By Independent News Roundup
A leading economist has warned that the United States economy is not heading toward a sudden collapse, but rather a prolonged and grinding deterioration driven by monetary expansion, weak growth, and structural imbalances.
Speaking in a recent interview, economist Ryan McMacken outlined a scenario where the economy continues to weaken gradually, describing the outlook not as a “time bomb,” but as a “slow unraveling.”
“We’re sitting on top of all these bubbles right now… it’s not going to be a time bomb, more of just a slow unraveling.”
Despite repeated claims from policymakers that monetary policy is restrictive, the data tells a different story.
The US money supply has surged significantly, with approximately $1 trillion created in just seven months between mid-2025 and early 2026. Total money supply now sits around $20 trillion, with roughly one-third created since 2020 alone.
McMacken argues that ignoring money supply growth while analysing inflation is fundamentally flawed.
“You can’t really get a grasp of what’s going on with rising prices unless you take some notice of what’s going on with the money supply.”
At the same time, inflation remains above the Federal Reserve’s stated 2% target, with real figures trending closer to 3%, suggesting continued upward pressure on prices.
Key economic indicators point to a weakening economy:
The labour market, in particular, is showing signs of structural strain. While mass layoffs have not yet materialised at scale, hiring has slowed dramatically.
This has created what McMacken describes as a “no hire, no fire” environment, where workers are neither being widely dismissed nor newly employed.
For younger workers and those entering the job market, the outlook is significantly worse.
Compounding the problem is declining production capacity linked to geopolitical instability, particularly disruptions in energy and supply chains.
With fewer goods being produced while the money supply continues to expand, the inflation dynamic becomes more severe.
“You’ve got more dollars chasing fewer goods. So that’s going to cause even more price inflation.”
Unless major global disruptions resolve quickly, economists expect inflation to continue rising in the months ahead.
While central banks are often blamed for money creation, the reality is more complex.
The modern financial system relies heavily on fractional reserve banking, where commercial banks effectively create money through lending.
However, since the 2008 financial crisis, central banks have taken a far more active role, purchasing trillions of dollars in assets such as government bonds and mortgage-backed securities using newly created money.
This has led to a significant expansion of central bank balance sheets, with little evidence of meaningful reversal.
“They’ve been talking about normalising policy for years… but there’s no sign that’s going to happen.”
One of the most striking contradictions in the current economy is the strength of asset markets, particularly equities, despite weak underlying fundamentals.
Stock markets continue to hit highs, but this is increasingly seen as a function of liquidity rather than genuine economic strength.
“Stock markets are a function of dollar creation in many ways.”
This divergence has created a bifurcated economy:
Housing affordability continues to deteriorate, reaching record levels of unaffordability.
Combined with rising costs and weak income growth, this is placing increasing strain on middle and lower-income households.
Growing deficits, rising debt issuance, and continued monetary expansion are also raising concerns about the long-term stability of the US dollar as the world’s reserve currency.
Increasing global efforts to move away from dollar-based trade systems, particularly among emerging economies, could accelerate this trend over time.
“If you’re flooding the world with dollars, each individual dollar is going to have less value.”
Historical comparisons have been drawn to the decline of the British pound following the Suez Crisis, suggesting a potential long-term shift rather than an immediate collapse.
Despite ongoing discussions about reducing central bank balance sheets and tightening policy, there is little political or economic appetite for meaningful contraction.
High government spending, war-related costs, and economic fragility all act as barriers to tightening monetary conditions.
“I just don’t see that happening… they’re too afraid of weakening the economy.”
Looking ahead, the most likely scenario is not a dramatic crash, but a prolonged period of stagnation and gradual deterioration.
Key expectations include:
“There is nothing in the economic data to suggest a significant revival.”
Rather than a single triggering event, the risks appear cumulative, with multiple pressures building over time.
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