fund
is a well renowned FN-agency with close ties with the world bank
the IMF releases GDP-prognosis reports two times annually
The most recent report indicated that Sweden currently has the lowest GDP per capita in the EU
this was vehemently refuted, in line with the national parodic obsession with the "image of Sweden"
and led to firm criticism from the Konkektur-instutute
who wanted to elevate Sweden from being at the tail end of the list, to a marginally
less disastrous placement as number 23 in Europe.
This can be likened to fighting over the last dry deck chairs
on the Titanic, instead of moving towards the life boats
...but we all choose our battles.
GDP stands for Gross National Product.
It measures the totality of economic activity in a country during a year.
The GDP is the sum total of a country's consumption
investments, and export surplus.
GDP per capita in Sweden can be said to be like a collaborative school project
...meaning that a few people do all the work, but we all get to share the credit.
We just divide the created values equally across everyone living in the country.
Consequentially, the fewer productive people
the lower the GDP.
To put things into perspective, we should note that the IMF gives Sweden
a growth number of 0,7% - and the konjektur-institute gives us a value of 1,3%
A normal value for Swedish GDP during a raging financial upswing as we currently are experiencing
is usually above 4%
"Oh well" you might say. "So maybe we're not getting richer quite as fast as before"
"but that's not so bad, greedy Henrik?"
But it is that bad.
First, we need to examine what growth really is, and why it is a good thing.
Growth can be expressed as the financial capacity to increase
the number of goods and services produced.
"Stop, stop! those of you who are Greens will now tell me
"The earth is being consumed and burinng up, at the same time, b'cause..."
"growth.. not.. more growth plz."
But growth is today not primarily driven by resource consumption.
Rather, it is driven by rationalization and digitalization.
Take Microsoft Windows as an example.
Windows was launched in 1985, and gained widespread adoption during the early 1990's
Thay did this by building better software.
In many cases existing computers could move from
a cumbersome keyboard-based interface
to a quicker and more user friendly graphic user interface
that most of us still use today.
By making 100,000's of thousands of office tasks more efficient
growth accelerated
the amount of products and services that could be provided increased
and the whole planet became wealthier.
The Apple iPhone is anotehr example of growth.
It makes more people able to do more with less.
An iPhone the size of a slice of bread now replaces machines
that 25 years ago would have filled an entire office
and it also makes it possible for more people
to communicate and be more productive than ever before.
This is innovation driven growth.
This is the positive force that propels our civilization towards greater wealth.
Innovations driving growth are characterized by
the creation of VALUE.
If enough people produce value in an economy, it grows.
The more resources being circulated, the better the cirrcumstances are for
continued innovation, value-production and further growth
as there are increasing numbers of people possessing resources to invest in, and to pay for
ever increasing levels of sophisticated products and services.
The historic low GDP of Sweden is an embarassing
fiscal elephant in the economic room of Sweden, where to floor is already creaking in discomfort.
The ongoing economic boom is unfortunately on steroids
to the same degree as a Russian shot-put champion in the 1980's
Credit - the access to borrowed funds
can be increased by the national governing banks lowering their interest rates.
This makes it cheaper to borrow money, which has made a lot of people in Sweden
buy homes they really cannot afford
but it drives up the property prices, and makes the country seem wealthier.
This is a dangerous trick for increasing consumption.
...kind of like giving Red Bull to children, or a couple of sturdy hits of meth for a stockbroker.
Why do they wish to create this kind of frenetic but artificial activity?
Because: there is not enough real value being created in the economy.
To sustain organic growth.
"Oh well so we're coming stimulants to putter on, you say?"
"You can do that every once in a while, as long as you're not taking to much, right?"
It must be said, that this is a generally poor long-term strategy
...incorporating stimulants as part of one's daily routine.
But, to answer your question: how much speed has the Swedish economy taken?
During the period 1997 - 2088, the interest rate averaged 4,2%
after the credit crunch of 2008
interest rates were drastically lowered to inject fresh new credit into the economy
In February of 2015, the repo-interest rate was lowered - that is to say, the control interest rate
the interest rate that controls all interest rates in Sweden
to negative numbers
It has since the beginning of 2016 hovered around -0,5%
This has never happened in Swedish economic history.
And it must be likened to: "if you take this speed to fuel the economy..."
"we'll give you some more speed, instead of you having to pay for the speed."
Special deal for you, bro.
And in this speed-fueled economy, Sweden has managed to reach a productivity level of
being lowest in the EU. Or number 23, according to the Konjektur-institute.
To summarize: you need to realize that the population of Sweden
is under-productive, carries too much debt and incapable
of generating enough value to deliver growth.
Even in spite of having an IV-cocktail
of ritalin and columbian special hot sauce pumped into its veins during an historic bull market period.
On top of this, we have the highest tax levels in the world
a failing health-care-system
a police authority which is under-manned and overwhelmed
a school system, short of 77,000 teachers - and basically no military spending budget.
Though we can console ourselves with having financed
the finest and BIGGEST moral code of values of all time.
It is highly probable that during the coming few years, we will experience a severe recession
This is what economist call a "correction"
meaning that the discrepancy between capital and value is rebalanced
and that the fictious values
are vaporised.
As a result, the economy will shrink. This makes investors risk-averse.
The more risk averse they get, the liess likely it is to find investment funding
resulting in fewer new businesses starting, and fewer available jobs.
Interest rates are likely to soar
and many people will struggle with their mortgage repayments.
When properties are sold as the result of insolvency and many people will struggle with their mortgage repayments.
When properties are sold as the result of insolvency
property prices will being to fall.
Rising interest rates will also affect export levels in a negative way
and as credit gets more expensive, the flow of capital will diminish.
This will result in fewer employment opportunities, and a generally poorer population.
This means fewer people will have their lunch at restaurants
resulting a the closing down of many high-street restaurants.
...and people will postpone their desicion to purchase a new laptop
If the crisis is too sever, the government is likely to try to intervene
with so called "quantitative easing"
This is just a fancy way of saying "printing money".
This new money is pumped into the economy in the hope of getting the wheels turning again
by making credit cheaper again.
But creating money is not creating value.
It creates inflation, lowing the general value of the currency.
This is nothing less than the candid taking of the savings of the people.
in order to fuel the credit markets.
It does not matter if you have a million crowns in a safe
if the government just pumped a few new billions into the economy
Your million is nominally still there, but its value has collapsed.
This is a recession.
Recessions recur cyclically as a result of credit being too cheap
and credit has NEVER been as cheap for a duration this long before.
The correction risks becoming a blood-bath.
On top of this, we need to remember that on the civil-servant side
most likely never has had a team as ill-prepared
a financial three-front assualt:
infra-structural collapse, financial collapse and a collapse of the contract of society.
"So you're upset because you had to sell your home for less than the remaining mortgage"
"...you have lost your job, and are unhappy that your aging mother can't have the operation she needs?"
"At least we have gender neutralized the public library, so maybe you can just hang out there for now?"
Does this sound gloomy? It IS gloomy, but we're not without hope.
Because now I will give you a recession survival guide.
1. Get out of debt
Pay off or get out of heavy debt BEFORE the interest rates start soaring.
2. Build up savings
Try to create a financial buffer which can cushing the blow of a loss of income
3. Diversify your savings. Do not save everything in currencies
susceptible to quantitative easing
Place money in several different countries
in a healthy mix of interest generating papers and long-term stocks
in commodity- and infrastructure-relevant industries as water, forests and energy.
4. If you can afford it, buy physical gold.
And I mean physical
this is a Krugerrand.
Gold will rise and fall on the marketplace
but the government cannot make more of it just because they want to.
Therefore, gold is a safer form of savings than currency in a recession.
5. Gain competence relevant in a poorer society.
Luxury consumption and niche services tend to be the first to go
so if you make your living as a hair-extension instragram influencer
this is good time to broaden your horizons.
6. Make a household budget now.
See how it is affected by different scenarios
for instance in the interest rates rise by 3%
or of you or your partner lose your job.
Ponder waht you can do to trim your costs.
and try to balance your budget right now.
To be prepared is an excellent idea right now.
Do you agree its better to have a realistic but negative view of the current economy
rather than a pleasant illusion?
Share this video! Subscribe to my YouTube channel!
Have you experienced a recession before?
Please share your experience in the comments section down below!
If you appreciate my videos, please support me using Patreon. There is a link for this purpose in the video description.
My name is Henrik Jönsson, and I am bracing myself.
Thank you very much for watching this video!
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