FSA rate is decreased to 3,5%. What's next? What will be with e-money and DGC?

What happens today? The week from January 14 to 18 was marked by a downward trend of business activity index in the USA. Strictly speaking all indexes were dropping, and on Friday 18.01.08 the majority of markets in USA closed with the record minus. And farther happened the following: on Monday Tokyo stock exchange opened with drop for more than 5 %, the Asian stock markets crashed and even farther following the motion path of the Sun and opening of trading platforms, the monitors of traders more and more were filling up with red color in a grid of index parameters. This tendency dramatically influenced on the Indian index, having lowered the business activity of this country to more than 11 %. The markets are still shaken with fever and we have got the first reaction.

The first reaction to it was a panic decrease of refinancing rate by FSA. The artificial decrease of this rate for 3\4 percent, i.e. decrease to 3,5% is a howl of Bernanke from the sinking ship of US economy. Such scaled decrease of the rate was aimed to prevent the recession in the USA and to make money more available at the market which gives an opportunity to investors to buy the stocks for the cheap money and to restart the complicated mechanism of stock market trade and growth of economy in USA and in the world. The next reaction was an announcement made by a number of companies about their losses. The most shocking news came from The Bank of America which has established the fact that their company has already lost about 95% of profit planned to be earned in 2008.

And what meaning does it have for virtual economy?
Firstly, the decrease of FSA rate will spur on the interest to dollar and this may result in slight growth of its cost in comparison with other currencies. But this buoyancy in dollar rate seems possible only in the short-term prospect.

Secondly, and this is the most important issue, such shocks in world economy will result in unprecedented growth of gold costs which on the January 22, 2008 have already increased for 2,88%, and hit the record of 890,3 $\oz.

And if the situation with drops in rates for American indices continues we can expect even a higher growth of gold prices at world stockmarkets, and hence the development of virtual economy in the fields of DGC. Of course, from the macroeconomic point of view the crisis that is observed today can cause the consumption decrease in the USA and in the world, and this will certainly result in e-currency demand decrease. But the economy of the USA is not so weak to give up in the face of coming recession. Besides, the developing markets of Asia, South America, Eastern Europe and Russia can support virtual economy due to the rapid increase of interest to e-finances in these countries.

Somehow or other, DGC industry gets profit in any course of development of the events and this will allow people to save their money in gold equivalents even in case of the worst economic scenarios. And they can do this without moving away from the computer. The population of USA had not such an opportunity in 1929 and may be that’s why many people who failed to buy gold had declared themselves bankrupt. And today such opportunity exists and may be one day in the course of history will be written that the coming world crisis had been avoided due to virtual economy and in particular due to its DGC tools.

Arthur Dunhill, Chief Editor of Ecommerce Journal