FX.co ★ Burst of economic bubbles to cause financial havoc

According to many experts, a lot of economic bubbles have appeared throughout the year 2020. Notably, the world economy has not seen such a great number of bubbles for a long period of time. For this reason, experts warn that if they start to burst, the current crisis will seem like a period of stable growth.

The actions of the world's largest central banks, namely the Fed and the ECB, have become an excellent environment for creating those bubbles. Dovish stance on monetary policy and money printing have made borrowing extremely cheap, allowing speculators to invest more actively in stocks, currencies (including ones of emerging markets), precious metals, real estate, and cryptocurrencies.

Such buoyant demand for various assets has caused a stir in many markets, including a record increase in the value of rather dubious assets. However, it will not last long. Sooner or later, the bubbles will burst, entailing serious losses for both private and institutional investors. Additionally, the financial authorities may curtail their stimulus programs at any time. If so, the bubbles will begin to burst immediately.