In this week's cover story, our American colleague Dan Denning looks at the US election. The race for the presidency is now very much Hillary Clinton's to lose (although if Brexit has taught us anything it's never to take anything for granted). But her rival Donald Trump has already pulled the debate a long way in his direction. And, says Dan, that legacy could have some unexpected effects it could trigger the next, and perhaps final, eurozone crisis.
The popular appeal of Trump's protectionism, anti-immigration views, and his rages against the "elites", has influenced Clinton's policies (most notably on free trade), echoing the success of other populist movements globally. It's important to understand this if Trump loses this election, it'll be because of his character, not in spite of it.
He is the only candidate to have articulated however incoherently the anger of voters who feel that their interests and concerns are being ignored by the current defenders of the status quo. If Trump wasn't so blatantly repellent, alienating many who would otherwise be his natural supporters, he'd probably be in the lead right now.
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What's at the heart of this anger? Look back at history. We've been here before. Big economic shocks create a sense that the system is no longer working for society as a whole, creating fertile ground for populism to grow. And the focal point of today's rage is increasingly clear. We've argued for a while that it was a mistake for democratically elected governments to delegate responsibility for the economy to unelected central bankers, and that quantitative easing (QE) and negative interest-rate policies were fuelling disquiet. Now politicians are making that point too.
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Trump has verbally attacked Janet Yellen at the Federal Reserve. Over here, in The Daily Telegraph this week, Conservative peer William Hague wrote up a ten-point list of the damage central-bank policy has done. It's a checklist of themes we've raised over the years: low rates make the wealthy wealthier; they keep "zombie firms" alive, damaging productivity; they undermine pensions; the list goes on. In short, the mood music is changing.
But what's the alternative? Leaving well alone is one answer but it's unlikely to happen. Instead, pressure is mounting for governments to spend more. This is where the real danger starts. As Dan notes, it's a big risk for Europe just try getting fiscal stimulus through when Germany is dead against it. But it's not just Europe.
If you promise unlimited access to free money to the typical government, what will result? Inflation, most likely. That in turn could trigger a crash in the hugely overvalued bond market a topic we'll discuss in a lot more detail in the coming weeks. Meanwhile, we have some thoughts in this week's issue on how to prepare for the election result whoever wins.
