FX.co ★ COVID-19: an engine of public distrust

Over the past decade, people in a number of developed countries have often expressed distrust of their government. Against this background, global contradictions are growing. We are witnessing a large-scale collapse of the economy and an unprecedented agitation in the financial world.

Similar situations have already occurred in world history like the global financial crisis of 2008. This was a period of significant decline in key economic indicators in developed countries which led to a global economic recession. At that time, factors such as cyclical economic development, overheating of the credit and stock markets, as well as high commodity prices contributed to this. However, this did not cause resentment of the population and did not lead to mass rallies calling for a fight against government decisions.

Today, the global recession is driven by the COVID-19 pandemic. The impact of this virus was devastating. It led to a global collapse of the economy and undermined public confidence in specialists. In many countries, there is growing skepticism about international financial institutions, central banks, technology giants, and, above all, the World Health Organization. The intervention of the administration of President Trump's involvement in the work of health authorities increases doubts in society. Citizens of developed countries are skeptical about the need to introduce quarantine measures and mandatory universal vaccination. This provoked another surge of conspiracy theories that previously appeared in narrow circles. The impact of conspiracy on people has increased significantly. Michael Butter, a Professor of the history of literature and art at the University of Tubingen, Germany, says that the popularity of such opinions among the population can be very dangerous. If the public does not trust the recommendations of doctors, scientists, and financial experts, then a prolonged crisis is likely to develop.

In the US, 30% of the population consider the COVID-19 virus to be man-made, created by medical scientists in the laboratory while 35% say they refuse to vaccinate against COVID-19. Experts are impressed by the huge number of people who doubt the real danger of the virus, as well as those who do not want to comply with generally accepted norms.

In the current environment, it is possible to restore people's trust if governments respond to the growing public skepticism. The authorities need to choose the means by which to preserve the economy and maintain public confidence. Recall the March statement by the US Federal Reserve to reduce the key rate to 0.25%. In the spring, the Reserve launched a $700 billion issue and announced an immediate asset buyback. Currently, assets are being repurchased at a rate of $2 billion per hour. This raises a number of rhetorical questions: what will this policy lead to? How long will Wall Street be able to fight a prolonged fall in stock markets? The unprecedented mobilization of financial resources has helped protect a number of economies. However, the gap between Wall Street and the rest of the population exacerbates existing political problems.

If the vast majority of citizens stop trusting central banks, this will lead to the collapse of the financial system. This statement also applies to liberal democracy which can cease to exist. Thus, only trust in the system can guarantee its success and trust in medical experts can increase the effectiveness of COVID– 19 vaccination.

The main task for the authorities is to find solutions to economic problems. The primary goal is to prevent an economic crisis and a crisis of public opinion. Other important measures to restore the global economy are increasing the authority of government, health care sector, and science.