Posted Dec 26, 2019 by Martin Armstrong
QUESTION: Dear Sir,
Following the decentralization and breaking downtrend in society (brexit, catalunia, EU and US probably in the future, etc), is there a chance to see that in consumers behaviour?
Example: from individual small shops to malls and then online. Any possibility to see that inverse in the future?
ANSWER: This is a very good question. As societies breakup and start to fragment as we are seeing globally, normally the inter-connectivity declines. Historically, commerce returns to local for trade even within the same country starts to decline. There is typically the shift from luxury goods back to basics as well. Hoarding of money increases and this adds to the decline in the velocity of money.
It would seem that this particular cycle could be more pronounced because of our reliance on the internet. There are two trends emerging. First, we see Europe going after the internet companies aggressively for taxes. We also see states in the USA taxing movie streaming. Secondly, if the internet is also obstructed by governments seeking to cut off communications in an attempt to divide and conquer civil unrest, then obviously the economy will fragment and collapse back to a localized structure that is typically inadequate to accommodate society.