The U.S. has the worst of both worlds and risks losing its authority
One wave of the pandemic has led the U.S. and the dollar to the throne, the second wave could knock them off the throne. Yes, the Spanish flu and the Great Depression, which followed, were far more destructive than the COVID-19 and the current global recession, due to a greater death rate and duration. However, the U.S. was governed by the great Franklin Roosevelt at that time, who knew what he did, unlike the current U.S. president, Donald Trump, who more and more often looks confused. World War Two increased the power of those, who did not take part. After the Second World War, the U.S. has taken over the world, now, it has the worst of both worlds.
You should always be prepared that, at any moment, something that you are not ready for can happen. Just a few months ago, the global recession seemed not to touch the U.S., as if it had been something going on in a different world. The U.S. stocks were rallying up, the U.S. longest economic expansion seemed to last forever. Even the US-China trade war didn’t cast a shadow of the US GDP outlook. Alas, but the reality has turned out to be different. US accounts for one-quarter of total global COVID-19 deaths. Americans remain barred from entering the EU, the unemployment level is the highest since the post-war period. On top of that, George Floyd’s death revealed a problem of racial discrimination.
If the further it goes, the worse it gets, one may need to change the direction. The U.S. may need another president, who won’t act according to the principle, “I don’t know what I want, but I’ll achieve it anyway.” Donald Trump has been obsessed with the US stock indexes rally, which is expected to help him be re-elected, his words often do not make sense. The White House’s mantra-like idea of the V-shaped recovery looks like a utopia. The U.S. president talks about GDP rebound amid the increase in the U.S. employment in June, however, it is clear already now that there will be a drop in July. He praises Jerome Powell, although the Fed’s chair paints a gloomy outlook for the US economy. The S&P 500 is growing in both cases, however, the US stock indexes rally is purely speculative. Once there is something wrong, the US stock market could crash. With this regard, Trump’s remarks seem to result from ignorance. But that’s how the world works, the knowledge is the power for the smart and the abuse for the stupid.
The flattery of Jerome Powell is unexpected, as, over the past two years, there has been a strong impression that the U.S. president doesn’t digest him. After all, if someone cannot digest you, then you are not eaten. The Fed looks realistic in a gloomy realm of shadows that risks losing credibility.
The pandemic will change everything. The world can well cease being unipolar. Investors would cease focusing on the Fed’s actions, the dollar would cease playing the central role in the world financial markets, the US default would cease being something unreal, and Donald Trump, with his slogan “America is the first”, would go down in history as the president who witnessed the end of America’s glory days. If you knew what should happen, you would prepare for it. After all, it also doesn’t help sometimes.
– Why do you need an umbrella? The sun is shining.
– In case it rains…
– Oh, by the way, have you put a bulletproof vest on?
– What for?
– Just in case there are terrorists…
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