This article was written by Brandon Smith and originally published at Birch Gold Group
For many years now there has been a contingent of alternative economists working diligently within the liberty movement to combat disinformation being spread by the mainstream media regarding America’s true economic condition. Our efforts have focused primarily on the continued devaluation of the dollar and the forced dependence on globalism that has outsourced and eliminated most U.S. manufacturing and production of raw materials.
The problems of devaluation and stagflation have been present since 1916 when the Federal Reserve was officially formed and given power, but the true impetus for a currency collapse and the destruction of American buying power began in 2007-2008 when the Financial Crisis was used as an excuse to allow the Fed to create trillions upon trillions in stimulus dollars for well over a decade.
The mainstream media’s claim has always been that the Fed “saved” the U.S. from imminent collapse and that the central bankers are “heroes.” After all, stock markets have mostly skyrocketed since quantitative easing (QE) was introduced during the credit crash, and stock markets are a measure of economic health, right?
The devil’s bargain
Reality isn’t a mainstream media story. The U.S. economy isn’t the stock market.
All the Federal Reserve really accomplished was to forge a devil’s bargain: Trading one manageable deflationary crisis for at least one (possibly more) highly unmanageable inflationary crises down the road. Central banks kicked the can on the collapse, making it far worse in the process.
The U.S. economy in particular is extremely vulnerable now. Money created from thin air by the Fed was used to support failing banks and corporations, not just here in America but also banks and companies around the world.
Because the dollar has been the world reserve currency for the better part of the past century, the Fed has been able to print cash with wild abandon and mostly avoid inflationary consequences. This was especially true in the decade after the derivatives crunch of 2008.
Why? The dollar’s global reserve status means dollars are likely to be held overseas in foreign banks and corporate coffers to be used in global trade. However, there is no such thing as a party that goes on forever. Eventually the punch runs out and the lights shut off. If the dollar is devalued too much, whether by endless printing of new money or by relentless inflationary pressures at home, all those overseas dollars will come flooding back into the U.S. The result is an inflationary avalanche, a massive injection of liquidity exactly when it will cause the most trouble.
We are now close to this point of no return.
The difference between a crisis and a real crisis
As I have said for some time, when inflation becomes visible to the public and their pocketbooks take a hit, this is when the real crisis begins.
A Catch-22 situation arises and the Fed must make a choice:
- To continue with inflationary programs and risk taking the blame for extreme price increases
- Taper these programs and risk an implosion of stock markets which have long been artificially inflated by stimulus
Without Fed support, stock markets will die. We had a taste of this the last time the Fed flirted with tapering in 2018.
My position has always been that the Federal Reserve is not a banking institution on a mission to protect American financial interests. Rather, I believe the Fed is an ideological suicide bomber waiting to blow itself up and deliberately derail or destroy the American economy at the right moment. My position has also long been that the bankers would need a cover event to hide their calculated economic attack, otherwise they would take full blame for the resulting disaster.
The Covid pandemic, subsequent lockdowns and supply chain snarls have now provided that cover event.
Two years after the pandemic started and the Fed has pumped out approximately $6 trillion more in stimulus (officially) and helicopter money through PPP loans and Covid checks. On top of that, Biden is ready to drop another $1 trillion in the span of the next couple years through his recently passed infrastructure bill. In my article ‘Infrastructure Bills Do Not Lead To Recovery, Only Increased Federal Control‘, published in April, I noted that:
“Production of fiat money is not the same as real production within the economy… Trillions of dollars in public works programs might create more jobs, but it will also inflate prices as the dollar goes into decline. So, unless wages are adjusted constantly according to price increases, people will have jobs, but still won’t be able to afford a comfortable standard of living. This leads to stagflation, in which prices continue to rise while wages and consumption stagnate.
Another Catch-22 to consider is that if inflation becomes rampant, the Federal Reserve may be compelled (or claim they are compelled) to raise interest rates significantly in a short span of time. This means an immediate slowdown in the flow of overnight loans to major banks, an immediate slowdown in loans to large and small businesses, an immediate crash in credit options for consumers, and an overall crash in consumer spending. You might recognize this as the recipe that created the 1981-1982 recession, the third-worst in the 20th century.
In other words, the choice is stagflation, or deflationary depression.”
It would appear that the Fed has chosen stagflation. We have now reached the stage of the game in which stagflation is becoming a household term, and it’s only going to get worse from here on.
Lies, damned lies and statistics
According to official consumer price index (CPI) calculations and Fed data, we are now witnessing the largest inflation surge in over 30 years, but the real story is much more concerning.
CPI numbers are manipulated and have been since the 1990’s when calculation methods were changed and certain unsavory factors were removed. If we look at inflation according to the original way of calculation, it is actually double that reported by the government today.
In particular, necessities like food, housing and energy have exploded in price, but we are only at the beginning.
To be clear, Biden’s infrastructure bill and the pandemic stimulus are not the only culprits behind the stagflation event. This has been a long time coming; it is the culmination of many years of central bank stimulus sabotage and multiple presidents supporting multiple dollar devaluation schemes. Biden simply appears to be the president to put the final nail in the coffin of the U.S. economy (or perhaps Kamala Harris, we’ll see how long Biden maintains his mental health facade).
But how bad will the situation get?
“Collapse” is not too strong a word
I think most alternative economists have called the situation correctly in predicting a “collapse.” This is often treated as a loaded term, but I don’t know what else you could call the scenario we are facing. The covid lockdowns and the battle over the vax mandates have perhaps distracted Americans from an even larger danger of financial instability. That fight is important and must continue, but stopping the mandates does not mean the overarching threat of economic chaos goes away, and both serve the interest of central bankers and globalists.
Some of the key policies within the literature for the “Great Reset” and what the World Economic Forum calls “The 4th Industrial Revolution” includes Universal Basic Income (UBI), the “Sharing Economy” and eventually a global digital currency system using the IMF’s Special Drawing Rights basket as a foundation. Essentially, it would be a form of global technocratic communism, and if you enjoy individual freedom, being forced into total reliance on the government for your very survival does not sound appealing.
To obtain such a system would require a catastrophe of epic proportions. The Covid pandemic gets the globalists part of the way there, but it’s obviously not enough. Covid has not convinced many hundreds of millions of people around the world to give up their freedoms for the sake of security.
But maybe a stagflationary collapse will accomplish what Covid has not?
Accelerated price spikes in necessities including housing and food will generate mass poverty and homelessness. There is no chance that wages will keep up with costs. The government might step in with more stimulus to help major corporations and businesses increase wages, but this would basically be the beginning of a universal basic income (UBI, or free money for everyone) and it would only cause more dollar devaluation and more inflation. They could try to freeze prices as many communist regimes have in the past, but this only leads to increased manufacturing shut downs because the costs of production are too high and the profit incentives too low.
I suspect that the establishment will bring back regular checks (like the Covid checks) for the public now struggling to deal with ever increasing expenses and uncertainty, but with strings attached. Don’t expect a UBI check, for example, if you refuse to comply with the vax mandates. If you run a business, don’t expect stimulus aid if you hire non-compliant workers. UBI gives the government ultimate control over everything, and a stagflationary crisis gives them the perfect opportunity to introduce permanent UBI.
The mainstream can no longer deny the fact that stagflation is happening and it is a threat, so hopefully those people that have not been educated on the situation will learn quickly enough to complete the preparations necessary to survive. Countering stagflation will require localized production, decentralization and a move away from reliance on the global supply chain, the institution of local currency systems, perhaps using state banks like the one in North Dakota as a model, barter markets and physical precious metals that rise in value along with inflationary pressures. There is a lot that needs to be done, and very little time to do it.
At bottom, the fight against economic collapse and the “Great Reset” starts with each individual and how they prepare. Each person caught by surprise and stricken with poverty is just another person added to the hungry mob begging the establishment for draconian solutions like UBI. Each properly-prepared individual is, as always, an obstacle to authoritarianism. It’s time to choose which one you will be.
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Paul Craig Roberts and Peter Schiff have been sounding the same alarm for a very long time. “Quantitative easing” (QE) will continue until the Fed can’t do it anymore, lest the masses finally become aware that liberal economic and monetary policies don’t work. And we all know how perfect the liberals think they are, and how much they tolerate criticism. Too bad Mises wasn’t the model for the world’s economies, instead of John Maynard Keynes.
Or the fed will taper and implode the markets. Either way they get the crisis they want.
They are trying to tear apart every fabric of society. So far, they have kept the illusion of an economy stitched together and the stimmy payments to tide economically struggling people over, while getting them accustomed to government handouts. A little more and it will be habit forming.
Once that habit is formed, they will (and already are, with Utah being an example) tie behavior such as vaccine compliance, but expand it to innumerable other areas, to the tithe coming from the government, or sanction you in a similar manner to an IRS levy and most will be defenseless at stopping it. At that point the entrapment will be complete.
Asset overvaluation is, for now, letting the wealth effect keep people solvent who otherwise do not have a steady income. If asset prices collapse, things will rapidly disintegrate.
Thus far, they have maintained the illusion via algo controlled financial markets. At some point though, when people least expect it, they will flip the engines in reverse …..
Will you address private property and their need to get rid of it through increased property taxes. My wife and I are old, living on a fixed income. We own our home and have a nest egg, but man my biggest fear is an unpaid property tax.
Look into doing a Land Patent. There is a 3 part video series on the following website. Alfa Vedic.com then go to Alfacast.
do you think the FED will announce a rate hike next week?
Nobody is following Keynesian economics. Balance economic cycles by underspending in good years so you can overspend in bad years. They’re overspending every year and pretending it’s Keynesian economics.
What you are ignoring is the fact that EVERY YEAR for the past 14 years has been a bad year in the eyes of markets and so they demand stimulus regardless. And if constantly spending to stimulate more market spending is not Keynesian economics, then even Keynes was not Keynesian. Keynesian economics was a direct response to the deflationary collapse of the Great Depression, which, by the way, Keynes denied was a threat until everything imploded right in front of him. Government spending NEVER produces wealth or production because the government has no wealth, it only has direct taxation and hidden taxation through inflation, which is stealing wealth and production from the public. It’s funny though that Keynesians, on the brink of realizing what a failure their system actually is, are now using the same denial and gaslighting that socialists use – They claim “Keynesian economic didn’t fail because it’s not real Keynesian economic”, thereby dismissing all responsibility for their part in the stagflationary crisis now upon us. Keynesians laughed off Austrian economists and those of us that argued for sound money, and now they are witnessing first hand how wrong they were.
Appreciate your updated views on the economic situation, Brandon.
I’ve imagined the next stage in this intentional collapse might be war, civil strife, supply chain shortages, vax caused crises, or market turmoil.
At some point there has to be a dollar crash in order to facilitate transition to a new global currency.
From what I’ve read, there have been suggestions of a taper tantrum caused minor market correction, followed by a reversal of the Fed’s tightening stance, causing a melt up market and trashing the dollar. Then a waterfall equity and bond crash to take out everything. That would be a means to pave the way for a new global currency, it seems to me.
The Deep State (globalists) is trying to shift from the dying fiat dollar to Central Bank Digital Currency so they can stay in control. They’re using the vaccines as a gateway to Passports -> Digital ID -> UBI -> Serfdom. They’re also using the vaccines to reduce UBI expenses.
Perhaps the fiat dollar will collapse before they succeed. In which case, we’d all lose- but perhaps the Globalists would suffer the most (the bigger they are, the harder they fall). I’ve seen claims the globalist cabal behind the Great Reset are worth $100 Trillion!!! I have no idea if that’s true or not- but most of that money must be a bubble. In that case, a collapse would “impoverish” them.
Melissa CIUMMEI Interview:
It will be a combination of the SDR (which already exists) and a digital currency, as well as gold and silver (which central banks have been quietly buying by the ton for several year now).
Brandon, what do you think the price range for silver will be when the shift occurs?
The “price” in terms of the existing evil monetary unit? Gold and silver coins are money- the prices question is- how many ounces of gold or silver does something cost?
Extricate yourself from the existing fake money. Never think about “dollars” ever again!
Never think about “government” [the federal mafia] ever again! Excellent, now you are free!
In all previous collapses the scope has been national or moreover regional such that in every case there were relative safe havens to which one could relocate themselves…but what happens when no part of the Global system is untouched by the coming financial apocalypse?
In the mid 90’s after Glass-Stegall had been defanged the Bankers magically conjured (seemingly out of thin air no less) the Globall Derivatives market whose intent from the very beginning to be the infinitely deep ‘rabbit hole’ down which the Wealth of the World could be disappeared without any clear trail of evidence of culpability.
The notional value of that market is now pushing 3 Quadrillion dollars. To put that into perspective, the US GDP is roughly 19 Trillion dollars and the Global GDP is only a mere 90 Trillion, give it take a trillion. In effect the Central Bankers and thier proxies have bet more than 30 years of the productivity of the entire Earth in the Derivatives Casino. If someone tries to explain that markets dynamics they will – virtually without exception – attempt to claim that since every counter-claim in it is backed by another counter balancing payout that the system is ‘Self-Balancing’…nothing could be further from the truth.
In 2007 when the Chairman of the Fed got a frantic call from the head of Lehman Bros. on a Saturday night explaining that LB would not be able to meet it’s cash margins at the open on the following Monday we actually got to SEE what cards the Central Banks were holding. In reality, the Derivative market is ‘Self-Balancing’ if and ONLY IF every counter-party actually pays out on their commitments…which is a mathematical impossibility given the sheer size of the ‘bets’ involved. The arcane intricacies of that system were put in place for a single reason…and the craftiness of that was done with extreme deliberation to one end: That when the Bankers finally decided to head for the hills that NO ONE would ever be able to ferret out WHERE the money actually went.
We are – IMHO – very near to that time inasmuch as the Global Financial Charade can’t be maintained much longer. I suspect that regardless of what methods used the final Terminus will arrive in the course of 2022.
God Bless you all and Good Luck…
Thank you for mentioning this often overlooked “market”. It operates in the shadows mostly and dwarfs what the public believes to be the true indebtedness of the US Corp. I just wish more people would realize that they cannot be held responsible for a stolen credit card.
We should never have had a credit card.
One of our inalienable rights is the right to contract. Two or more people may agree to a contract where certain goods or services are exchanged for a promise of future value. Now, I may be wrong, but I believe that this ability is one of the necessities of a thriving economy. For example, not everyone has the money to build a home, but housing is a necessity. Providing the “credit” for someone with the ability to repay the value associated with the building of a home is (in my opinion) necessary to a thriving free and fair market economy. One’s ability to contract (or rather their “credit limit”) should be limited only by their ability to produce the necessary value to satisfy any and all open contracts. If someone defaults and for some reason is not able (or simply refuses) to deliver on the promised future value, then word of this person’s failure to fulfill their promises spreads and thereby limits their ability to find others willing to contract with them. The problem is that sometime after the ratification of HJR 192 (Public law 73-10) the banksters stole the issuance power of private credit from the people, the true creditors. Banks were never meant to create value (and still do not, as it is only an illusion of the printing press). Banks were only supposed to administrate contracts between private individuals, acting as neutral middlemen, so to speak. Somewhere, along the line, I guess holding all those assets to be exchanged became too much of a temptation. Then again, I’m probably wrong……
Howdy WCS and messianicdruid,
WCS, In ordinary circumstances your analysis is impeccably correct. However the underlying assumption is that of an equilibrium, steady-state fundamentals. What is – instead – the appropriate course of action when no equilibrium is possible, ie, an impending cataclysmic collapse?
Bear in mind that all credit lines/cards are fundamentally unsecured credit, meaning that none of your possessions – real or otherwise – are ‘encumbered’ in the legal sense. That being the case the following might be a new paradigm in which to view the larger picture.
Messianicdruid asserts that the instrument which is the “Credit Card” should never have been created and God knows that particular form of Cedit has led to the downfall of many to be sure.
However, the ability of creditors to recover losses CRITICALLY depends on a functioning system of “The Rule of Law” which is rapidly being eroded to the point of oblivion more with each passing day; once THAT is effectively defunct, then Cerditors have no recourse to repatriate thier Capital from you should you refuse payment. Now this is NOT something I would ever suggest in a World where ‘ a Man’s Word’ actually meant something but as we all know, over the course if the last 50 years or so, the entirety of Human existence in the West has – via Finacialization of EVERYTHING – led to the circumstance where ‘We, the People’ are viewed as little more than a good source for those who cannot find in themselves to actually WORK for a living…but instead derive all thier Worldly wealth through various forms of Chicaner. So be it.
I have over the last year taken out – but not USED as yet – about $45,000 in Credit Lines/Cards…and am patiently waiting to see what happens NEXT. If it appears – miraculously so – that a return to the Rule of Law is possible then I’ll happily defer deploying that access, however…if we continue down the path we are on then at some time in the not too distant future, I WILL invoke ALL of those ‘resources’ and promptly apply same to buying every item of significant utility I can lay my hands on without delay.
Is there anything in that proposition that is even remotely moral or ethical? Absolutely not. However, given the financiers treatment of us as a “harvestable resouce”, much like Cattle, over the last half-century it seems only fitting to leave the parasites holding the bag at the end as catastrophic collapse begins in earnest.
Food for thought, with one caveat; in this play, TIMING is EVERYTHING…proceed with appropriate caution.
Good luck everyone.
I don’t think you are wrong – you have it right. Banks in 18th century Britain were first and foremost enablers of credit through primarily bills of exchange. My book in PDF about all this is available at:
I agree entirely and write about this often at:
Good Day AP,
To say that the Derivatives Market is both Arcane and Opaque would surely be the understatement of the Millenia…as quite clearly you already understand.
From the outset, I observed that the idea of allowing parties ‘without skin in the game’ such as is the case with simple futures contracts had a distinctly bad odor about it…encouraging the absolute maximum “Morale Hazard” conceivable, especially when the only players in the Casino are the wealthiest on Earth.
After spending some time examining the details of the dynamics of that market the sole conclusion which could be drawn was that – as an entity – that market was designed as a siphon to benefit the Financial sector while the ever increasing complexity of the contracts involved strongly suggested a very long term plan to produce at the terminus, a system is convoluted and complex that no forensic accountant could ever track what had transpired after a serious tectonic shift had occurred therein.
On realizing the nature of the construct the singular thought that crossed my mind was simply, ” IF you intend to STEAL a Million dollars you might – might! – be able to run far enough and dig a deep enough hole to evade your pursuers. However, IF instead you’re intent is to STEAL 100 Trillion dollars WHERE are you going to run TO? The World is round after all and after you’ve ran far enough then you’re running BACK to from whence you came. Furthermore, there is no hole DEEP enough to hide you when 8 Billion people are hunting you like the vermin you are.”
The sole viable solution then is to create a system so opaque, so complex that everyone would be pointing thier fingers at each other for generations. Upon that realization I began prepping in EARNEST in the knowledge of what the ‘End Game’ comprised.
A pleasure to make your acquaintance BTW Sir.
“Although capitalism is the economic system of modern Western civilization, the policies of all Western nations are guided by utterly anti-capitalistic ideas. The aim of these interventionist policies is not to preserve capitalism, but to substitute a mixed economy for it. It is assumed that this mixed economy is neither capitalism nor socialism. It is described as a third system, as far from capitalism as it is from socialism. It is alleged that it stands midway between socialism and capitalism, retaining the advantages of both and avoiding the disadvantages inherent in each.”
― Ludwig von Mises, Planned Chaos
“There is no way to avoid the final collapse of a boom triggered by expanding credit. The alternative is whether the crisis is to come sooner, through the voluntary abandonment of further credit expansion, or later, as a final and utter catastrophe of the affected monetary system.”
– Ludwig von Mises, Human Action (1949).
Here we are.
I recently talked to a small group at the break room where I work part time and explained pretty much what Brandon discussed here. It was a mix of young kids and seniors like myself. Much to my surprise the kids in the break room loved it and said, right on man. Pretty much everyone in the group said they would not get vaccinated and would rather quit.
That has begun to happen as the Lowe’s where I work have seen a ton of workers just get up and quit or gave their 2 weeks notice. I have not been approached yet but when they do, i’m also out as well. I’m just there to get paid to exercise. I told one the small group expect a cashless society because this is where it’s all headed. One kid said he didn’t think it was possible. I told him, India has pretty much switched from paper money to digital currency and a news story I recently read, said that in India the government imposed restrictions where you cannot buy, sell, buy food or fuel unless you are vaxxed.
In Canada there is a Supermarket chain that now has the governments backing to not let you buy food unless you are vaxxed.
This was a nice summary of where we are at and how we got here. It looks like Jerome Powell is standing strong on tapering but as you mentioned, this will cause havoc in the credit markets and eventually crash the stock market. I wouldn’t be surprised if you saw a half-hearted attempt at a taper and then a new variant, or some other exogenous event occur that would give the fed cover to open up the flood gates one last time. It would seem to me a deflationary crash would hurt those with higher income and assets the most. Inflation would hurt the working class more and allow them to be pushed towards believing that capitalism caused this mess and more likely to accept the great reset.
Hey Brandon, another great article!
“I suspect that the establishment will bring back regular checks (like the Covid checks) for the public now struggling to deal with ever increasing expenses and uncertainty, but with strings attached. Don’t expect a UBI check, for example, if you refuse to comply with the vax mandates. If you run a business, don’t expect stimulus aid if you hire non-compliant workers.”
Sucks, but unfortunately, the US Constitution’s “Spending Clause” allows Congress to “spend for the general welfare” and make any restrictions it wants which has been supported by case law.
Also, to Goldy’s point, my guess is that the “taper” is just a head fake, and that they know/believe that the only way to truly destroy the US dollar is to go the inflationary route, and because that’s apparently their goal, they’ll continue printing but at a much bigger scale and then China and other foreign investors cut us off.
1) The US Constitution also calls for sound money practices and issuance only by the US Treasury, not a private central bank.
2) They could do either one and get the same result. A taper will lead to the collapse of the dollar as well, just in a different way.
Hey Brandon, I agree on both your points.
Well described Brandon and I am exactly on the same page as yourself. Your reference to a local economy is particularly pertinent and is the subject of my upcoming ‘Letter from Great Britain’ this Saturday. If you would do me the honour of reading it – I would appreciate your opinion on my description of the localised 18th century money system which functioned well without the need for banks.