According to the following conditions written yesterday, countries will ultimately choose to engage in massive monetary easing. Including ourselves, we must adjust the economic temperature through easing.
1. The global economy is experiencing structural downturns. Population aging, especially the relocation of Western industrial chains, technological replacement cycles, and weakened demand are universal problems, not isolated to any single country. In this cycle, 'not easing' means the economic temperature will further decline, and risks will emerge simultaneously in various countries. The struggle between left and right forces adjusted by economic pressure is already visible. This includes the frequent changes of prime ministers in neighboring countries that are doing relatively well.
2. Fiscal leverage has become the main force, rather than a supplementary means. Whether in the United States, the European Union, or China, the contribution of fiscal expenditure to economic growth continues to rise. Once fiscal expansion stops, the truth of economic growth rates will be immediately revealed. The government must maintain fiscal operations through easing, otherwise there will be a break in fiscal continuity.
3. The scale of global debt is so large that it cannot be resolved through tightening. Today's economic structure is not that of 2008, nor 1998. Global debt exceeds three times GDP; once comprehensive tightening occurs, all countries will simultaneously enter a chain reaction of debt defaults, bank failures, and real estate collapses.
4. Geopolitical conflicts and supply chain restructuring lead to rising costs, rather than economic growth. We can see that the United States is rebuilding its manufacturing sector, Europe is reshaping its energy system, and Asia is redistributing its supply chains. All these are high-cost models that do not inherently create effective demand. The combination of high costs and low growth.
5. The AI industrial revolution is swallowing traditional jobs; in the short term, it is an efficiency revolution, and in the long term, it leads to shrinking demand. AI does not bring about job expansion but job compression. Corporate profits may rise, but household incomes do not necessarily rise in sync. Under this structure, countries must stabilize consumption through monetary means, otherwise they will fall into the trap of technological prosperity, insufficient demand, economic stagnation, and severe wealth disparity.
In the coming years, liquid currency will continue to be issued, and wealth will be diluted until it becomes inconsequential. An excuse will be found, or a new school of economics will emerge to explain the development rules of new economic entities.
