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.
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.
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Beat the cost of living crisis – go on holidayEditor's letter As inflation rages, energy bills soar and the pound tanks, what’s a good way to save money this winter? Go on holiday, says Merryn Somerset Webb.
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How capitalism has been undermined by poor governanceEditor's letter Capitalism’s “ruthless efficiency” has been undermined by poor governance, a lack of competition and central banks’ over-enthusiastic money printing, says Andrew Van Sickle.
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Don't be scared by economic forecastingEditor's letter The Bank of England warned last week the UK will tip into recession this year. But predictions about stockmarkets, earnings or macroeconomic trends can be safely ignored, says Andrew Van Sickle.
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The biggest change in the last 17 years – the death of the “Greenspan put”Editor's letter Since I joined MoneyWeek 17 years ago, says John Stepek, we’ve seen a global financial crisis, a eurozone sovereign debt crisis , several Chinese growth scares, a global pandemic, and a land war in Europe. But the biggest change is the death of the “Greenspan put”.
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The wolf returns to the eurozone’s doorEditor's letter The eurozone’s intrinsic flaws have been exposed again as investors’ fears about Italy’s ability to pay its debt sends bond yields soaring.
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Things won't just return to normal – that's not how inflation worksEditor's letter You might think that, if inflation is indeed “transitory”, we just need to wait and everything will return to “normal”. But this is a grave misunderstanding of how inflation works, says John Stepek.
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Car hire and the strangeness of the post-pandemic economyEditor's letter A global shortage of hire cars and unusually high hotel occupancy rates sum up the post-pandemic global economy in a nutshell, says Merryn Somerset Webb, with enhanced demand meeting restricted supply.
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Why we need to get a grip on our governmentEditor's letter Our government is trying to do too much, enacting policies that are destructive to the private sector. It needs to drop the the feel-good nonsense and create policies that lead to long-term wealth, says Merryn Somerset Webb.
