Global Economic Crisis

The Dow Jones Industrial Index was the one shining light in President Donald Trump’s unconventional administration. No matter how perplexing his tweets were, there was no denying that Wall Street investors loved his pro-business posture. That is until now.

The massacre that occurred on Wall Street on Black Monday, February 5, 2018 was the largest one -day loss on  the New York Stock exchange. This comes after a bad week on Wall Street, meaning all of the gains trumpeted by Trump have been erased. Of course, there will be pundits claiming that this is just a temporary correction. But is it?

After a decade of money printing and near zero interest rates undertaken by central banks around the world, but especially by America’s Federal Reserve, inflation  fears are returning with a vengeance

It must be recalled that a major reason the world supposedly escaped a massive economic depression following the global economic crisis of 2008 has been  money printing by central banks and massive borrowing by sovereigns. This borrowing binge continues to the present day.  Up till now, zero interest rates have enabled major sovereign borrowers, especially the United States, to service its growing government debt. However, should interest rates return to anything approaching normal historical levels, then many countries, the USA being in the lead, face the prospect of a massive insolvency crisis. Fear of this approaching fiscal Armageddon may be what is animating the growing  fear among Wall Street investors.

Black Monday may very well be  a sign of much worse to come.