The New World Order: Investment, inequality and a changing future

February 2026 by Jorge Silveira Botelho.

The vast majority of investors are beginning to believe that geopolitics is not an obstacle to the good performance of stock markets, since the main protagonist in creating episodes of tension and unrest ends up, in one way or another, protecting the behavior of the markets — the famous acronym TACO (Trump Always Chickens Out). However, as Canadian Prime Minister Mark Carney lucidly illustrated in Davos, the current global scenario does not correspond to a simple transition, but rather to a definitive rupture of the international order as we know it.

In reality, perhaps we are too entertained and absorbed in these geopolitical escapades, without realizing their true dimension, nor how the world has changed. What we are gradually beginning to observe is a historical realization of the growing risks underlying the decline of a great empire.

Contemporary historians and economists who have analyzed the patterns of rise and fall of empires over the centuries—such as Ray Dalio, Niall Ferguson, Daron Acemoglu, James A. Robinson, Paul Kennedy, among others—identify multiple signs that precipitate their decline, including: excessive indebtedness, loss of value and status of the currency, inequality, breakdown of the social contract between generations, institutional degeneration, rise of rivals, fiscal arithmetic (when interest on debt exceeds defense spending), among other criteria.

The truth is that this set of patterns is manifesting in a peculiar way and is quite visible in the world we live in. Therefore, although they may seem to be overlooked, these geopolitical episodes — because of the famous TACO — are occurring with increasing frequency, which is beginning to cause collateral damage. As the demand intensifies for greater autonomy in different regions, in matters such as energy, resources and defense, there is a greater race for capital.

Excessive debt and chronic structural deficits reflect how this new international order is taking hold. It is thus important to remember that a scarcity of capital can generate significant internal imbalances—both economic and social—within each region.

Currently, the biggest obstacle to economic growth is not necessarily inflation, but rather the correct allocation of capital, which allows for productivity gains and corrects the growing levels of inequality, which in turn constitute a serious impediment to economic growth, especially in regions where private consumption is the main driver of the economy.

This debate becomes particularly evident in the US, where growing inequality is manifest at both economic and generational levels, opening space for a latent conflict between the citizen of Main Street and the citizen of Wall Street. According to the US Census Bureau, the Gini index of income was 0.446 in 2024, making the United States the country with the highest inequality index among the G7 nations and one of the highest among OECD countries. However, if this analysis is done in terms of wealth rather than income, according to the World Inequality Database, the Gini index for wealth in the US is currently 0.85. To get a more concrete idea of ​​the distribution of this wealth, studies by the Fed indicate that the top 10% of the richest population own between 87% and 90% of all listed shares and investment funds, while the poorest 50% own about 1%. With regard to real estate, according to FED data relating to the third quarter of 2025, the poorest 50% own only 10% of homes.

But, in addition to grappling with growing inequality, we also face an extremely indebted state that shows little interest in correcting this problem—quite the opposite.
The per capita debt burden at the end of 1985 was $7,700, but by the end of 2025 it had already reached approximately $113,000 (source: FRED). To put these figures into perspective: in 1985, an American would need about four months of the average salary to pay off their share of the federal debt. In 2026, it would take almost two years of full (gross) salary to cover the nearly $113,000.

It is clearly extremely difficult to correct a problem of this magnitude when the deficit is consistently between 6% and 7% and the debt is growing uncontrollably, having reached approximately 125% of GDP by 2025. The IMF predicts that this figure will reach 142.5% of GDP in 2030.

It is no coincidence that this new administration, after seeking to cut spending — especially in health and education — is now trying to introduce a set of popular measures to reverse some of this inequality, the application and effectiveness of which are, however, questionable. In practice, these measures are unlikely to reduce mortgage interest rates, nor to solve the health and debt problems of the most disadvantaged classes.

The problem of excessive debt and chronic deficits demonstrates a lack of discernment in adopting a policy based on the correct allocation of capital. What emerges from this situation is the inherent risk of being unable to implement countercyclical measures when needed, especially in an economy that proves more vulnerable to internal shocks than external ones.
In this sense, it is important to monitor the evolution of three variables that can provide us with a better understanding of the risks inherent in the future performance of the American economy:

The labor market, whose recent evolution reveals weaknesses, has gone from an average creation of more than 200,000 jobs in one year to an average destruction of more than 20,000.

The evolution of long-term real interest rates, which constitute a diagnosis of the financing conditions of an economy. Real interest rates for 30-year bonds in the United States are at multi-decade highs.

In short, in a world undergoing constant transformation, it is essential to know how to read the signs of the times, because the greatest investment opportunity lies, above all, in seeking new forms of diversification that capture this new reality. The pursuit of greater regional autonomy, capital scarcity, and inequalities are factors that are already altering the correlations between assets and geographies, whether at the level of currencies, commodities, safe-haven assets, sectors of activity, or companies. Perhaps that's why it's wise to be careful where we walk, because a stroll down Wall Street can quickly end up on Main Street.