In recent years, the United States has seen staunch economic growth, resulting in proclamations from many economists of boom times and easy employment. Though these predictions have proven true in the past, a growing number of economists are beginning to see cracks forming in the U.S. economy—which could eventually spell a downturn. In this piece, we delve into these claims further by examining what some leading economists are saying and by taking a look at predictions from U.S. Money Reserve, a precious metals distributor whose team includes coin research and numismatic professionals equipped with market knowledge. By examining this variety of informed opinions, we provide a better sense of the potential danger that lies ahead.
To understand the current state of domestic and international financial markets, it’s important first to consider recent economic conditions. Though it may seem far removed from the present-day situation, it was not long ago that large Wall Street firms were crumbling in the wake of one of the worst economic downturns in modern history, from 2007 to 2009. The firm that perhaps best epitomized this collapse was Lehman Brothers with its surprise declaration of bankruptcy after what seemed to be some of its most successful years on record. In the years leading up to the collapse, the economy seemed bulletproof. In reality, inherently unstable financial forces were at play—which would eventually have dire consequences.
While we would like to think we have learned from the economic mistakes of our past, many today are predicting a similar downturn on the horizon. Former British Prime Minister Gordon Brown has warned that we are “sleepwalking into the next crisis.” Former U.S. Treasury Secretary Lawrence Summers has likewise said that central banks are overly focused on the conditions of the last crisis, which is blinding them to conditions that may contribute to the next one. Timothy Geithner, another former U.S. Treasury Secretary, has expressed similar concerns, stating that “the deficit fever of ’09 through ’13 was mistimed.” Geithner has also asserted that “the new complacency about the larger deficits is mistimed.”
So what is causing these dire forecasts despite the seemingly good present economy? As in most complex systems, a number of factors contribute to the underlying forces at play. One key factor, which has been singled out by U.S. Money Reserve CEO Angela Koch, is political in its basis. “As the 2008 crisis unfolded, Congress acted quickly to pass stimulus measures, tax incentives, bailout monies, pension protection, and federal loans,” says Koch. “No such resolve exists today.”
What Koch means is that the current system rewards politicians who sit back and watch the economy spiral out of control. In the wake of a crisis, it will be advantageous for government officials to swoop in and enact measures that will work to salvage what’s left of the U.S. economic landscape. This type of wait-and-see attitude toward legislative agendas contributes to a situation in which economic forces may very well spiral out of control before lawmakers and other regulatory bodies can intervene.
Another contributing factor to predicted poor future economic conditions is the stance that countries across the world are taking toward monetary policy. Here again, Koch lends her opinion to the discussion by highlighting that “during the recession, the U.S. and other advanced nations flooded emerging economies with cheap money. While the Fed is now engaged in normalization, currencies like the Argentinian peso, the Indian rupee, the Turkish lira, the South African rand, and the Brazilian real are plummeting.”
Since economic conditions are closely tied to how a country’s currency is performing, these wild extremes and fluctuations in currencies are having real-world effects for citizens across the globe. Many countries are experiencing record levels of unemployment and ominous increases in inflation rates. This can be especially concerning when examining emerging markets, which have accounted for a sizable portion of the world’s economic growth in recent history. Any disruption in the health of these economies could ripple through other countries and cause a worldwide dip in economic output.
Although experts know that the last economic downturn was intricately related to drops in housing markets and the use of unstable investment vehicles to generate wealth, not much has changed. There are still numerous bubbles in a range of asset classes across the financial spectrum. These bubbles have been artificially inflated by relaxed regulatory policies. The original purpose of these regulations was to combat the type of abuse that was typical in the lead-up to the last economic downturn. As these policies have been relaxed or recontextualized, the underlying health of the economy has been thrown into question.
Additionally, a growing push toward protectionism has emerged in rhetoric and regulation, illustrated by many actions taken by the government and its associated financial bodies. Some economists wonder if these policies are a reaction to past economic conditions that no longer apply to the current day and age. Others fear that political partisanship has created an atmosphere in which it will be difficult to enact policies that could right the economic ship before it sinks. With these factors combined, many have become increasingly pessimistic regarding the immediate future of the U.S. economy.
While it is true that the United States has experienced several boom years lately—and many economic indicators show healthy levels of growth and economic surplus—a growing number of voices are advocating for caution in the years ahead. These voices, many of whom have held the reigns of government in the past, are proponents of a return to nonpartisan politics and more sensible regulations and policies before economic conditions become dire. Among these voices is U.S. Money Reserve, which has increasingly emerged as a source of financial and economic information in recent years.
As one of the leading providers of government-issued coins, U.S. Money Reserve has long been known for its high standard of customer service. The company selects account executives based on their knowledge of the financial industry and ability to provide customers with personalized recommendations. In recognition of the emphasis the company places on customer service, outside evaluators have consistently given the organization high marks. One example of such accolades is Business Consumer Alliance’s awarding the company a coveted AAA rating.
Another thing that sets U.S. Money Reserve apart is the connection members of its leadership team have to government. This advantage is particularly manifested in the president of the company, Phillip N. Diehl, who previously served as a director of the U.S. Mint. This experience not only leaves Diehl well-placed to draw on a career of both public service and financial knowledge, but also helps inform the company on the direction the country’s economy may take. His unique insight has helped build trust with many readers and listeners who look to the company’s publications for financial information.
Check out our recent post here: http://chronicleweek.com/2018/08/u-s-money-reserve-advises-economy/