The recent inflation was not due to money printing, but a supply shock from lockdowns where prices surged far ahead of incomes. This created a permanent "phase shift," reducing purchasing power for the majority of people and preventing a true economic recovery as incomes never caught up.
Socialism is gaining traction because Marxist theories of "end-stage capitalism"—where capitalists exploit workers, wages stagnate, and assets become unaffordable—accurately describe the lived experience of many. This narrative resonates when mainstream sources report a strong economy that people don't feel.
A reserve currency must be globally available and acceptable. China fails on both counts. It won't allow the yuan to be truly mobile because that means losing control, and global partners won't accept it because China's legal system doesn't respect contract law, a vital component of trust in finance.
Companies like Amazon and Block are laying off staff not because of AI, but because they over-hired in 2021-22, believing the narrative of a strong post-pandemic recovery. They are now adjusting their workforce to the reality of a weaker, stagnant economy that never materialized.
Contrary to popular belief, low interest rates historically indicate a weak economy with high demand for safety and liquidity. Conversely, rising rates signal expectations of economic growth or inflation, as capital seeks better returns in the real economy rather than safe government bonds.
Despite massive deficits, the US Treasury market hasn't broken because the economy is in a depressionary state. Similar to the 1930s, the overwhelming demand for safety and liquidity from global investors surpasses concerns about the government's fiscal irresponsibility, keeping interest rates low.
The path out of the current economic stagnation is a monetary system reset that restores trust. Since banks no longer trust each other, a decentralized digital ledger system (like a stablecoin) could reintroduce the money mobility that the broken Eurodollar system once provided, unlocking global prosperity.
The stock market's performance is disconnected from the real economy's health. Since the 1980s, a structural shift has made equities the default savings vehicle, especially for retirement. Valuations are stretched by continuous, passive capital inflows, regardless of underlying economic conditions.
The current economy mirrors a depression, which is characterized not by steep declines but by a persistent lack of upside and opportunity. The US is 8 million jobs short of its pre-pandemic trend, indicating a stagnant system where people feel left behind despite headline numbers like GDP appearing positive.
The true global reserve currency is the Eurodollar—a private, offshore, ledger-based system for dollars—which facilitates global money mobility. This system broke in 2007, destroying trust among banks and creating the current era of low risk-taking, safety-seeking, and depressionary economics.