2017 is of course the year where, if you hadn’t perceived it already, everything seems absurd. With Donald Trump as president, many conservatives now trust the federal government more than ever and liberals venomously fear the orange-hued Fed and probably out shopping for a firearm.
Not only are the liberal-cosmopolitan and conservative-traditional ideologies not on speaking terms, US representative politicians are momentarily shifting allegiances as well. Establishment republicans versus The Don and his bots. Of course you have the Democrats too, who have been struggling to find a footing in representative politics and news stories that don’t involve FBI investigations. The political realignment on the hill in Washington obviously adds to all of our political vertigo induced nausea. And what is fake news even anymore? I say it’s the stuff that distracts from the important developments.
Let’s look to Europe. The European Union has been inflicting noteable austerity measures on ‘sovereign nation states’, like Greece for almost a decade, which will most likely need another round of bailouts. The EuroZone is currently operating at around 90% public debt to GDP, with Greece and Spain individually at 176% and 133%, the two highest, respectively. The global debt to GDP ratio is 325%, which ought to make even the least economically literate human-being cringe.
So too, the United States is pressing harder on that ‘other-half’ of the world with sanctions and propaganda. These countries are the likes of Pakistan, Russia, and China, and as the US continues this trend, it pushes these countries into a closer friendship. Not only do they have a geographic similarity, they have a similar geopolitical enemy.
The condition of the US Dollar, however, is for now the canary in the coal mine for the inquiry into 2017’s absurdity and future instability, for it is the world's reserve currency. Sadly and absurdly, In recent weeks the US Federal Reserve said there will not be another crisis in our lifetime. However, if you look at economic conditions right now, it seems hard to take this prediction too seriously, even if Janet Yellen, Chair-women of the Federal Reserve was just talking to an alter ego of hers as she spoke to the press. Let’s look at the data. In the second quarter of this year, the velocity of money (ratio of GDP to currency supply) hovered around 1.4, a value lower than no other point, at least since 1960. This is due to the Fed’s copious money printing to stimulate growth since the last crash. A low velocity number is actually what the Fed bases its unsustainably-low interest rate on, which brings into question why they keep on printing money. The US treasury yield has yet to rise to 2005 levels since the crash in 2007-08. The yield rate is now around 2.3%. There is less incentive to buy into the dollar. The closer the bond yield is to zero, the more probable we see the discontinuation of US dominance as the world reserve currency. Full stop.
Federal Reserve said there will not be another crisis in our lifetime.
Yeah I find this hard to believe as well. Perhaps specific concerns like the housing market may have better safeguards, but what's to say there isn't developments in other sectors like tech that radically destabilize other industries?