In the event of major changes, it is normal human behaviour to take cover and do nothing for the time being.
It is therefore not surprising that many companies around the world are cutting investments in order to wait and see what will ultimately emerge from all this uncertainty.
1. No improvement in global trade.
2. The period of uncertainty will be long.
Speculation at its Most Obvious is Passivity.
I see it this way because it’s obvious that passivity doesn’t encourage innovation or employee loyalty.
I’m not suggesting that we should pretend that everything is normal and can be planned.
In times like these, it is important to identify and, where possible, eliminate any weak points.
This applies to both currency and interest rate management (in both cases, ‘management’ refers to an activity!).
However, I also believe that now is the perfect time to eliminate material price fluctuations, even if this requires the use of unfamiliar processes. They exist, and today is the day to familiarise ourselves with them.
Investments Will Continue Regardless of the Duration of the Uncertainty
As I described in my second book ‘Die kommenden roaring Twenties’ it is inevitable that the major parties will become embroiled in the geopolitical battle. Over the last 10 years, this battle has affected the USA with its escalating national deficit, China with its equally high level of debt, and now Europe with the threat of the USA turning away.
It can be assumed that the willingness and ability to invest globally are not necessarily simultaneous. A restriction is to be expected in the USA in the coming years, which Donald Trump is seeking to alleviate by ‘blackmailing partner countries’ in order to stay ahead of China in the global competition.
The USA Must Solve This Problem on Several Levels
1. Interest rates in the USA are twice as high as they are in China.
2. The partner countries are, to put it kindly, ‘irritated’.
3. The uncertainty weighing on the economy is causing a slump in investment and consumption (a recession is possible in the second half of the year).
4. the political support for Trump collapses => the more the population perceives restrictions, the sooner the support in parliament collapses
5. Support in the Western world could erode more quickly than the US would like to admit.
6. Apart from gold, the international central banks are increasingly diversifying away from the USD into smaller, more liquid currencies.
7. The world is ‘overinvested’ in the US. Adjusting to a healthy level would make the USD much weaker than currently thought possible.
