Anthony Pompliano makes a comparison between unemployment today and what it was like during the Great Depression in the U.S. He believes that it is worse now and he tries to see how this may affect crypto.
Anthony Pompliano, fondly called Pomp, is one of those that founded Morgan Creek Digital. He made a livestream video on YouTube some hours ago to discuss the economy today and what it will likely be tomorrow.
In his comparison, he referred to the events of 1929:
“In 1929, which was the start of the Great Depression, there was 3.1% unemployment — record low — and that unemployment jumped from 3.1% to over 8.5%, to then over 15% in the next two years.”
Comparing that with what’s obtainable today, Pomp said:
“What you end up seeing is we have accelerated faster on the unemployment track than even in the Great Depression.”
If data from Tradingeconomics is something to hold unto, then there is need to be concerned about the rise in unemployment this year. From 3.6% in January, it jumped to 14.7% in April.
COVID-19 brought a national disaster
Pomp recalled that the U.S. economy was flourishing before the effects of COVID-19 became strong in March 2020. It caused the government to order the closure of government establishments and private businesses
A lot of businesses were shut down for a while and civil servants didn’t go to work. Because the economy started dwindling, the U.S. government thought it wise to insert money into the financial system.
Pomp is of the opinion that the prices of crypto assets rose because of the money that was driven into the economy. What is still surprising is how the stock market normalized quickly after its bad performance which was believed to be the effect of COVID-19. But everyone knows that all is still not well seeing that unemployment rate is now at 11.1%
Crypto is also affected
Even though people say that crypto is not affected by the activities in the mainstream market, Pomp thinks this is not entirely true because, for instance, a person may want to invest in crypto with a certain amount but will be forced to reduce it if he or she doesn’t have a regular flow of income.
Nevertheless, it is clear that crypto has done better than the traditional financial markets. Sometimes, crypto is influenced by the activities in the traditional market and at some other times, crypto does its own thing independently. Although unemployment is higher now than before, everything still seems normal because more dividends are now being obtained from the crypto and stock markets.