In the #News #Economy #Politics - Tariffs Are Part Of An Evolving Global Crisis

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Tariffs Are Part Of An Evolving Global Crisis

While tariffs and their economic impacts are drawing widespread attention, they are symptoms of deeper, more significant shifts with the global economy. The real focus should be on the breakdown of the global monetary, political, and geopolitical orders, which happens roughly once per lifetime but follows historical patterns.

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The collapse of the Bretton Woods monetary and economic system, often misattributed by former President Obama to the effects of the Trump Administration, is the result of deeper structural issues: unsustainable debt, trade imbalances, and capital distortions. Rather than the actions of any one administration, it’s the inevitable consequence of the “invisible hand” correcting decades of excess. The West—encompassing both debtor nations like the U.S. and creditor nations such as China—is now showing signs of systemic unraveling. Yet, leaders like Obama, along with much of the American public, continue to believe this global order can be preserved indefinitely. They overlook the waning foreign interest in U.S. Treasuries from key economies like Japan, China, and India. History reminds us: every empire falls when the money runs dry.

The erosion of Bretton Woods has become a catalyst for political fragmentation. Across the political spectrum, from Democrats and Republicans in the U.S., CDU and AFD in Germany, Labour, and Liberal Democrats in the UK, parties continue to cling to a dying economic framework of the West. Their diverging approaches to salvage the system only deepen polarization, fuel nationalism and populism, and undermine democratic discourse. The resulting instability is paving the way for authoritarianism and social unrest.

Populism and division are unraveling decades of U.S.-led global cooperation. While some pundits blame the Trump Administration, the truth is more complex. The Democrats, for instance, sought to impose their will through financial levers like SWIFT sanctions, prompting the formation and strengthening of the BRICS bloc. The blame game, though loud, misses the point, we’re all complicit in creating the conditions for this unraveling. The unraveling is following cycles.

Meanwhile, the rise of artificial intelligence will accelerate these disruptions. Marginalized workers will be displaced, economies will be transformed, and entirely new superpowers may rise. Many nations will simply be left behind in this next phase of global realignment.

Most subscribers prefer to tune out these broader trends, choosing instead to focus solely on timing the markets. But successful market timing—what we often refer to as “surfing”—requires a deeper understanding of how economic, social, and political forces are all interconnected. When the next recession becomes undeniable, these social and political dynamics will be flipped on their heads.

Every trend discussed above will intensify if the economy slips into a recession. Economic Activity Composite (EAC), our proprietary measure of marginal economic activity, is clinging to growth above 0 by its fingernails (see Chart). We frequently discuss the EAC in the Economy & Stock Report. If the EAC turns downward, brace yourself. The E&S Report discusses the cycle and recognizes different versions of it. Bottom line, the global economy was in trouble long before Trump won the election. If you have any doubts, please watch the US Bond Report 01/03/25 Report – Time’s Up. The invisible hand knew long before tariffs became the favorite topic of discussion for influencers across all mediums.

Get ready, this is not over. Please join us to stand away from the majority. 2025 is part of an Evolving Global Crisis.  Please watch this video.

Chart: Economic Activity Composite

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The Matrix provides market-driven trend, cycles, and intermarket analysis.

Source: http://www.edegrootinsights.com/2025/04/in-news-economy-politics-tariffs-are.html