Many market participants have built long positions on euro-denominated assets, expecting a positive outcome from the German stimulus plan and Rearm Europe projects. However, betting on a stronger euro may be optimistic considering the poor track record of these government plans, the rising fiscal challenges of France and other nations, the elevated debt and enormous unfunded liabilities, as well as the imminent implementation of a central bank digital currency. There are undoubted fiscal and deficit problems in the United States, but the relative position against the euro is undeniably stronger considering all the previously mentioned factors.

The world is not going to see another crisis like the ones experienced in 2008 or 2011. No central bank or government is going to accept it. You may think the prospect is good news. However, the flip side is that this means secular stagnation and perennial crisis for wage earners and the middle class. There is a slow-motion eternal crisis that leaves the average citizen wondering why they cannot make ends meet, while governments boast about their economic stability.

A crisis is only the manifestation of a previous excess. When governments prioritise prudent investments, healthy public accounts, and attractive taxes, crises end quickly, and the recovery is stronger. However, when governments claim to be the solution and mask economic imbalances with increased spending, debt, and taxes, they merely create a significant transfer of wealth from the private sector to themselves, resulting in persistent inflation, higher taxes, weaker productive growth, and lower real wages that burden taxpayers.

In 2025, the mainstream Keynesian narrative that the United States would inevitably experience a recession and stagflation has proven to be utterly incorrect. The American economy is performing much better than its comparable nations, is showing broad-based strength, and even has indications of accelerating growth, giving investors and consumers plenty of reason to feel more optimistic, despite the consensus estimates from earlier in the year.

The consensus was wrong.

The United States economy is outperforming the economies of the UK, Germany, France, Italy, Japan, and the entire euro area, showing estimates of economic growth that exceed those of the best-performing developed nations, along with significantly lower unemployment rates and solid real wage growth.

Both the recent spike in inflation and the current decline in US jobs are, in a very significant way, the fault of the Federal Reserve.

The Fed’s policies since 2021 reveal a nightmare “pendulum” effect: first, easy money and historic liquidity expansion fueled runaway inflation; then, rapid rate hikes hurt businesses and families as well as job creation, especially for small and medium-sized businesses and families. In 2021, the largest monetary expansion in decades caused an inflationary burst that was particularly negative for wage earners and small businesses. A massive rate hike exacerbated this negative impact.