In order to understand where we are going, having a solid foundation on the economic history of the US from about 1980 to present shows where we came from, how we got to where we are now, what the imbalances are, and what to expect next.
China began acquiring large quantities of US Treasury debt through the 1990s and onward, artificially lowering interest rates;
The United States government has run a federal deficit well beyond its means while seeing no punitive interest rate levels;
The current Republican-led government wants to increase the budget while simultaneously decreasing tax take;
China has begun diversifying out of the US and more so into gold and other foreign treasury debt.
The world is shifting. From here, investing needs to shift with a mindset of diversifying. The United States will no longer have access to an abundance of capital flowing in. Interest rates will systematically move higher and higher as investment capital dries up. Equity markets will no longer produce ultra-high returns.
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