How does the economy work in a health crisis?

Let’s imagine a night in Las Vegas, it sounds fun but very risky despite being a great expert, why? Simple, you don’t know if you are going to win or lose, it is a risk that you certainly have to take; In the economy it is the same, everything is about throwing a dice in the air and hoping that luck is on your side, the experts call it probability, just that is how the stock market works, investments, companies, in a few words we are living a game of dominoes: if we stack all the tiles and one falls, they will all fall, unless we stop that fall with our hand.

This hand in economics is called the invisible hand and it is about market regulation, but what does all this have to do with the crisis we are experiencing?

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There comes a point in Las Vegas that you have to change cards to win, these strategies are what Central Banks around the world must use, from inflation adjustments, dollar auctions, price changes, placing or withdrawing money circulation, rethinking interest rates, among others, with the sole purpose of avoiding an economic collapse.

This crisis that we are facing is due to the fact that we confine ourselves at home, companies stopped their production, but continued to pay wages until their finances were compromised and even closed. On the other hand, we change our usual consumptions and stop buying everyday products, by decreasing these sales, therefore, companies have less income, resorting to the dismissal of people and these in turn are left without a salary.

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On the other hand, let us remember that it is a global disease that has limited international trade, and in turn the shortage of products has caused prices to increase exponentially, causing quite critical economic fluctuations.

We are going through a situation where we have all got sick of our pockets and that will only depend on the good management of our personal finances to continue betting on this game and above all to support trade in order to move the economy in our environment, as well as to encourage production with the purpose of creating jobs.

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We are betting the best hand we have in that game of chance, the strategies are already in the air, now it will only depend on the house, and that is us with the care of our health.

Editor’s note: Erendira Yaretni Mendoza Meza has a degree in Economics, a Master in Government and Regional Development from the Colegio del Estado de Hidalgo and a PhD in Social Sciences from the Autonomous University of the State of Hidalgo. She is a professor at the entity’s highest house of studies. Follow her on Twitter me in Facebook . The opinions expressed in this column are those of the author.

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