- The CEO of Social Capital, Chamath Palihapitiya warns about the recession.
- He said the upcoming recession will take place in two different phases.
In a recent interview with Palihapitiya, he says the global recession is yet to come. The world will face a global recession in the upcoming years.
Chamath Palihapitiya is a Canadian venture capitalist. His worth is around $1.2 billion. That keeps him on the Forbes list of Billionaires 2021.
Two Phase Of Recession
He added, it will come in two phases. One is supply-side recession and the other will be demand-side recession. Whereas, at present the globe is under its first phase, that is supply-side recession.
The recent inflation in the market is due to the supply-side recession. The extra money currently we are putting in and out destroys the demand for it. And then, it triggers the demand-side recession. Relatively, we will lose the asset value.
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According to Palihapitiya, he thinks people still have lots of savings. It left him to make his belief to be in the first phase of recession. He further said he hates to be the bearer of bad news. But additionally, a lot of money is left in the market, which will cause a supply-side recession.
On the other hand, he said some available indexes suggest the upcoming economic changes. Like, as the deficit in the savings and switch of the global economy towards the second phase of the recession.
His assumptions are, When people used to be more motivated to re-enter the workforce, it’s a signal. When credit failures begin to end, that’s another signal. As a result, people wipe out their savings. Then wipe their credit cards and suddenly become unsettled.
After all these things happen, we are probably at a point. That will be the first phase of the supply side issues. And then we reach the stage of demand collapse. It may pressurise the equity.
According to Palihapitiya, we all will soon become witnesses of the global recession. That may lead to an increased recession. It results in the equity part being under pressure. And hence we will face strong inflation.
According to his analysis, we are currently in a supply-side recession that will end soon. And then we will undergo a demand-side recession. These two phases will lead to a major global recession at the present time.
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