Imtiaz Rafi Butt The global economy is still deep in uncertainty over not just whether or when a recovery will take place. But, more importantly, there is much debate over if the financial turbulence of 2008 were just the tremors before the real economic earthquake. The fabric of the global economy, however, is completely different today, than it has been in recent history. Never before have nations been so dependent on each other for not just consumer manufacturing or financial inflow, but also strategic resources, including food and electricity as well as the components to produce strategic resources, without which no civilisation can maintain its modern infrastructure and state functionality. There is no doubt that the current economic system of global capitalism and its supporting institutions have been largely crafted, created and guided by the dominant superpower of our times - the United States of America. Its importance to the global economic system cannot be understated, and the relationship can be conveniently comprehended by the clich: If America sneezes, the world catches a cold. Even though many economic pundits are trying their utmost to convince the world that it is in recovery, and that the mistakes leading to the financial meltdown of 2008 have been corrected, I have great concern that these experts, who did not see the 2008 fiasco coming, are ignoring the facts and seem to be in a state of denial. Just by glancing at the facts in the USA, we can get a global perspective of where the world may be heading. The US Social Security system was created at the end of the Second World War in 1945. At the time, there were 43 taxpaying citizens for every single pensioner. A victorious America entered into a period of unprecedented growth; it was one of the few places untouched by the war and a manufacturing behemoth. A significant proportion of the global manufacturing and capital were American, with birth rates skyrocketing and the resulting generation being termed baby boomers. In 2011, however, the US is a very different place. The taxpayer to dependent ratio has dropped to 3:1. The people are living longer thanks to the advances in medical science and those baby boomers are starting to retire - all 80 million of them. According to some statisticians, starting in 2011 about 10,000 a day will be retiring and turning into a burden on the system. The question is: How exactly is the US planning to deal with this massive problem? Well for starters, its regulatory authority - the Federal Reserve - is in fact a privately-owned institution, and is helping deal with the problem by printing more money. The scale of the 2008 fiasco has already caused the Fed to print $824 billion, which is only going to cause hyperinflation in the US and undermine the dollar causing further problems. Historically, hyperinflation has already occurred in the US before - once during the revolutionary war and again during the civil war. Globally, there are now seven billion people, and populations in the rapidly developing countries, such as India and China, are starting to behave like American consumers. Thus, these countries will now be competing for the same resources as the US, causing further global inflation. Another term often associated with the global economic nightmare is peak oil. It is basically a term given to the fact that we have taken more oil out of the ground than we will ever find. The global oil discovery peaked in 1964 and 1984, when the world was consuming more oil than it discovered. In 2011, we consume four to six barrels for every one barrel of oil discovered. And to make matters worse, the newly discovered oil is much more expensive to refine and will further undermine our global system that is centred around cheap oil; everything from shampoo and fertiliser to asphalt and electronics is dependent on oil. So, any increase in crude oil prices will directly affect all those products. The most dangerous aspect of the inflation bomb is its effect on food; many countries like Brazil are switching agricultural land normally used for food supply to produce biofuel. According to a UN survey, food prices skyrocketed 48 percent in 2010, wheat rose to 74 percent, the price of oats 68 percent and corn, coffee and sugar prices are at record highs. Moreover, global warming is causing crop failures worldwide, further impairing the food supply. During the last depression, credit cards did not exist and not many people had access to home equity loans or debt. In 1929, the US was a manufacturing behemoth and enjoyed a trade surplus quiet contrary to the situation today. The model of economics then was not so debt reliant. The sooner the international community comes out of its state of denial and sees the writing on the wall, the better for the world in avoiding a second 'dark age. The writer is the chairman of the Jinnah Rafi Foundation and honorary consul for Malaysia. Email: