The Illusion of Wealth and the Coming Reckoning
The US economy is flashing warning signals. Unemployment pressures are rising, yet the administration continues to assure the public that lower interest rates will fix the problem. History tells a different story. Rate cuts usually arrive when trouble is already underway—and markets tend to interpret them as confirmation of weakness, not strength.
The Federal Reserve’s path makes the point. From March 2022 to July 2023, the Fed raised its policy rate 11 times, moving from 0.25% to 5.50%. The economy was strong and investors accepted those higher rates – at least until securitized real estate loans started failing. During the early hikes, the S&P 500 weakened and Bitcoin crashed. But as soon as the Fed stopped hiking, equities lifted and Bitcoin roared back. This wasn’t economic strength—it was speculation fueled by cheap liquidity. Bitcoin, which peaked at about $120,000 two months ago, has barely pulled back. Meanwhile, gold has risen sharply, and the US dollar has slipped.
For most Americans, a falling dollar doesn’t resonate. They don’t see the link between a weaker currency and higher consumer costs. What they feel directly is job insecurity, rising loan charges, and shrinking purchasing power. That’s where the real pressure builds.
My concern is about investor sentiment. What I see missing from Washington is problem-solving. Instead of endless partisan battles, the government could be investing in youth employment, housing renewal, and projects that build lasting wealth. Without it, confidence erodes.
For investors, gold is the canary in the coal mine. Its rise signals stress. When that canary falls silent, the next plunge will likely be in the S&P 500—and the long bull market could finally give way to deflation and decline.
Takeaway: Watch prices, not promises. The illusion of wealth is fragile, and the reckoning may be closer than many think.