The last forty years has been an unusual and unsustainable period in world economic history. The abandonment of the gold standard in 1973 AD resulted in the unleashing of multiple fiat currencies on the entire world. “Fiat” is currency created out of nothing and relying solely on confidence in government solvency. It has been tried before in history and always ended in disaster. It has now become a global phenomenon.
These fiat currency experiments, in combination with a massive global baby-boom after World War 2, and the collapse of Communism, have allowed government, corporate and personal debt levels to be driven up exponentially to over $216 trillion. Global debt levels now stand at over $30,000 per person, against an average global income at just under $10,000 per person. Veteran economic commentator and adviser to President Reagan, David Stockman, calls this aberration the “Great Deformation”, a once only event in human history. This “deformation” began to implode in 2008 AD as the Global Financial Crisis took hold, but was postponed by massively increased central bank intervention in the form of quantitative easing, or money printing. This simply added more debt to a debt balloon that was trying to implode.
The now much larger debt bubble will probably burst before 2020 AD, swamping central banks and ushering in a protracted era of extreme financial pain as the value of paper assets, such as bonds, derivatives, currencies and bank accounts shrink at an unprecedented pace. Bank “bail ins” have already been legislated in all western countries, so what happened in Cyprus will go mainstream throughout the Western World. Guard your bank account! This economic depression will probably dominate global economics and politics up to around 2040 AD, just as the Great Depression did in the 20th century. It could possibly also start to reverse the incredible era of urbanisation that saw over half the world’s people move to cities by 2007 AD.
In 1900 AD only 10% of the world’s population was politically free. In 2000 AD the figure was 50%. With the coming economic deterioration could also come a decline in the global influence of democracy and freedom. As people look to socialism or military dictators for answers to their financial pain, the western world may no longer be seen as the standard for politics and freedom. This is exactly what happened in Germany a century ago. Desperate people clamour and fall for desperate answers.
Wars are also likely to increase as nations fight over the world’s ever-dwindling supply of natural resources (China has recently been moving rapidly to secure its future share). One of the signals for the onset of these wars will be the breaking of the USA’s global military hegemony due to the shrinking of America’s military budget. US Federal government spending is currently running at a consistent $700 billion deficit and doubled during the Obama years. The interest bill on US government debt alone will exceed its $500 billion military spending by 2020 AD, and that is with artificially low interest rates. If interest rates rise 3%, fully half of all tax receipts in the US will be needed just to pay interest on its federal government debt.
Conclusion: With the election of an inexperienced President Trump, his desire to withdraw the US from its role as international policeman, a severe global recession and a bankrupt USA, the next few decades will be a field day for terrorists and dictators with global agendas.
If you would like to read a whole lot more on what is in store for the world economically, spiritually, demographically and socially in the century ahead click on this link.