Every Cloud Has a Silver Lining

 We are heading for rough waters - in Canada, in the U.S., and all over the globe. The fact is that the U.S. economy has been the basis for the global economy, for global stability, and the U.S. dollar has been the universal store of value, because no other economy has been  bigger or more productive in human history.  But that’s all going to change; in fact, it’s already started to change, and nothing we can do will halt this change.

 There is already an ongoing crisis of confidence caused by the actions of the current President of the United States.  By his utterly reckless actions, In less than one hundred days, Donald Trump has single handedly increased economic uncertainty exponentially.  Now, the lesson has become evident to all: he cannot be trusted, nothing he says can be relied on.  This means that the uncertainty has no reverse gear, it will just keep ratcheting up;  because of what he has already done, nothing that Trump does from here on can change the nature of this problem. 

 Because international investors will realize that the  American economy and the American dollar are not to be trusted,  a tipping point will be reached, probably  sometime this year, when people around the world will decide to take their capital out of America; and this will become irreversible; it will turn into an unstoppable flood, a contagion that spreads exponentially.

  But where will the money go?  There is no real substitute for the United States, so it will have to go into multiple currencies and economies, none of which are equivalent in scale or quality, which means that the value of all this capital will decline precipitously.  We are looking at a severe contraction of the world’s money supply, something that has occurred before during the Great Depression, but never on the vastly larger scale of today’s global economy.

It will take all of the knowledge and ingenuity of the world’s central bankers to keep their economies afloat; so here in Canada, Mark Carney’s experience steering Canada’s and the UK’s central banks during major crises, will be a valuable asset if he wins the election.  That’s the silver lining for Canadians:  Trump's belligerence and bullying have unified Canadians like no other force in our history;  it has even convinced Quebecers of the importance of being Canadian, which is a miracle in itself!  And, while a significant minority of Albertans are making noises about succession, that  will go nowhere, because  Alberta’s economy, which is tightly bound to the fate of the oil industry, will take a dive as the demand for oil plummets, leading to an exodus of workers from that province.

There’s even a silver lining for Americans, and this is even more important in the scheme of things, because, in spite of America’s inevitable weakening, they will still be our neighbour to the south with a much bigger population and economy.  But a market crash and a depression will seal Trump’s fate, making him so universally unpopular that his project 2025 scheme to create an American autocracy will be stopped in its tracks by the collective will of the American people.  Thank God for small mercies.