USA on a direct path to autocracy

Barely two months before the US midterm elections, the USA is in an extremely tense situation. Extreme social inequality and massive attacks against democratic principles seriously endanger the continued existence of US democracy. This is the conclusion of the FERI Cognitive Finance Institute in a recent analysis. "The US is on a direct path to an autocracy or presidential dictatorship. Donald Trump has greatly accelerated this trend, but the actual causes lie much deeper," says Dr Heinz-Werner Rapp, founder and head of the FERI Cognitive Finance Institute.

Antidemocratic currents

Most recently, the social and political division in the "U-USA" ("Un-United States of America"), which the FERI Cognitive Finance Institute examined in detail for the first time in 2018, has worsened massively. Behind this are the anger, bitterness and frustration of broad sections of the population as a result of many years of political ignorance. At present, attempts to deliberately reshape electoral districts and other party-political manipulations are doing serious damage to democracy. The active politicisation of the judicial system, especially by the Supreme Court, should also be interpreted as a clear attempt at "political transformation". The sum of these anti-democratic currents is now equivalent to a "conservative coup" from above. "This development is of almost tragic irony. The very country that was historically most characterised by the ideal of freedom is now moving ever faster towards political unfreedom," Rapp states.

Massive loss of confidence

The critical state of the US system is not least a consequence of the democracy-denying conduct of the last US President Donald Trump. Trump's targeted attacks have made serious constitutional crises a new reality, visible to the whole world, for example, in the "storming of the Capitol". Surveys in the USA currently show a clear loss of confidence in the security and reliability of democratic institutions and procedures. According to these surveys, most Americans do not believe that the results of the US elections reflect the will of the people. An alarming 85 per cent of US citizens now even favoured a "complete or extensive overhaul" of US democracy. "The enormous political tensions will already be unleashed at the midterms in November, but at the latest - and then with great vehemence - in the presidential elections in 2024," fears Rapp. This has immediate consequences for the rest of the world as well: "Any form of political instability in the USA always creates and amplifies geopolitical risks," Rapp explains.

USA no longer a safe haven

The dynamics and economic performance of the USA are also suffering from the increase in social and political tensions and the dismantling of democratic principles. "Entrepreneurs and investors should strongly question the thesis of the USA as a safe haven that stands for stability, market economy, security and openness in the long term. The further development of the 'U-USA' into a kind of autocracy could cause very negative surprises in the next few years, which would then also radiate directly onto the capital markets," emphasises Rapp. As a result of internal tensions and increased geostrategic uncertainties - triggered by the U-USA - political risk premiums on the capital markets are thus likely to rise noticeably again.

The detailed analysis "America on the Road to Autocracy - Anatomy and Prospects of a Divided Great Power" is available in German in the download area.