How We Got Here: The Global Economy’s 75-Year Stumble to The Precipice
The comments below are an edited and abridged synopsis of an article by Charles Hugh Smith
The global economy‘s history includes essential dynamics (energy, currencies, globalization, debt and financialization) that refer to everything that renders finance (borrowing, leverage, speculation) more profitable than generating goods and services.
Smith discusses the past 75 years in depth (1946 to 1970 were decades of rising prosperity; the wheels fell off in the 1970s; the 1980s saw a resurgence of growth; the 1990s were capped by the emergence of China as the manufacturing hub of the global economy; in the 2010s, financialization and globalization conquered the global economy, leading to the fragilities that are now unraveling).
Today, every sector of the global economy is teetering on a precipice. Globalization has optimized profits at the expense of everything else, while financialization has gutted the real economy in a process that concentrates all the gains into the hands of the few at the top of the financialization/globalization pyramid, a winners-take-most economy that has corrupted and distorted the political and social orders.
All the critical dynamics—energy, currencies, globalization, debt and financialization—have reached extremes that make destabilization inevitable.
Since the authorities have no Plan B, uncertainty, risk and volatility could reach extremes that few anticipate as Plan A—push extremes to even riskier extremes—generates increasingly consequential unintended consequences.