Major countries worldwide have been getting flexible with their balance sheets as a means of fighting COVID-related recessions for 18 months now, and no one knows for sure how those efforts are going to play out.
For now, it appears like everything has worked well as we have avoided a total collapse of our financial system like we feared in March of 2020. However, there is no guarantee that we didn’t just kick the can down the road and create a potentially more significant problem for our future selves.
In an effort to explore precisely what we might have to deal with down the road, let’s take a look at five different issues that might become a problem for us in the future.
Interest Rates Must be Held Down
The most obvious problem that we will have to address at some point is that we cannot artificially hold down interest rates forever.
At some point, governments are going to have to raise rates to fight off inflation. Still, with the amount of national debt ballooning out of control, the results of raising those rates is becoming increasingly treacherous.
Inflation or Hyper-Inflation
Speaking of inflation, that is the big issue that we have to worry about on the opposite side of the interest rate debate. We are already seeing prices for goods and services rising rapidly all over the world, and that is likely to continue as long as governments are printing money as fast as they have been over the past few years.
Anyone looking to buy a house over the past year has likely noticed that prices are sky-high. And that doesn’t even get into how much the cost of furnishing and decorating a home has increased.
More Sensitive Stock Markets
While the average person can probably get through a day without too much concern for interest rates and inflation, the stock market absolutely cannot. These forces have been weighing on global markets for a while now, and the slightest bump in either direction could send markets spinning out of control.
You might not be too worried about the stock market yourself, but a severe market crash could indirectly impact almost everyone in most major countries.
Rising Energy Costs
One aspect of inflation that you will undoubtedly notice this winter is that energy prices are on their way back up to the levels they were at in the early 2000s. Multiple sources are reporting that it could cost as much as 30% more to heat your home this winter, which will impact struggling families everywhere.
The Flight to Crypto
With so many questions about government debt, one response from many people has been to place a portion of their savings into the vast number of cryptocurrency options available. This sounds like a fantastic idea from an investment standpoint, but the flight of real money from fiat currency into crypto could expedite a coming collapse instead of helping to prevent it.
Regardless of how you feel about government spending and debt, there is no denying that we cannot maintain the course we are currently on. How much time we have to make a change is anyone’s guess, but there is simply no debate that trouble is lurking right around the corner if we are not extremely careful.
