What could go wrong in 2025?

Such days the mind of all goes to Wishes for 2025 and with them we would like to begin. So, health for 2025 to all of us, and the rest will somehow… fight. Of course, after Wishes the mind, rightly, goes to what is to be born in the new year, in 2025. And here the answers come easily and others after thought. The first “think” is obviously about the agony of the threat of wars. Those who are already here, but mostly those who seem to be hiding behind the… corner on the 2025 route. But there are in 2025 and some other “requirements” – which fall within the competence of our column – financially worth mentioning in time and if we do what we can to “accept” their consequences… The most important of all – when assessing the column always and without claiming the … infallible – is the terrifying path of US public debt. As much as this seems a little off on our data, we have to remind you that this, U.S. government debt, is expressed in dollars and identifies with dollar luck. And therefore it affects up to decisively any currency that attracts to its foreign exchange “value” from its dollar reserves, such as the Euro. But let us come back to the debt of the United States and to why in 2025 this debt can shake up the international monetary system. It is now known to everyone that its explosive increase in the last two years over $36 trillion. It is expected with almost absolute certainty to continue at a higher speed in 2025 and 2026. The reasons are two, the continuing and impossible to contain a public deficit (moves to wartime levels) and the obligation to serve it. The great danger of this terrifying increase is triple. The first has to do with the fact that it already involves the Central Bank (Fed) in a double trap. The obligation on the one hand to reduce interest rates to maintain the ability of the American public to refinance it. On the other hand, in the need to keep them (interest rates) sufficiently high to ensure adequate attracting funds from the international financial markets to its refinancing. The second risk relates to the fact that despite its relative superiority over other currencies (the strongest reserve currency remains), the dollar in which this debt is expressed slips into real values. And this is reflected on the one hand in the persistence of inflationary pressures on product and service prices (diversity of its purchasing value) and on the other in its collapse (depreciation 27% in one year) against the unchanged value of gold. The third risk has recently occurred and is so worrying that it has been subject to significant analyses and warnings in American financial SMEs. Not more or less the explosive increase in US debt has highlighted the weakness – or more precisely the difficulty – of more than the US financial giants managing it on the primary market. Specifically, the prime operators of the American debt, the small group of financial giants who have earned the only advantage of being the ones to whom the US public gives the right to absorb this debt and then channel it to the secondary market, i.e. on a planetary scale, now declare for the first time ‘difficulty’ to respond to it. Its volume and the rate of debt issue by the US government to cover the public deficit and to refinance debt service is beginning to exceed the potential of the colossal American, i.e. international, financial system. So big is the difficulty that some of those who claimed entry into this global elite, back off despite the fact that the Fed has approved the entry to the primary dealers… Simply put, the American debt, both as size and as a prospect of its evolution, has difficulty finding “intermediators” to get out on world markets. The relevant publications can be easily found online these days. Of course one will ask “So what?”. The answer is that this huge debt has already created conflicting conditions of inability to deal with it. For example, for the first time in such intensity there are increased prices of government bonds (including the US), “precise” dollar, high interest rates and “expensive” gold. For the first time there are strong anomalies in the formation of interest rates overnight, repos and the ability of the financial system to deal with ‘excesses’ in debt leverage, especially in relation to the shadow financial system area (hedge funds, etc.). So much so that the issue of a possible liquidity crisis in the first quarter of 2025 is raised directly. The grounds of many. One of these concerns the explosive increase in credit card debt, more than 1.7 trillion. With a rapidly increasing rate of difficulty in repayment of debts… Another could be the crisis in commercial property prices or the still active crisis in the US medium-sized banks concerning the range of ‘unrealised’ losses due to their bond reserves. And many – many others listed in international financial SMEs and which in terms of size, due to the underlying leverage of public and private debt exceed all levels of comparison with that of Lehman Brothers. One could observe here, “yes but there is always the Fed ready to intervene and close the holes as has been proved even in the recent past…”. Indeed there is the Fed, but the Fed can only print (electronic) paper cannot produce ‘values’. And we all know exactly what happens when this paper no longer has the purchasing power to trade with these “values”… Apparently the Trump election at this juncture with these “prospectives” is not the best that could happen for 2025.