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‘It’s going to pop’: Major warning to Biden-led America

 Joe Biden will inherit a nation grappling with a sovereign debt crisis and a dollar that will “drop through the floor”, leaving other world economies like Australia better off, a prominent US financial broker has predicted.

Speaking to Yahoo Finance, Euro Pacific Capital CEO and global strategist Peter Schiff said the US Government had been driving itself into debt for years, and US asset prices would crash during Joe Biden’s presidency.

“The US economy has been a bubble for many, many years. And they've been passing the baton from administration to administration,” he said.

Democracy rarely functions well in such large states

American statesmen love to say that "there's more that unites than divides us", but it's reaching the stage where that is becoming less and less true.

The life lived by a wealthy Wall Street trader or California socialite almost couldn't be more different from the life lived by a minimum wage hospitality worker in West Virginia.

Growing income inequality means more people are living in poverty in the United States than the entire population of Australia and New Zealand combined.

With numbers like these, comparing the United States to the most high-functioning democracies is perhaps unfair.

When you look at the state of American politics in comparison with Western Europe, Canada, Australia and New Zealand it does not come off well at all. But more people live in the United States than all of those countries combined.

Rather than the largest of the developed countries — it may be more helpful to look at them as the most developed of the large countries.

The most populous countries are, in order, China, India, the US, Indonesia, Pakistan, Brazil, Nigeria, Bangladesh, Russia, and Mexico, and when you compare American politics to those, it comes off rather well.

According to last year's Economist Intelligence Unit Democracy Index, two of them — China and Russia, are full-blown authoritarian regimes.

Pakistan, Nigeria, and Bangladesh are "hybrid regimes" — in that while they have not slipped fully into authoritarianism, their governments are going to serious efforts to quash opposition and dissent.

The Index rates the US as a "flawed democracy", alongside India, Indonesia, Brazil and Mexico.

The problems facing these five are significantly different, though.

In India, Narendra Modi, the fiscal conservative the people elected in 2014, has morphed into a hardline Hindu nationalist — bringing in discriminatory policies against the country's 200 million Muslims and stirring up the tension with neighbours China and Pakistan to increase nationalist fervour.

In Indonesia, the popular moderate Joko Widodo has successfully held anti-democratic hardliners at bay, though there is significant concern that at the end of his term in 2024, they may take control of national politics.

In Brazil, widespread corruption in national politics led to the rise of far-right culture warrior Jair Bolsonaro, who has led a dangerous assault on the country's public institutions and denied the effects of climate change even as the Amazon burns.

In Mexico, the incredible influence of organised crime and corruption of political institutions has meant the population has lost almost all confidence in its public officials and institutions.

This is the group the Economist has placed the United States in, though it does look on it more favourably than the others.

The researchers are less concerned about rule-of-law and the legitimacy of elections than they are by the hyper-partisan nature of American politics.

They say "Republicans and Democrats are increasingly seen as being focused on blocking each other's agenda, to the detriment of policy-making", a trend that has led to a decade-long stalemate in Congress.

But each passing administration made the debt problem worsen further, including outgoing US President Donald Trump.

Debt under Trump has ballooned to US$26.9 trillion. He added US$6.7 trillion to the country’s debt since Obama’s last budget. At the end of Obama’s presidency in 2017, the debt was US$20.24 trillion, according to The Balance analysis of White House papers.

“For all the talk from President Trump about draining the swamp and making America great again, he did neither. All he did is perpetuate the bubble that he inherited, and it's bigger than ever,” Schiff said.

“But I think it's going to pop. I think the chickens are going to come home to roost under Joe Biden.”

And if they do, we’ll see the US dollar plummet – dramatically. “We're finally going to see the dollar collapsing the way it did during the Bush administration.”

During George W Bush’s time in office, the US dollar fell to an all-time low of 71.30 on 17 March 2008 according to the dollar index during the global financial crisis.

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