The USA-led financial cycle has lasted for more than ten years, and the financialization, centralization, and debt-driven model that has propelled its rise has long been overdrawn.
CNN's Global Economic Analyst Rana Foroohar predicted the "dollar doomsday scenario" in 2019: the fundamental shift in globalization and the reconstruction of the post-Bretton Woods system would lead to a decline in the value of the dollar and dollar-denominated assets, driving up U.S. Treasury yields, Gold prices, and the exchange rates of various foreign currencies. Now, this prediction is gradually being fulfilled - although the S&P 500 Index fluctuates with Trump's unpredictable moods, the dice of the new era have already been cast.
Foroohar stated that while she is not good at predicting the timing of market turns, she consistently holds one core view: the entire investment paradigm is changing; regardless of whether a trade war occurs, reducing exposure to the U.S. market is crucial. Even if the current U.S. president is Harris, we will still be in the "post-Washington Consensus" era (the Biden administration has accepted this), and inevitably moving toward a multipolar world - where the dollar and dollar assets will lose their monopoly.
The U.S.-led financial cycle has lasted for over a decade, and the financialization, centralization, and debt-driven model that has propelled its rise are already overdrawn, which is far from being explained by Trump's personal antics. Foroohar believes that three major structural risks are brewing:
1. Asset Price Dependency: The "Bubble Shackles" binding Q&M Dental.
For the past half century, almost all major economic decisions in the USA have served to boost asset prices - from the marketization of interest rates in the late 1970s, to the legalization of Share Buybacks, to tax incentives for performance-based compensation primarily involving Stocks (the source of Silicon Valley's paper wealth). Trump's team claims that "ordinary people don't care about the stock market," but the fact that asset growth far exceeds income growth has plunged society into a dependency on Capital Markets.
The proportion of U.S. households' Hold Positions in Stocks has reached a historic peak (Stocks andMutual FundWith 26% of total household Assets, this means any market downturn will simultaneously impact individuals and the overall Economy. Analyst Luke Gromen pointed out, "Since 1995, Stocks have become the marginal driver of federal tax revenue in the USA. If the stock market remains sluggish, Consumer spending and GDP will fall into recession, with deficits soaring." At this moment, inflationary concerns persist, and investors' required risk premiums for USA Assets continue to rise.
Regardless of whether reciprocal tariffs are implemented, most Analysts believe that US Stocks will face deeper adjustments. The latest IMF financial stability report warns that the overvaluation of US Stocks has become a significant risk for the Global market.
2. Private Debt "Time Bomb": A Tsunami Maturing in 2027.
The surge in private sector debt and leverage in recent years is even more concerning. Corporate borrowing in the private credit market has exploded, with many borrowers unable to meet the traditional Banks' lending standards. About half of private credit funds will concentrate their maturities before 2027, unable to refinance.
Former SEC financial stability senior advisor Corey Frayer warned, "If an economic downturn overlaps with a wave of private credit maturities, it could trigger a chain of bankruptcies." This would not only destroy the shadow banking system but also affect formal Banking—current Banks' risk exposure to non-bank institutions far exceeds that during the 2008 financial crisis.
3. Cryptos "Powder Keg": Madness in a Regulatory Vacuum.
The Trump administration's relaxation of financial regulations, reduction of SEC staff, and undermining of the Consumer Financial Protection Bureau have opened the door to Cryptos' risks. The bipartisan-supported "Genius Act", if passed, would allow Cryptos to infiltrate the real economy on a large scale, amplifying the aforementioned risks.
When Silicon Valley Bank collapsed, the Biden administration was forced to rescue the crypto platform Circle. The new bill might attract more Institutions into this sector—this aligns with the interests of Trump and his "strategist" Musk.
Foroohar stated that she is not asserting that corporate debt or Cryptos will necessarily trigger a crisis (although the next financial crisis is likely to stem from this), but even aside from the threat of trade wars, the risks and overvaluation in the USA Asset Markets are already evident. Coupled with the trust deficit created by Trump, there is still room for the 'dollar doom' scenario to unfold.
