Present:
Markets enter a plateau, buoyed by slightly improved economic indicators but weighed down by uncertainties in geopolitics. The risks of a global stagflation scenario are increasing, as central banks worldwide exhibit weakness and hesitation in their easing policies, failing to act decisively to promote job creation and manufacturing growth.
Furthermore, the widening divide between the Global North and South — highlighted during the recent BRICS summit in Kazan — suggests that artificial political barriers, such as tariffs, are likely to further slow down the global economy in the near future. In this context, easing monetary policies by central banks have become a necessity; however, inertia and the outdated charters of these institutions hinder timely responses to the macroeconomic situation. Compounding this issue is the rapidly developing military sector, which will significantly increase government expenditures globally, inevitably leading to higher taxes that could suppress business productivity even more.
In addition, politically driven border closure policies between the North and South will likely exacerbate inflationary pressures, as industrial production from the North becomes more expensive for Southern economies, while energy and food costs rise for the North. Consequently, this could trigger inflation on both sides of the increasing divide. Rising inflation will, in turn, limit the ability of central banks to pursue active easing policies.
Taken together, these factors create an environment conducive to the onset of global stagflation.
Future:
In the next two to three decades, after an initial period of economic and political readjustment marked by instability and conflict, the world will likely bifurcate based on inherent limitations and historical trajectories. One part will maintain its technological and social advantage, fueled by open, highly competitive markets built on cutting-edge advancements. However, this region will face growing social pressures due to aging populations, decreased immigration, and increased government intervention, leading to tighter regulations and higher taxes. The rise of inequality, exacerbated by a rise of AI, market restrictions and reduced entrepreneurial opportunities, will further complicate the situation.
The other part of the world will stabilize within a more patriarchal, heavily regulated framework, reliant on government initiatives and investments. While unlikely to match the first world in high-tech innovation, this region may experience rapid economic growth due to its lower starting point and untapped potential for regional cooperation, bolstered by significant government support. However, it will remain dependent on the first world for high-tech goods and services. This region will also exhibit significant social disparity, with more pronounced extremes. Despite these challenges, it may offer better profitability and growth opportunities for businesses, albeit constrained by bureaucratic hurdles and high transaction costs.
A third category of countries will emerge, aiming to position themselves as intermediaries between the first and second worlds. These countries will export food, natural resources to one side, and high-tech goods to the other one, serving as conduits between the two.
Finally, a fourth category of micro-economies will strive for complete independence. By leveraging geographical or technological advantages, these economies will cater to wealthy individuals, offering unique, exclusive products and services that are inaccessible in the larger world. Freedom, both political and economic, may become a rare commodity in this scenario, as it is increasingly curtailed by governments in all three major economic models.
In this context, decentralization and cryptocurrencies will play a crucial role, attracting talent and facilitating borderless trade, offering a potential escape from the constraints imposed by traditional economic systems of the 1st, 2nd and 3rd Worlds.
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