The global economic landscape is increasingly precarious as inflation, geopolitical tensions, and speculative growth across key sectors converge. The meteoric rise of technology stocks over 2019, combined with rampant government-backed financial interventions, and underreported inflationary pressures have created an unsustainable economic environment. When factoring in growing geopolitical instability and emerging threats, the world may be edging closer to a long-overdue macroeconomic reset in the coming years (most likely, should no black swan event eventuate within the next 15 months, after the 2024 year; should a black sawn event occur within the next 15 months, we should expect to see a serious downturn-led-recession by 2024).

Inflation and Government Interventions at Record Levels

Governments worldwide are printing money at an unprecedented rate, backing mortgages, bonds, and corporate debt in a bid to sustain economic growth. Central banks have driven interest rates to near-zero levels, encouraging borrowing and speculative investments while fueling asset bubbles. Meanwhile, inflation, though underreported in official statistics, is quietly eroding purchasing power as consumer prices climb faster than wages.

Technology stocks have been the primary beneficiaries of this environment, with valuations soaring to historic highs. Trillion-dollar companies like Apple, Amazon, and Microsoft continue to dominate, yet their operational profits and sales figures do not fully justify these valuations. Alarmingly, companies like Apple have started withholding direct sales data, a potential “canary in the coal mine” signaling that valuations are increasingly decoupled from fundamental performance.

Commodities and Oil Edge Higher

Commodities, traditionally a hedge against inflation, are seeing a slow but steady rise. Oil prices, in particular, appear poised for a breakout as geopolitical tensions escalate. Supply chain vulnerabilities, compounded by trade wars and regional conflicts, are putting upward pressure on commodities, with investors shifting focus toward hard assets as economic uncertainty mounts.

Global Geopolitical Tensions Add to Uncertainty

Geopolitical instability is rising across multiple regions, compounding economic vulnerabilities. In Eastern Europe, Russian military posturing has increased tensions with NATO allies, creating unease in energy markets given Russia’s role as a major supplier. Taiwan faces mounting pressure from Beijing, with Chinese rhetoric and military actions near the Taiwan Strait escalating. Meanwhile, North Korea’s nuclear ambitions and unpredictability remain a volatile wildcard.

The Middle East is another flashpoint, with ongoing conflicts and proxy wars involving Iran, Saudi Arabia, and other regional powers. Oil supply routes remain at risk, further adding to the fragile global energy market.

The Case for a Macroeconomic Hard Reset

The global economy is showing classic signs of overheating, driven by speculative bubbles in technology stocks and excessive government spending. Trillion-dollar companies like Amazon and Alphabet have seen exponential valuation growth, often outpacing revenue growth and operational profitability. The disconnect between market performance and economic fundamentals suggests that the current trajectory is unsustainable.

A hard economic reset, such as a recession or even a depression, appears increasingly likely. Historically, such resets have been triggered by significant conflicts, wars, or global crises, leading to massive government spending and economic contraction. A collapse in the stock market or an unexpected global health event could serve as the catalyst for such a downturn.

Emerging Biothreat in China Raises Alarms

Reports from mainland China suggest the country is working to contain a potential biothreat emanating from a secondary city outside Beijing. While these reports are unverified, if they prove accurate, the implications could be severe. A biothreat would disrupt China’s workforce, forcing facility shutdowns as illness spreads, overwhelming the country’s already strained medical infrastructure. Such an event would significantly impact China’s economy, which plays a central role in global manufacturing and trade.

The potential for this biothreat to spread beyond China raises the specter of a global medical crisis. Disruptions to manufacturing and supply chains would lead to shortages in consumer goods, driving up prices internationally. The ripple effect on global commodities and goods prices would be profound, particularly for nations reliant on Chinese manufacturing.

Global Implications of a Biothreat

If a biothreat materialises and spreads globally, the economic fallout would be twofold. On one hand, a global recession could occur as supply chains collapse, consumer spending contracts, and government resources are diverted to crisis management. On the other hand, the initial shock could lead to a parabolic rise in economic growth as consumer goods prices surge and industries rush to capitalise on increased demand.

Technology sectors, in particular, would likely benefit in the short term, as companies innovate to adapt to the crisis. However, this would only exacerbate existing bubbles, further inflating overvalued sectors like technology and commodities. Such growth would delay an inevitable recession but ultimately increase the severity of the eventual downturn.

The Delayed Reckoning and Potential Hedge Against a Fall

Investing in crypto-assets, particularly Bitcoin, offers a compelling upside for short- to medium-term wealth preservation in today’s uncertain economic climate. Bitcoin’s capped supply of 21 million coins ensures it remains inherently scarce, making it a hedge against inflationary pressures driven by excessive money printing and government debt. Unlike traditional fiat currencies, Bitcoin operates on a decentralized blockchain, removing control from central authorities and providing investors with greater autonomy over their assets. This decentralized framework also insulates Bitcoin from geopolitical tensions and centralised monetary policy mismanagement, further enhancing its appeal as a store of value. As global economic volatility intensifies, Bitcoin’s unique properties position it as a robust tool for wealth preservation, with significant upside potential as adoption grows and institutional participation expands.

A global crisis that temporarily inflates economic growth risks delaying a necessary macroeconomic correction. Instead of addressing underlying vulnerabilities, such a scenario would push valuations further into unsustainable territory, increasing the risk of a more severe recession or depression in the future. A hard reset brought on by geopolitical conflict, stock market failure, or a health pandemic remains not only possible but increasingly likely.

The global economy is at a tipping point, with inflation, speculative growth, and geopolitical tensions creating a volatile and unsustainable environment. The emergence of a potential biothreat in China adds another layer of uncertainty, with the potential to trigger either a global economic slowdown or a short-term parabolic rise in growth that only exacerbates long-term vulnerabilities. As we move into the 2020s, the need for a macroeconomic reset becomes ever clearer, with the consequences of delaying such a correction potentially catastrophic.

Disclaimer: This article reflects analysis and predictions based on available information as of December 2019. It is not intended as advice or financial advice.