Now that we have the US Presidential race pretty well set (assuming there is no surprise on the Democratic side for any reason), I will be watching for what I think is the most important event (or non event) that no one will in the media be talking about at all unless it happens.

Of course I am talking about whether or not another major financial crisis unfolds before the election this year. I am not talking about just a normal recession. I am talking about another major crisis worse than the 2008 crisis that could actually disrupt the banking system and/or markets for a period of time. A crisis that creates genuine fear among the general public. It's not out of the question as I have documented a long list of warnings about systemic risk to the global financial system by both the IMF and the BIS (Bank for International Settlements) on my blog. 

The assumption in place right now by virtually everyone is that no such crisis will happen this year before the November election. If that is correct, then I would assume this election will play out much like everyone expects with a wild and unpredictable race between Hillary Clinton and Donald Trump. I would think that no crisis would favor Hillary Clinton and also favor the GOP retaining the US House of Representatives. The Senate might be more in play.

A pre-election major crisis could change everything though. It could discredit the Obama Administration and likely drag Hillary Clinton down as well (assuming the email issue does not). Since Donald Trump is already on record as predicting that we have a major economic bubble that will burst, I would expect him to use that to full advantage in positioning himself to the public as "the only one who could save the day." I would expect him to launch a full attack not only on the Obama Administration (and by extension Hillary Clinton), but also the US Federal Reserve. He would likely put blame on the Fed for creating an "asset bubble" in the markets with the easy monetary policies used after the 2008 crisis. I would expect him to say the Obama Administration supported Fed policy to make the economy look better than it was and fool the public.

So I view this as the key event (or non event) of the entire race. In every election in my lifetime, how secure the voters feel about the economy has been the major driver for how they vote. I see no reason why this year would be different. Another major crisis probably means voters punish the Democratic nominee since a Democrat has been in the White House the last eight years. No crisis and a continued dovish Fed probably favors the Democratic nominee. We can assume that the Fed would prefer to see Hillary Clinton as President rather than Donald Trump so a dovish Fed seems quite plausible.

If we do get the kind of major financial crisis I am talking about, I think Trump is more likely to win. If that were to happen, it would be beyond interesting to see how he dealt with the crisis. Trump has talked about being the King of Debt, but has not really explained how he would handle a true major crisis. Neither has Hillary Clinton for that matter. It's not in her interest to even bring the subject up.

Would Donald trump buy into idea that Jim Rickards has put forward that the IMF would propose using the SDR to replace the US dollar in the next major global financial crisis? Everything he has said in his campaign suggests he would reject that idea (America first, etc). I think we can assume that the Democratic nominee would be more likely to support using the SDR to replace the US dollar as global reserve currency if the next crisis was too big for the Fed to deal with as Rickards predicts.

One thing we know for sure is that we really have no idea what either candidate would do since the topic has not been discussed at all and likely will not be unless a crisis does unfold before the election. So the biggest potential issue for the future for the US and the world will likely be the one that no one will talk about unless the event itself forces them to.

Added note: Rick Miller at Bloomberg writes an article that says the next President probably faces a recession.