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Jim Rickards. Keith McCullough



Nouriel Roubini

The world economy is lurching towards an unprecedented confluence of economic, financial, and debt crises, following the explosion of deficits, borrowing, and leverage in recent decades. In the private sector, the mountain of debt includes that of households – such as mortgages, credit cards, auto loans, student loans, personal loans; businesses and corporations – bank loans, bond debt, and private debt; and the financial sector – liabilities of bank and non-bank institutions. In the public sector, it includes central, provincial, and local government bonds and other formal liabilities, as well as implicit debts such as unfunded liabilities from pay-as-you-go pension schemes and healthcare systems, all of which will continue to grow as societies age.

Just looking at explicit debts, the figures are staggering. Globally, total private- and public-sector debt as a share of GDP rose from 200 per cent in 1999 to 350 per cent in 2021. The ratio is now 420 per cent across advanced economies, and 330 per cent in China. In the United States, it is 420 per cent, which is higher than during the Great Depression and after World War II.

Of course, debt can boost economic activity if borrowers invest in new capital – machinery, homes, public infrastructure – that yields returns higher than the cost of borrowing. But much borrowing goes simply to finance consumption spending above one’s income on a persistent basis – and that is a recipe for bankruptcy. Moreover, investments in ‘capital’ can also be risky, whether the borrower is a household buying a home at an artificially inflated price, a corporation seeking to expand too quickly regardless of returns, or a government that is spending the money on ‘white elephants’, that is, extravagant but useless infrastructure projects.


Such over-borrowing has been going on for decades, for various reasons. The democratisation of finance has allowed income-strapped households to finance consumption with debt. Centre-right governments have persistently cut taxes without also cutting spending, while centre-left governments have spent generously on social programmes that aren’t fully funded with sufficient higher taxes. And tax policies that favour debt over equity, abetted by central banks’ ultra-loose monetary and credit policies, have fuelled a spike in borrowing in both the private and public sectors.

Years of quantitative easing and credit easing kept borrowing costs near zero, and in some cases even negative – as in Europe and Japan, until recently. By 2020, negative-yielding dollar-equivalent public debt was US$17 trillion, and in some Nordic countries, even mortgages had negative nominal interest rates.

The explosion of unsustainable debt ratios implied that many borrowers – households, corporations, banks, shadow banks, governments, and even entire countries – were insolvent ‘zombies’ that were being propped up by low interest rates, which kept their debt-servicing costs manageable. During both the 2008 global financial crisis and the COVID-19 crisis, many insolvent agents that would have gone bankrupt were rescued by zero or negative interest rate policies, quantitative easing and outright fiscal bailouts.

But now, inflation – fed by the same ultra-loose fiscal, monetary, and credit policies – has ended this financial Dawn of the Dead. With central banks forced to increase interest rates in an effort to restore price stability, zombies are experiencing sharp increases in their debt-servicing costs. For many, this represents a triple whammy, because inflation is also eroding real household income and reducing the value of household assets, such as homes and stocks. The same goes for fragile and over-leveraged corporations, financial institutions and governments: they face sharply rising borrowing costs, falling incomes and revenues, and declining asset values all at the same time.

Worse, these developments are coinciding with the return of stagflation – high inflation alongside weak growth. The last time advanced economies experienced such conditions was in the 1970s. But at least back then, debt ratios were very low. Today, we are facing the worst aspects of the 1970s stagflationary shocks alongside the worst aspects of the global financial crisis. And this time, we cannot simply cut interest rates to stimulate demand.

After all, the global economy is being battered by persistent short- and medium-term negative supply shocks that are reducing growth and increasing prices and production costs. These include the pandemic’s disruptions to the supply of labour and goods; the impact of Russia’s war in Ukraine on commodity prices; China’s increasingly disastrous zero-COVID policy; and a dozen other medium-term shocks – from climate change to geopolitical developments – that will create additional stagflationary pressures.

Unlike in the 2008 financial crisis and the early months of COVID-19, simply bailing out private and public agents with loose macro policies would pour more gasolene on the inflationary fire. That means there will be a hard landing – a deep, protracted recession – on top of a severe financial crisis. As asset bubbles burst, debt-servicing ratios spike, and inflation-adjusted incomes fall across households, corporations, and governments, the economic crisis and the financial crash will feed on each other.

To be sure, advanced economies that borrow in their own currency can use a bout of unexpected inflation to reduce the real value of some nominal long-term, fixed-rate debt. With governments unwilling to raise taxes or cut spending to reduce their deficits, central-bank deficit monetisation will once again be seen as the path of least resistance.But you cannot fool all of the people all of the time. Once the inflation genie gets out of the bottle – which is what will happen when central banks abandon the fight in the face of the looming economic and financial crash – nominal and real borrowing costs will surge.

The mother of all stagflationary debt crises can be postponed, not avoided.



Egon von Greyerz
January 10, 2023

The world is today confronted with two nuclear threats of a proportion never previously seen in history. These threats are facing us at a time when the world economy is about to turn and decline precipitously not just for years but probably decades.

The obvious nuclear threat is the war between the US and Russia which currently is playing out in Ukraine.

The other nuclear threat is the financial weapons of mass destruction in the form of debt and derivatives amounting to probably US$ 2.5 quadrillion.

If we are lucky, the geopolitical event can be avoided but I doubt that the explosion/implosion of the Western financial timebomb can be stopped.

More about these risks later in the article.

There is also a summary of my market views for 2023 and onwards at the end of the article.


With a business life of over 52 years in banking, commerce and investments, I am fortunate to still learn every day and learning is really the joy of life. But the more you learn, the more you realise how little you really know.

Being a constant and curious learner means that life is never dull.

As Einstein said:

The important thing is not to stop questioning.

Curiosity has its own reason for existing.”

There has been another important constancy in my life which is understanding and protecting RISK.

I learnt early on in my commercial life that it is critical to identify risk and endeavour to protect the downside. If you can achieve that, the upside normally takes care of itself.

Sometimes the risk is so clear that you want to stand on the barricades and shout. But sadly most investors are driven by greed and seldom see when markets become high risk.

The end of the 1980s was such an obvious period, especially in the property market. Stocks crashed in 1987 but if you are not leveraged, stock crashes normally don’t wipe you out. But in commercial property the leverage can kill a lot of investors and sadly did in the early 1990s.

The end of the 1990s was another period of very high risk in the tech sector. I was involved with a tech business in the UK and told the founder in late 1999 that we must sell the business for cash. This was the time when tech businesses were valued at 10x sales. Virtually none of them made a profit. So we managed to sell the business in 2000. We actually got shares as payment but were allowed to sell them immediately which we did. Thereafter the Nasdaq crashed by 80% and many businesses went bankrupt.

At those particular moments of extreme overvaluation, you do not have to be clever in order to get out and take profit. Super profits should always be realised when the valuation of businesses doesn’t make sense and the prospects don’t look good.


So let’s get back to the massive risks that are hanging over the world currently.

In my estimation this is not a war between Russia and Ukraine but between the US and Russia. Russia found it unacceptable that the Minsk agreement of 2014 was not kept to. Instead, the bombing of the Donbas area continued, allegedly encouraged by the US. As Ukraine intensified the bombing, Russia invaded in Feb 2022.

I won’t go into the details here of who is at fault etc. But what is clear is that the US Neocons have a major interest for this war to escalate. For them Ukraine is just a pawn and the real enemy is Russia.  Why would the US otherwise lead the initiative to sanction Russia and send weapons and money to Ukraine but send no peace keepers to Russia?

Let us just remind ourselves that ordinary people never want war. The American people doesn’t want war, nor do the Russians or Ukrainians. It is without fail always the leaders who want war. And in most countries, even in the so called democratic USA, the leaders have total power when it comes to starting a war.

Most of Europe is heavily dependent on Russian oil and gas. Still Europe is shooting itself in the foot by agreeing to the sanctions initiated by the US. The consequences are disastrous for Europe and especially Germany which was the economic engine of Europe.  Germany is now finished as an economic power. Time will prove this.

The global economic downturn started before the Ukrainian war butthe situation has now severely deteriorated with the European economy weakening rapidly. Still, Europe is digging its own grave by sending more weapons and more money to Ukraine much of which being reported to end up in the wrong hands.

The Ukrainian leader Zelensky is skilfully inciting the West to escalate the war in order to achieve total NATO involvement.

The risk of a major escalation of the war is considerable. Russia’s main aim is for the Minsk agreement to be honoured whilst the US Neocons want to weaken Russia in a direct conflict. Major wars are often triggered by a minor event or a false flag.

The Neocons know that a defeat for the US in this conflict would be the end of the US dollar, hegemony and economy. At the same time, Russia is determined not to lose the war, whatever it takes. This is the kind of background that has a high risk of ending badly.


Since there is not a single Statesman in the West, dark forces behind the scenes are pulling the strings. This makes the situation particularly dangerous. 

The risk of a nuclear war in such a situation is incalculable but still very real.

There are 13,000 nuclear warheads in the world and less than a handful of these would wipe out most of the West and a dozen, a major part of the world.

Let’s hope that the West comes to its senses. If not, the consequences are unthinkable.


The other nuclear cloud which is financial will fortunately not end the world if it detonates but inflict a major global setback that could last many years, maybe decades.

I have in [b]numerable articles (link) and interviews (link) outlined that the global debt expansion will end badly.[/b]

This can be illustrated in a number of pictures so let us look at two self explanatory graphs.

The first one shows how global debt has grown 75X from $4 trillion to $300T since Nixon closed the gold window in 1971.

The graph also shows that the world could reach debt levels of maybe $3 quadrillion by 2030. That sounds like a sensational figure but the explanation is simple. Derivatives were around $1.4 quadrillion over 10 years ago as reported by the Bank of International Settlement (BIS) in Basel. But with some hocus-pocus they reduced the figure to $600 trillion to make it look better cosmetically. The BIS decided just to take just one side of a contract as the outstanding risk. But we all know, it is the gross risk that counts. When a counterparty fails, gross risk remains gross. So as far as I am concerned, the old base figure was still $1.4Q.

Since then derivatives have grown exponentially. Major amounts of debt are now created in the derivatives market rather then in the cash market. Also, the shadow banking system  of hedge funds, insurance companies and other financial business are also major issuers of  derivatives. Many of these transactions are not in the BIS figures. Thus I believe it is realistic to assume that the derivatives market has grown at least in line with debt but probably a lot faster in the last 10+ years.  So the gross figure is easily in excess of $2 quadrillion today.

When the debt crisis starts in earnest which could be today or in the next 2-3 years, major defaults in derivatives will become debt as central banks print money on an unprecedented scale in a futile attempt to save the financial system. This is how debt can grow to $3Q by 2030 as the graph illustrates.


The second graph shows that the US, the world’s biggest economy, is living on both borrowed time and money.

In 1970 total US debt was 1.5X GDP. Today is is 3.6X. This means that in order to achieve a nominal growth in GDP, debt had to grow 2.5X as fast as GDP.

The conclusion is simple. Without credit and printed money there would be no real GDP growth. So the growth of the US economy is an illusion manufactured by bankers and led by the private Federal Reserve Bank. As the graph above shows, GDP can only grow if debt grows at an exponential rate.

The gap between debt and GDP growth is clearly unsustainable. Still with hysterical money printing in the next few years, in an attempt to save the US financial system, the gap is likely to widen even further before it is eroded.

There is only one way for the gap to narrow which is an implosion of the debt through default, both sovereign and private. Such an implosion will also lead to all assets inflated by the debt – including bonds, stocks and property – also imploding.

Temporarily the US has achieved this illusory wealth but sadly the time is now coming when the Piper must be paid.


The days of the dollar as reserve currency are counted. A currency that has lost 98% in the last 50 years hardly deserves the status of a reserve currency. A combination of military might, petrodollar payments and history has kept the dollar far too strong for much too long. Since there is no immediate alternative, it is possible that the dollar temporarily will remain strong for a while as the Ukrainian conflict continues. The economies of other currencies (Euro, Pound, Yen) are clearly too weak currently to be realistic reserve currency contenders.

The days of the Petrodollar are also counted.

Major moves are now taking place between the world’s biggest energy producers (excluding the US) which will gradually end the Petrodollar system.


But firstly let’s understand that in spite of the climate zealots, there will be no serious alternative to fossil fuels for many decades. Fossil fuels account for 83% of global energy. 

Global growth can only be achieved with energy. Since renewables today only account for 6% and are growing very slowly, there will be no serious alternative to fossil fuels for many decades.

In spite of that, Western governments in Europe and the US have not only stopped investing in fossil fuels, but also closed down pipe lines, coal mines and nuclear power plants. This is of course sheer political and economic lunacy and a very rapid method to achieve a collapse of the world economy. Add to that the Russian sanctions and we have a global recipe for disaster.

Without fossil fuels, the world economy will collapse. In spite of that, political pressure has slowed down fossil fuel production substantially. As the graph shows, fossil fuel production is likely to decline by 26% by 2048. Increases in nuclear and, hydro and renewables will not compensate for that fall. The effect will be a fall in global GDP and trade. But more about the energy side in another article.

Few people understand the importance of global trade. Rome conquered many countries from Europe to Asia and Africa. But during the Roman Empire, the various economies prospered due to free trade. The Romans were clearly superior thinkers compared to current Western leaders.


The GCC countries (Gulf Corporation Council) consist of Saudi Arabia, UAE plus a number of Gulf countries have 40% of the oil reserves in the world.

Another 40% of oil reserves belong to Russia, Iran and Venezuela all selling oil to China at a discount currently.

In addition there are the BRICS countries (Brazil, Russia, India, China and South Africa. Saudi Arabia also want to join the BRICS which represents 41% of the global population and 26% of global GDP.

Finally there is the SCO, the Shanghai Cooperation Organisation. This is a Eurasian political, economic and security organisation headquartered in China. It covers 60% of the area of Eurasia and over 30% of global GDP.

All of these organisations and countries (BRICS, GCC, SCO) are gradually going to gain global importance as the US, and Europe decline. They will cooperate both politically, commercially and financially. As energy and oil is a common denominator for these countries, they will most likely operate with the Petroyuan as their common currency for trading.

With such a powerful constellation, minor hobbyist groups like Schwab’s WEF will dwarf in significance and finally disappear as the WEF members including the political leaders lose their power and the billionaires their wealth.


This article is already very long but I will still cover what I see in markets in 2023 and coming years. I have covered this in many articles so I will be brief.

Stocks have just had a major down year globally. This is the mere beginning of the implosion of the extreme overvaluation based on printed money. I would be surprised if stocks on average decline by less than 90% in real terms. The measure for real terms is of course gold.

It will not be a straight line fall and many investors will buy the dips until they have exhausted most of their wealth.

Bonds will probably perform even worse than stocks. Many borrowers, both sovereign and commercial, will default.

The 40 year decline in interest rates has finished. Central banks will lose control of the interest markets as investors panic out of bonds.

The combination of high inflation, collapsing currencies and defaults on a massive scale will turn the bond market into a historic horror story.

The bond equation is simple:

Hyperinflation + Currencies going to Zero + Defaults = BOND VALUES ZERO

Good luck to bond holders. They will need it.

Investment properties will also fare badly. Low interest rates and unlimited credit have created a bubble of historic proportions.

In many countries it has been possible to borrow up to 15 year money at 1% or less. Anyone who didn’t take advantage of free money will regret it badly. The risk reward calculation was obvious. At 1%, rates could only go to zero which is a 1% fall. On the other hand, rates could go to 20%+ like they did in the 1970s.

Falls of 75-90% in real terms will be commonplace in the property market.

If you have no mortgage or a low one at a fixed rate, don’t worry. But just look at it as an abode and not an investment. 

Lastly and most importantly let’s look at GOLD.

We invested heavily into gold in early 2002 at $300 for ourselves and the investors we advised. This was based on our risk assessment of the financial system and a gold price which had declined for over 20 years. We were certain that gold was undervalued at the time and also that it was the ultimate wealth preservation investment.

Since that time we and our clients have not ever worried one day about our gold holdings.  As a matter of fact, gold today in relation to money supply is cheaper than in 2002 and therefore represents superb value.

2023 will be the start of another gold era. The circumstances are perfect for this.

Back in mid September I tweeted that gold was bottoming when the price was $1665 and that we would see $2,000 at least in 2022. Well as I often say, forecasting is a mug’s game and we are “only” at $1,875 today. See graph below which was Tweeted in Sep 21.

Considering the two nuclear risks discussed above, the gold price becomes irrelevant. Physical gold is the ultimate wealth preservation investment. The value should be measured in ounces or kilos and not in ephemeral currencies.

Gold is likely to reach levels that no one can imagine today. But to forecast a price in paper money serves no purpose without defining the purchasing power of the fiat money at some future point.

Gold is the metal of kings and should be the primary wealth preservation holding. Silver has a massive potential but is much more volatile and much bulkier.

It is extremely important how gold is stored. The principal part of your gold holding should be outside your country of residency. You should be able to flee to your gold.

Do not store gold at home. With crime rates surging globally and likely to go up much further, it is extremely unwise to store gold at home. Add to that likely social unrest in most countries, whatever valuables you store at home are at risk however well hidden you think they are.

There is no perfect country to store gold today. The world has become a generally unsafe place. Our company has carried out a major review of the best countries to store gold globally. This will be published at some future point.

Switzerland is still one of our favourites. The combination of the political system, history and 70% of gold bars being refined in Switzerland plus most private gold being stored here, makes it an obvious choice.

Our company also has a major advantage in being able to offer the only private vault which is nuclear bomb proof and can operate fully under any such circumstances. We also offer full data backup even against EMP risks (Electro Magnetic Pulse). I am not aware of anyone in our industry that offers this protection. The location of this vault is confidential. Here is a brief video which shows the uniqueness of the vault: 

To summarise, the risks today are greater than anytime in history. A full nuclear war between the US, Russia and China is the end of mankind and no one can protect against this kind of event.

But there are more limited situations, whether nuclear or with conventional weapons which necessitate the best protection possible of your wealth preservation asset.

Let’s hope that a major nuclear war will not take place. In any case, there is very little we can do about it.

The financial nuclear risk is very real and also very likely to be triggered in my view. Anyone who can has a responsibility to organise protection against this risk as discussed in this article.

Finally remember that in periods of crisis family and friends is your most important protection. Helping others will be essential in a coming crisis.


Matthew Piepenburg
January 4, 2023

If you want to understand modern CBDC, it may be worth considering the context of history, the philosophy of man, the math of debt and the geology of gold.

Broke Countries Do Bad Things

When broken, debt-soaked “developed economies” suffering from years of fantasy money printing to “solve” fatally rising debt levels collide with [b]history-blind and economically-ignorant policy makers, the end result is always the same: Liberty sinks, currencies die and control rises.[/b]

This is not sensationalism, but the toxic evolution of economic, political and psychological patterns seen throughout time.Sadly, our “times” (as well as the global abundance/convergence of weak leadership) are no exception.

Or stated more simply, inept financial and political leadership leads to even more dangerous financial opportunists and tyrannical policies masquerading as efficient solutions.

Toward this end, the [b]evidence is literally everywhere—left, right and center.[/b]

The Inevitable Klaus Schwab-Type

Nowhere is such will-to-power opportunism and fantasy (i.e., centralized) solutions more exemplified than in the so-called “Great Reset” authored by the head of the World Economic Forum, Klaus Schwab.

Like all opportunists and historical as well as current “types,” Schwab (like the IMF, the BIS, the Fed, the White House, the European or British Parliament etc.) is exploiting a crisis to enhance control while appearing humanitarian and visionary.

We’ve seen this demagogue movie before in Italy, France, Germany, Spain, Yugoslavia, Cuba, China, Russia etc.

In each example (from the 1780’s to the 1960’s to now), leaders who promised miracle solutions to financial disaster brought only centralization and disorder while erecting statues (or book deals and [b]Parisian shopping sprees) to themselves.[/b]

Never Let a Good Crisis Go to Waste

And what better crisis to exploit than the bat-made narrative of the Covid pandemic with its case fatality rate of less than 2%?

Post-Covid, it is now patently obvious to anyone who has taken the time to look unemotionally at the science, math and data (including courageous British journalists like [b]Matt Ridely, well-spoken celebrities like Russell Brand, dark horses like Bret Weinstein or the non-political [and hence more honest] scientists convening at Great Barrington) that COVID most likely came from a lab and that the policy reaction of a global shut down and forced vaccine was a moral, scientific, economic and political disaster for the record books.[/b]

Despite the fact that history has seen (and stoically survived) far greater per-capita death tolls in the form of cholera, the bubonic plague, small pox, or influenza, our policy makers, with the embarrassingly complicit support of a Pravda-like and politically-influenced main stream media, would have us believe they care so much about you and I. So, they locked us down, went trillions more into debt (and a hidden, [b]second market bailout) for our sake.[/b]

In fact, the IMF in 2020 compared the war on Covid to the Second World War and its 85 million deaths.

That’s an insult to history.

As an equally courageous Christine Anderson declared from the European Parliament during the height of the Covid hysteria (mandates, restrictions, masks etc.): Covid politics were [b]not about concern for the masses.[/b]

Despite such sober honesty and macabre math, Klaus Schwab, along with just about every other global leader, was taking a more dramatic and opportunistic approach, declaring that, “the Corona Virus pandemic has no parallel in history. It is our defining moment.”


What he really meant in this classic Freudian slip was that Covid was his defining moment. Namely, the perfect crisis to exploit global fear and promote his new “Great Reset” vision as the leader of a better tomorrow, akin to Lenin’s losing-war promise/bribe of simple “bread and peace” in 1917…

And what is Schwab’s (and others like him) vision of a better tomorrow?

What is the “Great Reset”?

Like most politically and financially bad ideas (from Quantitative Easing to the Patriot Act), the Great Reset envisioned by Schwab has a seductive title and facade—namely “Stakeholder Capitalism.”

Unlike current shareholder capitalism, his concept of stakeholder capitalism aims to infuse global corporate board seats with a higher percentage of special interest representation (i.e., labor, environmental, social justice etc.).

In the USA, Elizabeth Warren has a similar, and indeed superficially noble, and more inclusive agenda.

China, whose leader-for-life (Xi Jinping) is a Schwab favorite and Davos keynote speaker, takes this autocratic vision one step further by simply inserting governmental agents into every Chinese boardroom.

For many, including myself, one can understand a desire to improve corrupt financial/banking systems and [b]fractured social structures. One can understand more inclusion and less corporate greed.[/b]

Toward that end, I don’t think Schwab is a transhumanist creature of a dark global conspiracy to depopulate the world and rule as supreme leader of a one-world government.

I actually feel he believes he can help himself (and others) at the same time.

And as for the current version of capitalism in which central banks like the Fed (and [b]derivative-sick commercial bankslike Credit Suisse) have become THE driving/liquidity force of supply and demand, I’ve written and spoken countless times on my view that true capitalism died long ago.[/b]

But what we are being told by folks like Schwab is hardly better; in fact, it’s much worse.

Schwab’s Flawed Premise: Institutional Faith

Like China’s Xi Jinping, Schwab’s Great Reset is based upon the notion that systemic risks like inflation, pandemics and geopolitical as well as economic distortion can be better managed by a global “coordination” of wise centralized and institutional players.

Like Xi, Schwab believes “giant ships survive storms, whereas small boats sink.”

But such faith (and premise) that massive and globally coordinated institutional wisdom is somehow safer and superior to individual freedom ignores the titanic example, of well…the Titanic.

In short: Big ships sink too—and usually with higher casualty rates.

Schwab’s vision of a “coordinated economy” and the redefining of the “social contract” to tackle real or exaggerated (pick your view) crises like climate change or future pandemics is based upon an inherently flawed premise that enlightened yet [b]increasingly CENTRALIZED institutions or even governments (like China?) can save us.[/b]

But what folks like Schwab (or for that matter Biden, Trudeau, Macron, Scholz, Johnson and just about every other embarrassing but modern national leader) failed to confess is that not once in the entire history of homo sapiens has a centralized system (fascist, Bolshevik, communist or socialist) ever brought an ounce of sustainable good to the world.

(Though such centralization certainly brought a lot of temporary luxury, wealth and power to folks like Castro, Lenin, Mussolini and Robespierre…)

The simple, tragic yet historically and (psychologically) confirmed reality is this: “Efficient” safety via central planning at the expense of individual freedoms NEVER works.

America’s Brief & Shining Moment

That is why the founding fathers of the greatest constitutional and democratic (yet now failed) experiment in history declared (via Ben Franklin) that “those willing to give up their freedoms for greater security deserve neither.”

For a brief and shining moment in 18th century Philadelphia, a document and vision of individual freedoms and constitutional protections declared the priority of the individual over the “security” of centralized tyranny as the cornerstone of its national vision.

America’s Flawed Premise: Faith in Human Nature?

Perhaps, however, these founding fathers under-estimated the human-all-too-human (nod to Nietzsche) susceptibility to self-interest and a desire for more personal and political control—i.e., the common extroverted psychopathy of most politicians—even those posing under a democratic flag.

That is why the same Ben Franklin casually (though sadly) remarked to a passer-by on the very day of America’s Declaration of Independence that “eventually all democracies die, and usually by suicide.”

This suicide has been gradual but undeniable, marked by such slow-drip turning points toward increasing centralization as exemplified by: 1) the 1913 birth of the Federal (Central) Reserve (against which Thomas Jefferson warned in 1806); 2) the now increasingly obvious and centralized (coup d’état) [b]murder of a sitting president in 1963; 3) the imperialist drift toward false flag wars of expansion (from “remember the Maine” of 1898, the Gulf of Tonkin Resolution in 1964 or the 2003 WMD fiction in Iraq) to 4) the exploitation of cataclysmic crises to slowly eradicate personal liberties in the name of “national security” under such euphemistically-titled legislation like the post-9/11 “Patriot Act.”[/b]

In short, given that all systems and experiments, be they liberty-based or centralized, are envisioned and then managed by human systems, the age-old (Hobbes/Locke) debate as to whether humans are intrinsically in a state of war or a state of peace (i.e., good or bad) remains the core dilemma and question.

The Modern Flawed Premise: Faith in Technology

This timeless dilemma, of course, has taken an entirely new course in a smart-phone era of increasing faith in a technological, virtual and even robotic solutions to man’s quest for a better, freer tomorrow.

There are many who believe that we can replace corrupt institutions (from Davos to Brussels, DC to Beijing) with wiser technologies, which can and sometimes do allow a freer and more decentralized flow of information (as evidenced by non-main-stream platforms like this one) and even money (as evidenced by the thirst for decentralized, encrypted currencies like BTC).

Rapidly evolving technologies, for example, allow more people to leave crime-infested (and police defunded) cities for more work-at-home personal freedoms or income and even more personal expression.

As technology advances, many rightly or wrongly believe that civilization will experience more freedoms and hence more of the “happy accidents” (nod to F.A. Hayek) which only freedom-based (rather than centralized) systems allow.

For them, technology offers a “great escape” from the dangers of the “great reset.”

This feels promising at first glance, but it too ignores the human-all-too-human reality that even advanced technologies are still steered by [b]un-advanced humans, as the recent debacle at FTX easily reminds.[/b]

In short, like faith in human nature or faith in institutions, faith in technology is no cure all.

Enter CBDC—The Latest Lie from Above

As we now see in the slow yet inevitable evolution of Central Bank Digital Currencies, technology can in fact be used to further diminish rather than enhance human liberties.

It seems that in 2022 and now 2023, everyone is suddenly asking about CBDC. And they should be.

But what is it?

To begin with, CBDC is not a new currency, it’s a new payment system—one that is digital and encrypted rather than paper-based. Instead of dollars, yen, lira and euros, we’ll soon have e-dollars, e-yen, e-liras and e-euros etc.

In short, more crappy fiat money—just in digital form.

Furthermore, CBDCs are not cryptos. Yes, they are digital, encrypted and kept in a ledger, but they do not involve blockchain.

In essence, and much like a Visa or Mastercard service, CBDC involves a similar ledger technology, but in this new and twisted case it’s a controlled (rather than distributed) ledger of encrypted digital currencies managed by central banks.

In this new payment system, we hold digital money accessed by apps on our smart phones with an account directly linked to a central bank with (as the policy makers remind us) far greater speed and less intermediary costs (otherwise typical to credit cards).

All good, right?

Not so fast…

The CBDC Official Narrative: Only Half the Story

Like all dangerous, centralized and controlling ideas, CBDC was snuck in with consoling words during times of crisis.

But CBDC is far more than just an evolving and technological “eureka” moment.

CBDCs were first openly announced by the IMF at the onset of the Covid Crisis, which the IMF used as a convenient pretext to excuse decades of their own and other central-bank-driven (and historically unprecedented) debt sins.

Crises always boost the power of the state, and the Covid crisis boosted the power of the IMF to create new ways to promote bad ideas while centralizing more power. Although ignored by the media in 2020, I immediately [b]warned of this in 2020.[/b]

Then came the BIS in 2021.

Like the IMF, the BIS telegraphed all the warm and fuzzy good news in a [b]calm little video of CBDC “efficiencies,” “safety,” and “speed.”[/b]

The BIS took credit for leading the technological CBDC charge alongside 4 other key central banks (i.e., the Fed, the ECB etc.) and a select handful of 20 other “participants” (i.e., the same disastrous commercial banks who gave us the GFC in 2008) to eliminate certain “pain points and friction” in hitherto inefficient cross border settlements and FX transactions.

Then came Powell.

In the midst of a global inflationary crisis, gyrating markets and an avoidable yet disastrous war in the Ukraine, the Fed stepped in with its own one-sided puff piece as the world was distracted by bigger headlines.

With a calm expression and forked-tongue, Powell causally announced that the US will have a CBDC as the Fed plays a “leading role” in its development.

According to Powell, “the Fed is charged with the safety and efficiency of payment systems,” and that by “embracing innovation,” we good citizens can help the Fed in this historical process as the modern world evolves from telegraph wires and clearing houses to the new “Fed Now Service” driven by CBDC to ensure “safer financial transactions.”

Powell kindly reminds us that distributed ledgers of cryptos are not safe, as their swings in value prove.

Despite admitting that stable coins (directly linked to currencies) are better, he said they too are riddled with risks and thus not nearly as safe as digital currencies under “the same regulatory measures as our banking and financial firms.”

(Apparently, Powell thinks the public has forgotten Bear Stearns, Lehman, AIG, Long Term Capital Management and other “regulated” enterprises of this corrupted ilk…)

Powell closed this blue-pill video by saying that the Fed’s focus with a CBDC is to improve on an already safe system—as a complement to, not a replacement of cash. He further promised to take into consideration issues of law and privacy, and warmly announced that, “we look forward to hearing your thoughts on this important topic.”

All warm and fuzzy, safe, innovative and democratic, right?

Again: Not so fast.

CBDC’s Other Story: One Big Lie of Many Omissions

There are many obvious yet omitted dangers (and motives) behind CBDC (as lies of omission are the most common symptom of benevolent tyranny).

What neither the IMF, the BIS nor Powell discussed are likely the most honest motives behind CBDC.

  1. Kill the Crypto Competition

As I’ve argued almost from the the success of cryptos would eventually become their ultimate undoing, as the concept of alternative digital currencies outside of the banking system was a direct threat to sovereign power.

If forced to choose a “winner” in a war between the power of a blockchain BTC and a corrupt banking system (tied to the hip of sovereign power), my bet (sadly) was always on the corrupt.

CBDC, in short, is a direct assault[/url] on the growing (and in many ways free and admirable) crypto narrative.[/b]

  • Debt “Reset:” Impose Negative Rates & Screw the People

As I’ve also argued for years[/b][/url], all debt-soaked regimes need negative rates to climb out of the bottomless debt hole they alone created.

By forcing citizens into a CBDC system, banks like the Fed can “efficiently and quickly” impose negative rates (i.e., where you pay banks to hold your money rather than receive positive interest for your deposits). This already happened in Europe.

Furthermore, given that all major nations are suffering debt to GDP ratios well past the fatal 100% level,  with capital to asset levels surpassing the 200:1 mark, it’s now patently obvious in a rising rate and declining tax-revenue environment that nations like the U.S. can’t afford to pay even the interest on their unprecedented debt piles.

In this sickening backdrop, CBDC systems allow indebted nations to better control, and hence steal from, their citizens.

When currencies are “reset” (like Germany in 48), the government can “convert” your old money to the new money while simultaneously (due to a “crisis”) keeping a percentage for themselves as a clever way to pay their debts via digital hold-backs (i.e., theft).

And given that the entire world is over $300T in debt, one can bet that a massive debt restructuring (akin to a global bankruptcy declaration) is inevitable. CBDCs are thus being rolled out beforehand to make this intra-bank and cross border restructuring (theft) more “efficient.”

But that’s just the tip of the iceberg when it comes to controlling citizen money and freedoms.

  • A Cashless Control State

Despite Powell’s words to the contrary (as unreliable as his transitory inflation promise), the longer-term aim and practice of a forced digital currency system is to take cash out of the system.

Under a CBDC regime, citizen money can be digitally monitored, withheld, frozen, taxed, penalized or otherwise controlled should such a citizen (or collection of citizens) challenge or threaten the state—rightfully or wrongly.

I’m thinking of those truckers in Canada…

But as Mussolini himself said: “Fascism is the perfect marriage of corporations and the state.” CBDC is a giant leap in that sadly familiar direction.

In short, financial and personal privacy slowly but surely disappears under a CBDC system, and you can be assured that if the Mad King George had access to CBDC in 1776, folks with poor social credit scores like Ben Franklin, Thomas Jefferson, George Washington or James Madison would have been monitored, frozen and made financially impotent long before they ever had a chance to freely assemble near the Liberty Bell in Philadelphia.

Thus, even if Powell promises legal and privacy rights today, what happens tomorrow when we inevitably (if not already) fall under another mad king?

Stated bluntly, CBDC is not about freedom, individual rights or privacy. It is pure control masquerading as a safer payment system and faster trans-national currency settlements.

But which would you prefer? What is more important– personal liberty or “efficient payment systems”?

Powell said he was “looking forward” to our thoughts. Well, now he has mine.

Frankly: Shame on him.

Gold, CBDC and a Shortage of Easy Answers

Given the case made above that no easy answers to our current global nightmare (political, financial or ethical) can rest solely upon a faith in institutions, individual leaders or even technologies, as each of these “solutions” is vulnerable to the human element of corruption and ignorance—what will save us?

Do I have an answer to these manifold and increasingly troubling signs and times?

I do not.

Gold, of course, can not solve the laundry list of fracturing faiths, economies, politics, societies, currencies, borders and systems making the headlines of each passing day.

That’s a human, or even spiritual question which I will not pretend to answer/solve here.

Nor can I fully predict the precise timing, measures and misuses of CBDC near-term or long term.

Will gold-backed SDR’s come? Will banking systems and credit card systems change immediately or slowly? When will gold free-float? When will derivative markets implode? What will trigger the next banking crisis?

Again: I can’t say or time. No one can.

What I can say, sadly, is that political and monetary corruption, from ancient China to modern DC, or from Roman coins or crappy paper dollars to “advanced” CBDCs is nothing new under the sun.

But gold (sourced from the periodic table rather than a periodic printer) has never been corrupted by the sun’s rays nor man’s mechanizations. It can’t be printed, mouse-clicked or digitalized. Alas: It’s harder for governments and banks to control.

Without exception, physical gold has always been the only form of real money that has survived the death of one system and currency after the next, be they debased by ancient metallurgists, modern money printers or digital cons.

As history continues its of more control, more debasement and more double-speak, I can only place portions of my faith and wealth in the one asset—the only asset—that has always preserved citizen wealth in a world where its leaders have consistently destroyed it (from coins, cash and digital) for thousands and thousands of years.


Gerald Celente







Ellen Brown

A question now on many economists’ minds is whether the United States should have its own CBDC. A compelling case for it is made by Prof. Saule Omarova, President Biden’s nominee for Comptroller of the Currency. 

Ellen Brown


Egon von Greyerz
March 1, 2023

The final stages of major economic cycles are always accompanied by the maximum amount of bad news as well as heinous events. This time is no different as the West is in the process of committing Harakiri (Seppuku).

As Elon Musk said: 
“My mentality is that of a Samurai. I would rather commit Seppuku than fail.”

Sadly, the problem for the West is that it is both committing Harakiri and failing. For at least half a century, the world has been in a process of self-destruction.  As the decline accelerates, the next phase of 5-10 years will include major political, social, economic as well as wealth – destruction.

What can be more heinous than a total economic and financial collapse accompanied by a potential World War III that at worst could destroy the world totally. A recent article of mine discussed global fragility due to War, Debt and Energy Depletion. In this article I outline the major risks today, financial and geopolitical and also discuss the best way to protect against these risks. Physical Gold is of course the ultimate wealth preservation investment. The next major move up in gold is not far away. See further on.

Biden’s recent visit to Ukraine and whistle stop tour of Europe confirmed that there is no desire to make peace but only war. More support of weapons and money from the US is forthcoming. And whatever the US dictates, Europe follows without considering the consequences.  At the end of his Warsaw address Biden stated about Putin: 

“For God’s sake, this man cannot remain in power”.

Hmmm…. Hardly the talk of a peace maker.  China on the other hand is trying to act as peacemaker but their proposal last Friday was cold shouldered by the West.  More importantly, the Chinese Ministry of Foreign Affairs issued an important policy document this week which is a very strong attack on the US hegemony called:  “US Hegemony and Its Perils”.

The attack starts in the introduction:

“Since becoming the world’s most powerful country after the two world wars and the Cold War, the United States has acted more boldly to interfere in the internal affairs of other countries, pursue, maintain and abuse hegemony, advance subversion and infiltration, and wilfully wage wars, bringing harm to the international community.

It then goes on in detail to attack all the areas of US Hegemony like: Political – Throwing its Weight Around, Military – Wanton Use of Force, Economic – Looting and Exploitation, Technological – Monopoly and Suppression, Cultural – Spreading False Narratives.

The document exemplifies in detail the hegemonic policies and attacks of the US. Although US politicians will totally reject its contents, it is difficult to argue with the facts put forward by China.

As I mention regularly, I very much like America and its people but have difficulties accepting the policies of the Neocons who dominate US politics. Here is an extract from the Conclusion in this Chinese document:

“The United States has been overriding truth with its power and trampling justice to serve self-interest. These unilateral, egoistic and regressive hegemonic practices have drawn growing, intense criticism and opposition from the international community.

Countries need to respect each other and treat each other as equals. Big countries should behave in a manner befitting their status and take the lead in pursuing a new model of state-to-state relations featuring dialogue and partnership, not confrontation or alliance. China opposes all forms of hegemonism and power politics, and rejects interference in other countries’ internal affairs.” (Here is a link to the full document.)

It is difficult to argue with this conclusion. But we need to wear the moccasins of the US and rest of the world and look at China from that perspective. This is to follow my adage to walk three moon laps in somebody’s moccasins before you judge him.

China is not attacking various countries in the world by force, but primarily using investments and trade routes to dominate the world like the Modern Silk Road called the Belt and Road Initiative. It sets out to connect 65% of the world’s population to China by creating a network of sea routes and land links. China is estimated to have spent $1 trillion so far but total estimates are as high as $8 trillion. It will most likely take decades to achieve and might become too costly as the world economy declines.

However, what is clear is that China is investing heavily in infrastructure around the world both in Europe, Africa and South America. For example China is buying up ports in a substantial number of countries. They are also investing heavily in the resource sector globally. 
Another problem that the West has with China is their human rights record. 
Regardless, the trend is clear. The West is in a long term structural decline and the shift to China and the rest of the East and the South is inevitable as I discussed in the article


All empires are ephemeral and this is what the US and Europe are currently experiencing.
The final stages of empires, like the Han, Roman, Mongol, Ottoman, Spanish and British always include the same ingredients some of which are:

  1. Excessive Debts and Deficits
  2. Currency Collapse
  3. Collapse of asset prices including property, bonds and stocks
  4. Hyperinflation in the final stages, especially in food, commodities & services 
  5. Migration
  6. High Crime Rates & Breakdown of Law & Order
  7. Moral Decadence
  8. Social Unrest, Civil War  
  9. Wars

As the West is now falling (& failing), we can tick all the above events also in the current collapse. Global debt has exploded since 1971 to $2-3 quadrillion as I have explained in many articles like here.

If it wasn’t for the Petrodollar, the US would have collapsed years ago. But as more countries are considering trading oil in other currencies like Yuan, the dollar will first Gradually lose its value and then Suddenly to paraphrase Hemingway.

But remember that since Nixon closed the Gold Window in 1971, all currencies have lost at least 97-99% of their value in real terms which is against gold.

Empires seldom die overnight so this process which started in 1971 could take another 5-10 years. But since we are now in the final stages, it could also happen Suddenly.  So let’s paint a potential scenario for the next 5-10 years.  In simple terms it will be more of the same if we look at the 9 points above.

Debts and deficits will increase exponentially. I have for many years shown the growth in US debt which on average has doubled every 8 years since Reagan became president in 1981. 
On December 6, 2016, the chart below was included in a Family Office presentation I gave in London:

Interestingly, the debt was $28T in Jan. 2021. It doesn’t require a genius to project this figure as it is a straight extrapolation of the trend dating back 40 years. Still, I didn’t see anyone forecasting anywhere near the $28T debt in 2016. A couple of years ago, I raised my $40T debt in 2025 to $50T as the chart below shows:

So how is the US going to go from $32T to $50T in 3 years. Well, in the same way as bankrupt countries collapse with tax revenue falling precipitously and expenditure exploding.


As the value of the dollar collapses, think:
  • Much higher war costs, social security, and pensions. As pension fund assets implode, there probably won’t be any pensions. 
  • Debt collapse both private and public with $2-3 quadrillion of derivatives turning into debt. 
  • All bubble assets of stocks, bonds and property, only held up by fake money, collapsing  by 75-95% in real terms.
  • Banks and financial institutions failing after initially having received $100s of trillions in printed, thus worthless, government support.
  • With high inflation or hyperinflation, interest rates going to at least 20% or probably much higher. Financing a debt in the quadrillions at 20%+ will of course lead to even more money printing. The Fed and other central banks will clearly lose control of interest rates which will be determined by a market in panic.. 

The US has at this point stressed that there will be no uniformed US military in Ukraine. Both Russia and Ukraine has lost around 150,000 soldiers each. The problem for Ukraine is that this is around 50% of their regular soldiers whilst for Russia it is 13%. Also, a major part of the weapons and ammunition from the West is not forthcoming or substantially delayed. There just isn’t the spare capacity available to fulfil those promises.

At this point, it looks like this war at best will be a very long drawn local conflict although Ukraine will find it difficult to sustain the war. In January 2022 the Ukraine population was 41 million and now 14 million are estimated to have left the country.

In a war of this nature between two super powers, it is impossible to forecast the outcome. An “accident” or false flag can easily trigger the start of a nuclear war. Remember that this is a war between the US and Russia. So if there was a nuclear war, most missiles would be directed towards those two countries and potentially Ukraine.

But if the world will see a nuclear war, all bets are off since some parts of the world would then be destroyed for decades. Therefore, it is not worth speculation about.

So assuming that this war remains a local conflict in Eastern Europe, how should people outside the war zone prepare financially?  Many countries are planing to introduce Central Bank Digital Money or CBDC.

As the current monetary system in the West collapses, CBDC will only be another form of fiat money. The worst part about it is the ability to spy on and control people that it gives governments. As Western governments’ finances implode, CBDC is the perfect system for the likely socialist or Marxist economies that many Western countries are likely to have. 
For individuals who have the freedom to move, it would be preferable to leave the heavily indebted USA and Europe (especially the EU countries).

One country in Europe still stands out as probably the best in the world both politically, economically and socially. This is of course Switzerland. Yes, I have skin in the game here! I am Swiss from birth and pleased that I am. I was born and educated in Sweden and also like Sweden.

But whilst Switzerland has remained a very sound country, Sweden has deteriorated dramatically. It now has one of the highest crime rates in Europe. As in the last 10-15 years Europe opened its borders for refugees from many poor and war struck countries, this has totally changed Swedish society.

There is nothing wrong with immigration. The world has always had migration. But until recent years, migrants had to look after themselves with no government subsidies. But in many countries in Europe and especially in Sweden, migrants arrive and get free housing and money to live. For many, there is no incentive to work and or to learn Swedish. Sadly an important percentage of men turn to crime and especially drug dealing. Fatal shootings between the immigrants are now happening daily in Sweden whilst 20 years ago, private weapons didn’t exist.

The best proof of a sound country and economy is the currency.  When I, as a younger man, came to Switzerland in the late 1960s, 1 Swiss Franc cost 1.10 Swedish Kroner. Today it costs 11.20 Swedish Kroner to buy one Franc. So the Krona has lost 90% in the last 50+ years.  The Swiss Franc has of course been strong against all currencies. The dollar for example has lost 80% against the Franc over 50 years.


But Switzerland has so much more than a strong currency and economy like:
  • Low debt, normally no deficits
  • Lowest crime rate in Europe and in the world (excluding some Middle East countries. It is one of the few countries where you can walk safely in any town at night. 
  • Rule of Law 
  • Direct Democracy allowing the population to have a referendum on virtually any topic. If the referendum is approved by a majority, it becomes part of the constitution and cannot be changed by government or parliament but only by another referendum. This is totally unique in the world. 
  • For example there will be a referendum on stopping Switzerland from becoming cashless
  • Whilst all  EU countries have decided to confiscate Russian assets, Switzerland has declared: “The expropriation of private assets of lawful origin without compensation is not permissible under Swiss law,” the government said on Thursday. “The confiscation of frozen private assets is inconsistent with the constitution,” it added, and “violates Switzerland’s international commitments”.
  • The standard and quality of everything is very high, services, construction, communications etc
  • Switzerland also has beautiful nature, and excellent food.

Some countries are worrying about a war in Europe. Except for a nuclear war which would be global, the risk of a war on the ground in Europe is in my view minimal.  Russia has been invaded many times with the most famous examples being Karl XII of Sweden in the early 1700s, Napoleon in the early 1800s and Hitler in the 1940s. But Russia has never made any serious invasion into Europe.  Their interest lies primarily within their former empire. There was a brief entry into Finland at the beginning of WWII which lasted 3 months. Also at the end of WWII the Russians drove the invading Germans back to Berlin. So in my view, there is absolutely no reason to fear a Russian invasion of Europe.

To protect your wealth against all the risks that I have outlined above is absolutely vital. Anyone invested in conventional assets like stocks, bonds and property, which have been artificially inflated by printing fake fiat money will in the coming 5+ years experience a major collapse of their wealth.

As I already said, for anyone who has the ability to move to a country outside the US and the EU, that would be the safest option. It is likely that these areas will have the biggest problems both in the economy and the financial system as well as socially. In that region, Switzerland will be an important exception.

Parts of South America like Uruguay should also avoid many of the problems in the West but sadly crime is high in many of these countries. Many Americans live in Central America but with the coming economic downturn, many countries will become less safe and also poor. In Asia, countries like Singapore and Thailand are very good but if there is a conflict between the US and China after a possible Chinese invasion of Taiwan, these areas could become more precarious.

The problem with Australia and New Zealand is that they are highly indebted with big asset bubbles, especially in property. The socialist policies are not a plus either.  But the biggest risk is that a conflict in Taiwan could make these countries very risky with Chinese aspirations.  Many people are moving to Dubai today for tax reasons. Russians are moving there since Dubai doesn’t sanction them. The problem with the UAE is that conflicts in the Middle East occur with regular intervals.

For the ones who can’t move for job or family reasons, a second passport is advisable.  But the most important asset protection is having wealth preservation assets outside your country of residence. There is no totally safe country today in an unsafe world.

For investors who want to preserve their wealth, the best asset is physical gold followed by the more volatile silver. Gold and silver shares have had a terrible 35 years but the good companies should perform spectacularly.  Since most stocks are held by custodians within the financial system, they are not the same degree of wealth preservation as physical metals that you have direct control of.

So my own preference would be to own physical gold and silver that I have direct control of and can withdraw or sell with very short notice. It is also important to deal with a company that can move your metals at very short notice if the security or geopolitical situation would necessitate it.

Our gold vault in the Swiss Alps is the biggest private gold vault in the world and is also nuclear bomb proof which is totally unique. This is for bigger investors. We also store gold in Zurich. Our second preference is Singapore with the reservations I have mentioned. We also have vaults in many parts of the world and as I have stated, this can be important if the situation in the world changes and the gold/silver needs to be moved.The world is now moving towards troubled times.

Remember that family and friends are your most important asset and treasure them profoundly.  Also, except for family and friends, many of the best things in life are free like books, nature, music, and sports.

Egon von Greyerz

The financial system is terminally broken, toast, kaput!

Anyone who doesn’t see what is happening will soon lose a major part of their assets either through bank failure, currency debasement or the collapse of all bubble assets like stocks, property and bonds by 75-100%. Many bonds will become worthless.

Wealth preservation in physical gold is now absolutely critical. Obviously it must be stored outside a broken financial system. More later in this article.

The solidity of the banking system is based on confidence. With the fractional banking system, highly leveraged banks only have a fraction of the money available if all depositors ask for their money back. So when confidence evaporates, so do the balance sheets of the banks and depositors realise that the whole system is just a black hole. And this is exactly what is about to happen. 

For anyone who believes that this is just a problem with a few smaller US banks and one big one (Credit Suisse), they must think again.

Yes, Silicon Valley Bank (16th biggest US bank) is gone after an idiotic and irresponsible  policy to invest short term customer deposits in long term US Treasuries at the bottom of the interest rate cycle. Even worse, they then valued the bonds at maturity rather than market, to avoid taking a loss. Clearly a management that didn’t have a clue about risk. SVB’s demise is the second biggest failure of a US bank.

Yes, Signature Bank (29th biggest) is gone due to a run on deposits. 
And yes, First Republic Bank had to be supported by US lenders and the Fed by a $30 billion loan due to a run on deposits. But this won’t stop the rot as depositors attack the next bank
and the next one and the next one……….

And yes, the Swiss second largest bank Credit Suisse (CS) is terminally ill after a number of poor investments over the years combined with poor management that has come and gone virtually every year.. I wrote an important article about the coming demise of CS 2 years ago here: “ARCHEGOS & CREDIT SUISSE – TIP OF THE ICEBERG.”

The situation at CS is so dire that a solution needs to be found before Monday’s (March 20) opening. The bank cannot survive in its present form. A failure for Credit Suisse would not just rock the Swiss financial system but have severe global repercussions. A merger with UBS is one solution. But UBS had to be bailed out in 2008 and doesn’t want to be weakened again by Credit Suisse without state guarantees and support from the Swiss National Bank (SNB). The SNB injected CHF50 billion into CS last week but the share price still went to a new low.

No one should believe that a state subsidised takeover of Credit Suisse by UBS will solve the problem. No, it will just be rearranging the deck chairs on the titanic and making the problem bigger rather than smaller. So rather than a lifebuoy, UBS will have a massive lead weight to carry which will guarantee its demise as the banking system collapses. And the Swiss government will take on assets which will be unrealisable.

Still, it is likely that by the end of the present weekend a deal will be announced with UBS
being offered a deal they can’t refuse by taking over the good assets and the SNB/Government nurturing the bad assets of Credit Suisse in a rescue vehicle.

The SNB is of course in a mess itself, having lost $143 billion in 2022. The SNB balance sheet
is bigger than Swiss GDP and consists of currency speculation and US tech stocks. This central bank is the world’s biggest hedge fund and the least successful.

Just to put a balanced view on Switzerland. It has the best political system in the world with direct democracy. It also has low Federal debt and normally no budget deficits. It is also the safest country in the world.

But the Swiss banking system is very unsound, just like the rest of the world’s. A central bank which is bigger than the country’s GDP is extremely unsound. And a banking system which is 5x Swiss GDP makes it too big to save.

Although the Fed and ECB are much smaller in relation to their countries’ GDP than the SNB, these two central banks will soon discover that their assets of around $8 trillion each are grossly overvalued.

With a global banking system on the verge of a systemic failure, Central Bankers and bankers have been working around the clock this weekend to temporarily avoid the inevitable collapse of the bankrupt financial system.

As I pointed out above, the main Central Banks would also be bankrupt if they valued their assets honestly. But they have a wonderful source of money that they will tap to save the system.  Yes, I am of course talking about money printing.

We will in coming months and years see the most massive avalanche of money printing that has ever hit the world.  For anyone who believes that we are just seeing another bank run that will quickly evaporate, they will need to take a shower in ice cold Alpine water.   What we are witnessing is not just a temporary drama that will be sorted out by “the all powerful and resourceful” central banks.

No, instead what we are seeing is the end phase of this financial era which started with the formation of the Fed in 1913 and in the next few years, or much sooner, will end with the death of money.

But the Death of Money doesn’t just mean that the dollar (and most currencies) will make their final move to ZERO, having already declined 98% since 1971.  Currency debasement is not the cause but the effect of the banking Cabal taking control of the money for their own benefit. As Mayer Amschel Rothschild said in the late 1700s: “Let me issue and control a nation’s money and I care not who makes the laws”.

Sadly, as this Cassandra (me) has written about since the beginning of the century,
the Death of Money is not just all currencies going to ZERO as they have throughout history. 
No, the Death of Money means a total and final collapse of this financial system. 
Cassandra was a priestess in Greek mythology who was given the gift of predicting major events accurately but also given the curse that no one would  believe her predictions. 
No depositor must believe that the FDIC (Federal Deposit Insurance Corp) in the US or similar vehicles in other countries will save their deposits. All these organisations are massively undercapitalised and in the end it will be the governments in all countries which step in. 
We know of course, that the government has no money. They just print whatever they need. That leaves ordinary people taking the final burden of all this money printing.

But ordinary people will have no money either. Yes a few rich people will be taxed heavily to cover bank deficits and losses. Still, that will be a drop in the ocean. Instead ordinary people will be impoverished with little income, no government handouts, no pension and money which is worthless.

The above is sadly the cycle that all economic eras go through. The issue this time is that the problem is global and of a magnitude never seen before in history.  Regrettably a rotten and bankrupt financial system needs to go through a cleansing period which the world will now experience. There cannot be sound growth and sound values until the current corrupt and debt infested system implodes. Only then can the world grow soundly again.

The transition will sadly be dramatic with a lot of suffering for most people. But there is no other way. We won’t just see poverty, famine but also many human tragedies. The risk of social unrest or civil war is very high plus the risk of a global war.

Central banks had of course hoped that their Digital Currencies (CBDC) would be ready to save them (but not the world) from the present debacle by totally controlling people’s spending. But in my view they will be too late. And since CBDCs are just another form of Fiat money, it would just exacerbate the problem with an even more severe outcome at the end. Still, it won’t prevent them from trying.

A paper issued by 4 US academics in finance, illustrates the $2 trillion black hole in the US banking system:

“Monetary Tightening and U.S. Bank Fragility in 2023: Mark-to-Market Losses and Uninsured Depositor Runs?”
March 13, 2023 
Erica Jiang, Gregor Matvos, Tomasz Piskorski, and Amit Seru

We provide a simple analysis of U.S. banks’ asset exposure to a recent rise in the interest rates with implications for financial stability. The U.S. banking system’s market value of assets is $2 trillion lower than suggested by their book value of assets. We show that these losses, combined with a large share of uninsured deposits at some U.S. banks can impair their stability. Even if only half of uninsured depositors decide to withdraw, almost 190 banks are at a potential risk of impairment to even insured depositors, with potentially $300 billion of insured deposits at risk. If uninsured deposit withdrawals cause even small fire sales, substantially more banks are at risk. Overall, these calculations suggest that recent declines in bank asset values significantly increased the fragility of the US banking system to uninsured depositors runs.”

What is crucial to understand is that the $2 trillion “loss” is only due to higher interest rates. When the US economy comes under pressure, the loan books of the banks will deteriorate dramatically and bad debts increase exponentially. With total assets of US commercial banks
at $23 trillion, I would be surprised if 50% is repaid or recoverable in the coming crisis. 
The above risks are just for the US financial system. The global system will be no better with the EU under massive pressure partly due to US led sanctions of Russia. Virtually every major economy in the world is in a dire position.

Let’s just look at the debt pyramid which I have discussed in many articles.
In 1971, when Nixon closed the gold window, global debt was $4 trillion. With gold backing no currency, this became a free for all to print unlimited amounts of money. And thus by 2000 debt had grown 25x to $100t. In 2006, when the Great Financial Crisis started, global debt was $120 trillion. By 2021 it had grown 75x from 1971 to $300 trillion. 

The red column shows global debt at $3 quadrillion sometime between 2025 and 2030. 
This assumes that the shadow banking system plus outstanding derivatives of currently probably around $2 quadrillion will need to be saved by central banks in a money printing bonanza. This will obviously lead to hyperinflation and thereafter to a depressionary implosion.
I know this sounds sensational but still a very likely scenario at the end of the biggest credit bubble in history.

I have been standing on a soapbox for over 20 years, warning the world about the coming financial crisis and the importance of physical gold for wealth preservation purposes. In 2002 we invested important funds into physical gold with the purpose of holding it for the foreseeable future.

Between 2002 and 2011 gold went from $300 to $1,900. Since then gold corrected and then went sideways as stocks and the asset markets surged backed by massive credit expansion. 
With gold currently around $1990, there is not much gain since 2011. Still since 2002 gold is up 7x. Due to the temporarily stronger dollar, gold’s gains measured in dollars are much smaller than in Euros, Pounds or Yen. But that will soon change.

In the final section of the article “WILL NUCLEAR WAR, DEBT COLLAPSE OR ENERGY DEPLETION FINISH THE WORLD?”, I outlined the importance of owning physical gold to store it in a safe jurisdiction away from kleptocratic governments.

“2023 is likely to be the year of gold. Both fundamentally and technically gold looks like it will make major up moves this year.”

And at the end of this article, I explain the importance of how and where gold should be held:“PREPARE FOR 10 YEARS OF GLOBAL DESTRUCTION.”

“So my own preference would be to own physical gold and silver that only I have direct control of and can withdraw or sell with very short notice.

It is also important to deal with a company that can move your metals at very short notice if the security or geopolitical situation would necessitate it.”

In February 2019 I wrote about what I called the Gold Maginot Line which had held for 6 years below $1,350. This is typical for gold. Having gone from $250 in 1999 to $1,900 in 2011, it then spent 8 years in a correction. At the time I forecast that the Maginot Line would soon break which it did and swiftly moved to $2,000 by August 2020. We have now had another period of consolidation since then and the next move above $2,000 and towards $3,000 is imminent. 

Just to remind ourselves what happens to your money and gold during a hyperinflationary period, here is a photo from China’s hyperinflation in 1949 as people try to get their 40 grammes (just over one ounce) that they were allocated by the government. At some point in the next few years, there will be a panic in the West to buy gold at any price. 

So as I have been urging investors for over 20 years, please get your gold NOW while it is still available.

Intense discussions are right now going on here in Switzerland between UBS, Credit Suisse, the regulator FINMA, the Swiss National Bank – SNB – and the Swiss Government. The Fed, the Bank of England and the ECB are also involved.

The latest rumour is that UBS will buy Credit Suisse for CHF900 million ($1 billion). The shares of CS closed at a market cap of CHF8 billion on Friday. The deal would clearly involve backing from the SNB and the Swiss government which would have to take on major liabilities. 
The December 2022 book value of CS was CHF42 billion, as with all banks massively overstated.

The deal isn’t done at this point, 5.30pm Swiss time, but the whole banking world knows that without a deal, there will be global contagion starting tomorrow Monday the 20th. 
Even if a provisional deal will be done by Monday’s open, the financial system has now been permanently injured with an open wound which won’t heal. 
The problem will just move on to the next bank, and the next and the next…

Ellen Brown:


On Friday, March 10, Silicon Valley Bank (SVB) collapsed and was taken over by federal regulators. SVB was the 16th largest bank in the country and its bankruptcy was the second largest in U.S. history, following Washington Mutual in 2008. Despite its size, SVB was not a “systemically important financial institution” (SIFI) as defined in the Dodd-Frank Act, which requires insolvent SIFIs to “bail in” the money of their creditors to recapitalize themselves. 

Technically, the cutoff for SIFIs is $250 billion  in assets. However, the reason they are called “systemically important” is not their asset size but the fact that their failure could bring down the whole financial system. That designation comes chiefly from their exposure to derivatives, the global casino that is so highly interconnected that it is a “house of cards.” Pull out one card and the whole house collapses. SVB held $27.7 billion in derivatives, no small sum, but it is only .005% of the $55,387 billion ($55.387 trillion) held by JPMorgan, the largest U.S. derivatives bank. 

SVB could be the canary in the coal mine foreshadowing the fate of other over-extended banks, but its collapse is not the sort of “systemic risk” predicted to trigger “contagion.” As reported by CNN:

“Despite initial panic on Wall Street, analysts said SVB’s collapse is unlikely to set off the kind of domino effect that gripped the banking industry during the financial crisis.

‘The system is as well-capitalized and liquid as it has ever been,’ Moody’s chief economist Mark Zandi said. ‘The banks that are now in trouble are much too small to be a meaningful threat to the broader system.’

No later than Monday morning, all insured depositors will have full access to their insured deposits, according to the FDIC. It will pay uninsured depositors an ‘advance dividend within the next week.'”

A fuller report on the collapse of SVB will have to wait on developments that occur over the weekend and soon thereafter. 

This column, meanwhile, focuses on derivatives and is a followup to my Feb. 23  column on the “bail in” provisions of the 2010 Dodd Frank Act, which eliminated taxpayer bailouts by requiring insolvent SIFIs to recapitalize themselves with the funds of their creditors. “Creditors” are defined to include depositors, but deposits under $250,000 are protected by FDIC insurance. However, the FDIC fund is sufficient to cover only about 2% of the $9.6 trillion in U.S. insured deposits. A nationwide crisis triggering bank runs across the country, as happened in the early 1930s, would wipe out the fund. Today, some financial pundits are predicting a crisis of that magnitude in the quadrillion dollar-plus derivatives market, due to rapidly rising interest rates. This column looks at how likely that is and what can be done either to prevent it or dodge out of the way.

“Financial Weapons of Mass Destruction”

In 2002, mega-investor Warren Buffett wrote that derivatives were “financial weapons of mass destruction.” At that time, their total “notional” value (the value of the underlying assets from which the “derivatives” were “derived”) was estimated at $56 trillion. Investopedia reported in May 2022 that the derivatives bubble had reached an estimated $600 trillion according to the Bank for International Settlements (BIS), and that the total is often estimated at over $1 quadrillion.  No one knows for sure, because most of the trades are done privately

As of the third quarter of 2022, according to the “Quarterly Report on Bank Trading and Derivatives Activities” of the Office of the Comptroller of the Currency (the federal bank regulator),  a total of 1,211 insured U.S. national and state commercial banks and savings associations held derivatives, but 88.6% of these were concentrated in only four large banks: J.P. Morgan Chase ($54.3 trillion), Goldman Sachs ($51 trillion), Citibank ($46 trillion), Bank of America ($21.6 trillion), followed by Wells Fargo ($12.2 trillion). A full list is here. Unlike in 2008-09, when the big derivative concerns were mortgage-backed securities and credit default swaps, today the largest and riskiest category is interest rate products. 

The original purpose of derivatives was to help farmers and other producers manage the risks of dramatic changes in the markets for raw materials. But in recent times they have exploded into powerful vehicles for leveraged speculation (borrowing to gamble). In their basic form, derivatives are just bets – a giant casino in which players hedge against a variety of changes in market conditions (interest rates, exchange rates, defaults, etc.). They are sold as insurance against risk, which is passed off to the counterparty to the bet. But the risk is still there, and if the counterparty can’t pay, both parties lose. In “systemically important” situations, the government winds up footing the bill. 

Like at a race track, players can bet although they have no interest in the underlying asset (the horse). This has allowed derivative bets to grow to many times global GDP and has added another element of risk: if you don’t own the barn on which you are betting, the temptation is there to burn down the barn to get the insurance. The financial entities taking these bets typically hedge by betting both ways, and they are highly interconnected. If counterparties don’t get paid, they can’t pay their own counterparties, and the whole system can go down very quickly, a systemic risk called “the domino effect.”  

That is why insolvent SIFIs had to be bailed out in the Global Financial Crisis (GFC) of 2007-09, first with $700 billion of taxpayer money and then by the Federal Reserve with “quantitative easing.” Derivatives were at the heart of that crisis. Lehman Brothers was one of the derivative entities with bets across the system. So was insurance company AIG, which managed to survive due to a whopping $182 billion bailout from the U.S. Treasury; but Lehman was considered too weakly collateralized to salvage. It went down, and the Great Recession followed.

Risks Hidden in the Shadows

Derivatives are largely a creation of the “shadow banking” system, a group of financial intermediaries that facilitates the creation of credit globally but whose members are not subject to regulatory oversight. The shadow banking system also includes unregulated activities by regulated institutions. It includes the repo market, which evolved as a sort of pawn shop for large institutional investors with more than $250,000 to deposit. The repo market is a safe place for these lenders, including pension funds and the U.S. Treasury, to park their money and earn a bit of interest. But its safety is insured not by the FDIC but by sound collateral posted by the borrowers, preferably in the form of federal securities.

As explained by Prof. Gary Gorton:

“This banking system (the “shadow” or “parallel” banking system) – repo based on securitization – is a genuine banking system, as large as the traditional, regulated banking system. It is of critical importance to the economy because it is the funding basis for the traditional banking system. Without it, traditional banks will not lend and credit, which is essential for job creation, will not be created.”

While it is true that banks create the money they lend simply by writing loans into the accounts of their borrowers, they still need liquidity to clear withdrawals; and for that they largely rely on the repo market, which has a daily turnover just in the U.S. of over $1 trillion. British financial commentator Alasdair MacLeod observes that the derivatives market was built on cheap repo credit. But interest rates have shot up and credit is no longer cheap, even for financial institutions. 

According to a December 2022 report by the BIS, $80 trillion in foreign exchange derivatives that are off-balance-sheet (documented only in the footnotes of bank reports) are about to reset (roll over at higher interest rates). Financial commentator George Gammon discusses the threat this poses in a podcast he calls, “BIS Warns of 2023 Black Swan – A Derivatives Time Bomb.” Another time bomb in the news is Credit Suisse, a giant Swiss derivatives bank that was hit with an $88 billion run on its deposits by large institutional investors late in 2022. The bank was bailed out by the Swiss National Bank through swap lines with the U.S. Federal Reserve at 3.33% interest.

The Perverse Incentives Created by “Safe Harbor” in Bankruptcy

In The New Financial Deal: Understanding the Dodd-Frank Act and Its (Unintended) Consequences, Prof. David Skeel refutes what he calls the “Lehman myth”—the widespread belief that Lehman’s collapse resulted from the decision to allow it to fail. He blames the 2005 safe harbor amendment to the bankruptcy law, which says that the collateral posted by insolvent borrowers for both repo loans and derivatives has “safe harbor” status exempting it from recovery by the bankruptcy court. When Lehman appeared to be in trouble, the repo and derivatives traders all rushed to claim the collateral before it ran out, and the court had no power to stop them.  

So why not repeal the amendment? In a 2014 article titled “The Roots of Shadow Banking,”
Prof. Enrico Perotti of the University of Amsterdam explained that the safe harbor exemption is a critical feature of the shadow banking system, one it needs to function. Like traditional banks, shadow banks create credit in the form of loans backed by “demandable debt”—short-term loans or deposits that can be recalled on demand. In the traditional banking system, the promise that the depositor can get his money back on demand is made credible by government-backed deposit insurance and access to central bank funding. The shadow banks needed their own variant of “demandable debt,” and they got it through the privilege of “super-priority” in bankruptcy. Perotti wrote:

Safe harbor status grants the privilege of being excluded from mandatory stay, and basically all other restrictions. Safe harbor lenders, which at present include repos and derivative margins, can immediately repossess and resell pledged collateral. This gives repos and derivatives extraordinary super-priority over all other claims, including tax and wage claims, deposits, real secured credit and insurance claims. [Emphasis added.]

The dilemma of our current banking system is that lenders won’t advance the short-term liquidity needed to fund repo loans without an ironclad guarantee; but the guarantee that makes the lender’s money safe makes the system itself very risky. When a debtor appears to be on shaky ground, there will be a predictable stampede by favored creditors to grab the collateral, in a rush for the exits that can propel an otherwise-viable debtor into bankruptcy; and that is what happened to Lehman Brothers. 

Derivatives were granted “safe harbor” because allowing them to fail was also considered a systemic risk. It could trigger the “domino effect,” taking the whole system down. The error, says Prof. Skeel, was in passage of the 2005 safe harbor amendment. But the problem with repealing it now is that we will get the domino effect, in the collapse of both the quadrillion dollar derivatives market and the more than trillion dollars traded daily in the repo market.

The Interest Rate Shock

Interest rate derivatives are particularly vulnerable in today’s high interest rate environment. From March 2022 to February 2023, the prime rate (the rate banks charge their best customers) shot up from 3.5% to 7.75%, a radical jump. Market analyst Stephanie Pomboy calls it an “interest rate shock.” It won’t really hit the market until variable-rate contracts reset, but $1 trillion in U.S. corporate contracts are due to reset this year, another trillion next year, and another trillion the year after that. 

A few bank bankruptcies are manageable, but an interest rate shock to the massive derivatives market could take down the whole economy. As Michael Snyder wrote in a 2013 article titled “A Chilling Warning About Interest Rate Derivatives:”

Will rapidly rising interest rates rip through the U.S. financial system like a giant lawnmower blade? Yes, the U.S. economy survived much higher interest rates in the past, but at that time there were not hundreds of trillions of dollars worth of interest rate derivatives hanging over our financial system like a Sword of Damocles.

… [R]ising interest rates could burst the derivatives bubble and cause “massive bankruptcies around the globe” [quoting Mexican billionaire Hugo Salinas Price]. Of course there are a whole lot of people out there that would be quite glad to see the “too big to fail” banks go bankrupt, but the truth is that if they go down, our entire economy will go down with them. … Our entire economic system is based on credit, and just like we saw back in 2008, if the big banks start failing, credit freezes up and suddenly nobody can get any money for anything. 

There are safer ways to design the banking system, but they are not likely to be in place before the quadrillion dollar derivatives bubble bursts. Snyder was writing 10 years ago, and it hasn’t burst yet; but this was chiefly because the Fed came through with the “Fed Put” – the presumption that it would backstop “the market” in any sort of financial crisis. It has performed as expected until now, but the Fed Put has stripped it of its “independence” and its ability to perform its legislated duties. This is a complicated subject, but two excellent books on it are Nik Bhatia’s Layered Money (2021) and Lev Menand’s The Fed Unbound: Central Banking in a Time of Crisis (2022).

Today the Fed appears to be regaining its independence by intentionally killing the Fed Put, with its push to raise interest rates. (See my earlier article here.) It is still backstopping the offshore dollar market with “swap lines,” arrangements between central banks of two countries to keep currency available for member banks,  but the latest swap line rate for the European Central Bank is a pricey 4.83%. No more “free lunch” for the banks.

Alternative Solutions

Alternatives that have been proposed for unwinding the massive derivatives bubble include repealing the safe harbor amendment and imposing a financial transaction tax, typically a 0.1% tax on all financial trades. But those proposals have been around for years and Congress has not taken up the call. Rather than waiting for Congress to act, many commentators say we need to form our own parallel alternative monetary systems. 

Crypto proponents see promise in Bitcoin; but as Alastair MacLeod observes, Bitcoin’s price is too volatile for it to serve as a national or global reserve currency, and it does not have the status of enforceable legal tender. MacLeod’s preferred alternative is a gold-backed currency, not of the 19th century variety that led to bank runs when the banks ran out of gold, but of the sort now being proposed by Sergey Glazyev for the Eurasian Economic Union. The price of gold would be a yardstick for valuing national currencies, and physical gold could be used as a settlement medium to clear trade balances. 

Lev Menand, author of The Fed Unbound, is an Associate Professor at Columbia Law School who has worked at the New York Fed and the U.S. Treasury. Addressing the problem of the out-of-control unregulated shadow banking system, he stated in a July 2022 interview with The Hill, “I think that one of the great possible reforms is the public banking movement and the replication of successful public bank enterprises that we have now in some places, or that we’ve had in the past.”

Certainly, for our local government deposits, public banks are an important solution. State and local governments typically have far more than $250,000 deposited in SIFI banks, but local legislators consider them protected because they are “collateralized.” In California, for example, banks taking state deposits must back them with collateral equal to 110% of the deposits themselves. The problem is that derivative and repo claimants with “supra-priority” can wipe out the entirety of a bankrupt bank’s collateral before other “secured” depositors have access to it. 

Our tax dollars should be working for us in our own communities, not capitalizing failing SIFIs on Wall Street. Our stellar (and only) state-owned model is the Bank of North Dakota, which carried North Dakota through the 2008-09 financial crisis with flying colors. Post-GFC (the Global Financial Crisis of ’07-’09), it earned record profits reinvesting the state’s revenues in the state, while big commercial banks lost billions in the speculative markets. Several state legislatures currently have bills on their books following the North Dakota precedent. 

For a federal workaround, we could follow the lead of Jesse Jones’ Reconstruction Finance Corporation, which funded the New Deal that pulled the country out of the Great Depression. A bill for a national investment bank currently in Congress that has widespread support is based on that very effective model, avoiding the need to increase taxes or the federal debt. 

All those alternatives, however, depend on legislation, which may be too late. Meanwhile, self-sufficient “intentional” communities are growing in popularity, if that option is available to you. Community currencies, including digital currencies, can be used for trade. They can be “Labor Dollars” or “Food Dollars” backed by the goods and services for which the community has agreed to accept them. (See my earlier article here.) The technology now exists to form a network of community cryptocurrencies that are asset-backed and privacy-protected, but that is a subject for another column.

The current financial system is fragile, volatile and vulnerable to systemic shocks. It is due for a reset, but we need to ensure that the system is changed in a way that works for the people whose labor and credit support it. Our hard-earned deposits are now the banks’ only source of cheap liquidity. We can leverage that power by collaborating in a way that serves the public interest.
Robert Ingraham

A sudden, relatively convulsive reorganization of the world’s finances, monetary systems and trade-relations, is the only hope to be seen among those nations which prefer that their nations survive.”

      —Lyndon LaRouche [emphasis added]

[Ours] “is a struggle to maintain in the world, that form, and substance of government, whose leading object is, to elevate the condition of men—to lift artificial weight from all shoulders—to clear the path of laudable pursuit for all. . .”

      —Abraham Lincoln, 1861 [emphasis added]

In 1970, the last year before the abolition of the fixed exchange-rate Bretton Woods Monetary System, total U.S. government debt stood at $372 billion.  By 2000, this had risen to $5.73 trillion, and today U.S. sovereign debt is a staggering $31.78 trillion.  Numerous studies have posited that in the next decade that debt will grow by $1.3 trillion per year, minimally, to $45 trillion by 2033.  As of May, 2023, U.S. government debt is 121 percent of America’s Gross Domestic Product (GDP), a figure which itself represents a massively inflated depiction of the health of the productive U.S. economy.  At the same time, annual government deficits have grown from $3 billion in 1970 to $1.5 trillion in 2023, and annual interest payment on U.S. Government debt is now $570 billion, i.e., more than one-third of the entire deficit.  The Congressional Budget Office (CBO) now predicts that annual budget deficits will grow to $2.7 trillion by 2033.

Even worse, amid all of the talk of U.S. Government debt, what is usually ignored is the explosion of financial, corporate and consumer debt.  Total U.S. debt—public and private—now stands at over $90 trillion.  Corporate debt, which has been growing rapidly, has now reached $10 trillion. For a nation of 330 million people, this $90 trillion of debt equals $273,000 per man, woman and child in the nation.  This is a trajectory which is not sustainable.

As we near the June 1 Debt Ceiling deadline, a few things are clear.  First, what is being discussed in Congress as a stop-gap temporary remedy to this crisis is utter rubbish.  Kevin McCarthy and many others are simply ignoring how we arrived at such a disastrous situation.  There is no discussion, whatsoever, of the deeper economic problems of the nation or how we can begin to rebuild our productive economy.  There is no discussion of the precipitous decline in manufacturing and real wages since 2007, nor the escalating crisis in energy, water management and transportation.  Donald Trump is the only public figure to address these paramount concerns with the proposals he has put forward in his Agenda 47.  (See LaRouche PAC May 18 dialogue Will Trump’s Agenda 47 Solve the Debt Ceiling Crisis?) Yet, Congress ignores all this.  Instead, our elected officials bluster, pontificate, and act like a bunch of community college graduates with degrees in bookkeeping.

Rather than serious thinking, we are being treated to the same tired and discredited litany of “cutting spending.”  This is all a transparent charade, a Danse Macabre for the credulous.  Certainly, the entirety of Biden’s “Green Agenda” should be de-funded, all of the “Woke” programs jettisoned, and U.S. Defense spending could be sharply reduced if we stop acting as the imperial “policemen of the world.”  Proposals to cut Medicaid or reduce payments to the Supplemental Nutrition Assistance Program (SNAP) will have no effect, whatsoever, on restoring our nation to economic or financial health;  but such cuts will result in intense human suffering and an accelerated death rate.  Bear in mind, those now proposing to cut “entitlements” are the same ones who voted for $113 billion in aid to Ukraine in 2022.

What about the Depression?
Federal food assistance expenditures—what used to be called Food Stamps and is now called SNAP—rose from $28 billion in 2005 to $57 billion in 2018, a 100 percent increase.  Now, various knuckle-brained Congressmen are proposing to save a few billion dollars by imposing restrictions which will have the effect of kicking millions of Americans off of food assistance.  Yet no one seems to ask the obvious question:  why are millions more Americans eligible for food assistance today, and why have SNAP expenditures doubled in the last 20 years?

Why is no one discussing the devastating collapse of our productive economy?
In 1960 there were 17.2 million manufacturing jobs in the United States.  Today there are 13.1 million manufacturing jobs;  this despite the fact that the population has almost doubled—from 179 million to 332 million—during the past 63 years.

Much of our major manufacturing has either closed or moved overseas.  Our cities have been hollowed out and left to die, and our trade deficit now stands at $1.2 trillion per year.  Our nation’s infrastructure is rotting and collapsing under our feet.  Water rationing and electricity blackouts have become routine in many states.

Additionally, as stated above, corporate and consumer debt is a ticking time bomb, and we are walking directly into the jaws of a financial/economic catastrophe.  Tens of millions of Americans have already been reduced to debt slaves with a credit card.  But the worst—far worse—is yet to come.

How to reverse this collapse?  In the words of Donald Trump, there is only one way out:  “Build baby, build.”  Trump is defining a pro-growth agenda with his Agenda 47.  It is the right approach.  However, for this to work, Lyndon LaRouche’s call for “a sudden, relatively convulsive reorganization of the world’s finances, monetary systems and trade-relations” must be acted upon.  To do this, certain axiomatic issues of American System economics must be grasped.

The Fundamental Issue
On both the political right and the left, the term “globalization” has become a dirty word.  Klaus Schwab’s World Economic Forum is regularly pilloried by both “progressives” and activists of the MAGA movement.  Despite this, however, most critics don’t really understand what they are looking at.  In addition to the Davos gatherings, consider also the annual Jackson Hole Economic Symposiums (hosted by the U.S. Federal Reserve), as well the current meeting of the Bilderberg Group, now taking place in Lisbon, Portugal.  Look also at the murderous policies of the European Central Bank.  Read through the roster of attendees at these gatherings:  central bankers;  financial elites from London, Amsterdam, New York and elsewhere;  representatives of the Silicon Valley tech billionaires;  various spooks from the intelligence community;  and a plethora of oligarchical flunkies. 

Misguided people refer to these individuals as “elites” or “globalizers,” but the correct term is an Imperial Financial Oligarchy—the modern-day version of the 250 year-old British Financial Empire.  What this oligarchy controls—and imposes on nation-states—is what Lyndon LaRouche called an “ultramontane system of monetary imperialism.”

Constitutionally, the American Republic is a nation of “We the People,” and the government is held responsible to only the people.  Our Republic is absolutely sovereign in monetary matters, and no private banking or monetary interest has the authority to dictate the rules by which it operates.  Yet, the imperial financiers insist that not only is their “free market” of speculative finance “independent” from Government of the People, but that nations are in reality subservient to the “laws” of the financial marketplace.  Thus, it is their view, echoed by many in Congress, that it is okay to cut Social Security, but that the payment of interest on the National Debt is sacrosanct. 
Prior generations of Americans understood clearly that the American Republic was absolutely sovereign in all matters related to banking and finance.  Thus, Hamilton established a National Bank, Lincoln issued unsecured Greenbacks, and Roosevelt freed us from the slavery of the imperial British Gold Standard.  Today, however, we see the unelected International Monetary Fund or the European Central Bank dictate terms to allegedly sovereign nations.  This is the tail wagging the dog.  And it is killing the dog.

Under the Principles adopted in 1776 and 1788, all monetary policy is determined by agreements among absolutely sovereign nations.  All domestic financial policy is governed by a sacred bond between the People and their elected representatives.  No, allegedly independent, private financial power has any authority—of any kind—over this Constitutional system.

An Unconstitutional Budget There is no mention in the United States Constitution of a “budget” for the national government.  It may come as a shock to some to discover that for the first 145 years of our Republic’s existence, under George Washington, John Quincy Adams, Abraham Lincoln and William McKinley, there was no such thing as a national budget—no such thing at all.  Abraham Lincoln fought and won the Civil War and unleashed the greatest industrial revolution in human history without a national budget.  The practice, during those decades, was that Congress would enact a project, while specifying an income stream to finance the project.Far more important, as Lincoln demonstrated with the Greenback policy, our Republic has the Constitutional power to coin (and print) money and to emit credit for the economic development of the nation.  The security of that credit is grounded in the future-oriented expansion of the productive economy of the nation.  Such emissions of Credit are Sovereign to the elected Representatives of the people, and are not subject to the accounting “rules” of private financial oligarchs.The idea for an overall “federal budget” was first introduced by the Woodrow Wilson administration and finally signed into law in 1921, when the Bureau of the Budget was created.

In reality, the very concept of a “federal budget” was imported from Britain and was only made possible by the earlier establishment of the Federal Reserve.  The entire U.S. budget was to be consolidated into one gigantic blob and then made subservient to the financial “rules” of the Federal Reserve, the City of London, and the major New York and Boston banks.Previously, the economic development of the nation—manufacturing, agriculture and science—were the priority.  After 1921, the financial interests of London and New York became hegemonic.  All of this was laid out by Woodrow Wilson in his 1884 book, Congressional Government, where he explicitly attacks the American System policy of tariffs and internal improvements, and he praises the central role of the British Exchequer for prioritizing finance over economic development.  Wilson wrote:“The object of our financial policy (i.e., the United States) has not been to equalize receipts and expenditures, but to foster the industries of the country. . .  This obviously constitutes a very capital difference between the functions of the British Chancellor of the Exchequer and those of our Committee of Ways and Means.  In the policy of the former, the support of the government is everything;   with the latter the care of the industries of the country is the beginning and the end of duties.”When the Bureau of the Budget was established in 1921, Congressman John J.  Fitzgerald (D-NY) stated, “Many who are urging the adoption of a budget in the United States are really in favor of a very revolutionary change in our whole system of government.” [emphasis added]

Between 1921 and 1974 budgetary oversight existed, but it was somewhat loose and non-binding.  But then, in the wake of the abandonment of the Bretton Woods System, Richard Nixon signed into law the Budget and Impoundment Control Act of 1974.  This established the procedure of running the government on a stringent budget, subject to Congressional review, a practice that did not exist until that time.  Henceforth, every piece of legislation would be judged as to how it would affect the budget, and the Congressional Budget Office (CBO) was established to enforce this.  This bad situation was made even worse with the passage of the Gramm-Rudman-Hollings Balanced Budget Act in 1985.  Thankfully, this latter was declared unconstitutional, but many of its provisions were later enacted separately.One effect of this madness has been to annihilate the American principle of Public Credit, as enunciated by Alexander Hamilton.  Under the provisions of a “balanced budget,” the “Greenback” policy of Abraham Lincoln would be ILLEGAL. The Lost Art of Capital BudgetingLyndon LaRouche referred to our current “balanced budget process” as “a slop-jar package which lumps short-term and long-term balances together indifferently, in a single silly lump, as a common budget,” and concluded that this procedure could only have been designed by “unbalanced minds” or by “enemies of our Republic who would wish to induce us to destroy ourselves.”

In his 2005 paper, Deficits as Capital Gains:  How to Capitalize a Recovery, LaRouche identifies the now nearly-lost practice of the Capital Budget as the key to resolving the current budget fiasco.  What LaRouche points to is the—once standard—practice of large commercial enterprises and private entrepreneurships of separating day-to-day operating expense from a separate and distinct “Capital Budget” for long-term investments in the acquisition and maintenance of new plant and equipment, new technologies, or other physical improvements.

Viewing our nation’s economy, hypothetically, as one giant nation-state economic enterprise, about half of the annual product of this enterprise should be invested in capital and related expenditures for the creation and maintenance of investments in long-term physical improvements of the total economy.  This would include a broad definition of what is termed “infrastructure,” as well as other key areas related to energy, water, transportation, etc.  It would also mean supporting and promoting similar long-term investment among suitable private entrepreneurs.  All of these would be long-term investments of about a 25-year duration.

The intention is to reverse the post-1968 affliction of the “services economy” and to begin to rebuild actual physical productivity.

However, there is no way that this approach can be accomplished either through the current budget process, or under the present speculative financial practices imposed by the Federal Reserve.  The only pathway that will work is through Hamiltonian methods of National Banking and Public Credit.

Once the Federal Reserve is put into receivership and its criminally incompetent directors shown the door, a new National Bank will become the vehicle through which large long-term projects will be funded in critical areas for the physical improvement of the economy.[ii]  The Bank will also be authorized to provide loans into the private sector for similar long-term productive investment.  These initiatives will be made possible through the issuance of new U.S. Treasury Notes, to be placed on deposit in the National Bank.  In essence, this will define the Nation’s “Capital Budget.”

The issuance of large amounts of new U.S. Treasury Notes—as was the case with the Greenbacks—will represent new government debt, but it is debt of a different sort.  Long-term capital investments are not to be confused with annual costs.  As long as the debt has the effect of generating leaps in the nation’s productivity and provided that payment is not postponed to a point beyond the physical life of the capital investment, the debt will be easily managed and eventually retired.

All of this is based on the crucial, Constitutional principle that the creation and issue of legal currency is a monopoly of the Federal government.  Money only exists, legitimately, as a creation and a responsibility of the sovereign nation-state republic. However, that function of government is, itself, accountable to the people as a whole [not the financial oligarchy].  The people’s elected representatives are, in turn, bound by the supreme Constitutional principle of the promotion of the General Welfare of all present generations and their posterity.

Other measures toward recovery must also be taken.  The ruthless re-imposition of Glass-Steagall will end much of the destructive financial practices of the last 30 years, and lead to a restoration of sound commercial banking.  The $60 trillion of commercial and private debt will have to be sorted out.  This debt burden is strangling business investment and impoverishing the people.  Much of it is the result of financial practices that should never have been legalized and will probably have to be written off as part of a Glass-Steagall reorganization.  Other steps will have to be taken.

As the productive economy begins to recover and wages and profits surge, tax revenues should prove more than adequate to meet the day-to-day operating expenses of the Federal government, while paying down and eventually liquidating the present Federal debt.  At the same time, millions of people will be able to reverse their slide into poverty and government assistance will no longer be required by millions of American families.

We have to build.  We have to progress.  We have to advance the opportunities for the people.  That is the proper approach to situating any discussion of the “debt ceiling.” 

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