So what you are saying is that the two drunks are the USA and the UK, and the substance that is being abused is not alcohol, but debt.
Bingo! For the time being, the US can afford to pile on debt (i.e., issue bonds), but the bond market is beginning to become cautious and is holding back, with central banks buying both physical gold and paper gold (which they are buying to manipulate the gold price, to prevent it from shooting up so high that the world's currencies become destabalised).
As economist and fund manager Bill Fleckenstein put it "Central banks will keep on printing money until the bond markets take the keys to the printing presses away from them!"
Do we know why investors aren't being spooked yet though?.
That depends on which investors and what they are investing in. If we are talking about the US stock market, that has been steadily falling
in real terms for quite a while. It has held up nominally, but only when we count up the share prices in dollars. If we look outside of the Glorious Eight (Nvidia, Microsoft, etc.) US shares have fallen by about 20% nominally in the past few months.
But that is just gambling and is not the real economy. The real economy is to be found in jobs, housing, commercial real estate and the movement of goods and services. The latest jobs figures appear steady at first glance, but upon closer examination, one sees that the US government is employing more people (directly and indirectly), and large companies are beginning to either lay off or put them on short-time. SMEs are starting to go to the wall, starting with the small companies.
This is beginning to reflect in the prices SMEs can charge. One very typical example is a tree-felling and ground clearance company run by a young man on the West Coast. He began as a one-man show about eight years ago, climbing tall trees and bringing them down, a bit at a time using simple block-n-tackle. He now has a crew of about ten, two cranes, two giant chippers, stump grinders and several trucks and tractors, etc. He runs a really tight ship - but he is struggling to get decent prices for his work. Folks are prepared to hope that the giant hollow cottonwood that is leaning dangerously over their house won't go through the roof this year!
The state of commercial real estate is - er, well, "dire" hardly covers things in the US market! In some locations, a vacant office block or an empty, out-of-town shopping mall can have a negative value. They are just liabilities!
Both here and in the US, the published inflation rates are very obviously false. Bodies like the BLS (Bureau of Labor Statistics) and the ONS have to massage the figures by excluding all kinds of things and have to keep changing the so-called basket of goods and services to make things appear better than they are. Imagine what would happen if people knew that food inflation (2023-2024) was at 20%.
Except of course, they are realising it! My wife keeps a spreadsheet of food costs and 20% is what 25 core items that everybody needs to buy (eggs, milk, cheese, coffee, olive oil, fish, meat, vegetables - basic stuff like that) and that was the figure she got!
Perhaps the ONS, who claimed a food inflation figure of just 2%, only shop at Harrods and Fortum & Mason! But for ordinary mortals shopping at Tesco and Lidl, the figure was 20%.
And of course, the ONS and the BLS do not include taxes in their calculations - the last time I looked, HMRC were adamant that I should continue to pay my taxes! And they've gone up and not down!
Over the past 15 years, those poor souls on a modal income (the one that the largest number of full-time wage earners actually get) have seen their nominal gross income increase from £19,500 to £25,000, BUT
the purchasing power actually FELL by 20%. (ONS & BoE figures)
So the poor and the middle classes here and in the US are getting squeezed (i.e. poorer) because they are reliant on the value of the currency remaining stable - which it is not! But the asset loaded rich have seen the value of their assets not only increase nominally, but also increase in real terms.
Land, commodities and healthy, profitable companies all increased by enough to outstrip inflation. If that share allocation for the CEO was made at $20 a share and is now worth $100 a share. OK, so that was a fall from $120 and the dollar fell in purchasing power by 40% or more - but you are still many millions ahead of the game!
And amidst all this debt and chaos, the whole disaster is going to be rescued - or more likely, made a good deal worse! - by the deluded and irrational Donald Trump. I'm thinking here of the young female translator who could not translate into Italian something Trump said because she was laughing too hard:
What he said was, "America and Italy are two nations that have been in an alliance since the days of ancient Rome."
