Editor’s Introductory Note: The following article original appeared at the excellent Alt-Market blog, and is re-posted with permission. Brandon Smith’s economic and geopolitical analysis is usually spot on. I recommend bookmarking his site and checking it often. – JWR
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Trade is a fundamental element of human survival. No one person can produce every single product or service necessary for a comfortable life, no matter how Spartan their attitude. Unless your goal is to desperately scratch an existence from your local terrain with no chance of progress in the future, you are going to need a network of other producers. For most of the history of human civilization, production was the basis for economy. All other elements were secondary.
At some point, as trade grows and thrives, a society is going to start looking for a store of value; something that represents the man-hours and effort and ingenuity a person put into their day. Something that is universally accepted within barter networks, something highly prized, that is tangible, that can be held in our hands and is impossible to replicate artificially. Enter precious metals.
Thus, the concept of “money” was born, and for the most part it functioned quite well for thousands of years. Unfortunately, there are people in our world that see economy as a tool for control rather than a vital process that should be left alone to develop naturally.
The idea of “fiat money”, money which has no tangibility and that can be created on a whim by a central source or authority, is rather new in the grand scheme of things. It is a bastardization of the original and much more stable money system that existed before that was anchored in hard commodities. While it claims to offer a more “liquid” store of value, the truth is that it is no store of value at all.
Purveyors of fiat, central banks and globalists, use ever increasing debt as a means to feed fiat, not to mention the hidden tax of price inflation. When central bankers get a hold of money, it is no longer a representation of work or value, but a system of enslavement that crushes our ability to produce effectively and to receive fair returns for our labor.
There are many people today in the liberty movement that understand this dynamic, but even in alternative economic circles there are some that do not understand the full picture when it comes to central banks and fiat mechanisms. There is a false notion that paper currencies are the life blood of the establishment and that they will seek to protect these currencies at all costs. This might have been true 20 years ago or more, but it is not true today. Things change.
The king of this delusion is the US dollar. As the world reserve currency it is thought by some to be “untouchable”, a pillar of the globalist structure that will be defended for many decades to come. The reality, however, is that the dollar is nothing more than another con game on paper to the globalists; a farce that they are happy to sacrifice in order to further their goals of complete centralization of world trade and therefore the complete centralization of control over human survival.
That is to say, the dollar is a stepping stone for them, nothing more.
The real goal of the globalists is an economic system in which they can monitor every transaction no matter how small; a system in which there is eventually only one currency, a currency that can be tracked, granted or taken away at a moment’s notice. Imagine a world in which your “store of value” is subject to constant scrutiny by a bureaucratic monstrosity, and there is no way to hide from them by using private trade as a backstop. Imagine a world in which you cannot hold your money in your hand, and access to your money can be denied with the push of a button if you step out of line. This is what the globalists really desire.
Some people might claim that this kind of system already exists, but they would be fooling themselves. Even though fiat currencies like the dollar are a cancer on free markets and true production, they still offer privacy to a point, and they can still be physically allocated and held in your hand making them harder to confiscate. The globalists want to take a bad thing and make it even worse.
So, the question arises – How do they plan to make the shift from the current fiat paper system to their “new world order” economy?
First and foremost, they will seek a controlled demolition of the dollar as the world reserve currency. They have accomplished this in the past with other reserve currencies, such as the Pound Sterling, which was carefully diminished over a period of two decades just after WWII through the use of treasury bond dumps by France and the US, as well as the forced removal of the sterling as the petro-currency. This was done to make way for the US dollar as a replacement after the Bretton Woods agreement in 1944.
The dollar did not achieve true world reserve status, though, until after the gold standard was completely abandoned by Nixon in the early 1970s, at which point a deal was struck with Saudi Arabia making the dollar the petro-currency. Once the dollar was no longer anchored to gold and the world’s energy market was made dependent on it, the fate of the US economy was sealed.
Unlike Britain and the sterling, the US economy is hyper-dependent on the dollar’s world reserve status. While Britain suffered declining conditions for decades after the loss, including inflation and high interest rates, the US will experience far more acute pain. A complete lack of adequate manufacturing capability within US borders has turned our nation into a consumer based society rather than a society of producers. Meaning, we are dependent on the demand for our currency as a reserve in order to enjoy affordable goods from outside sources (i.e. other manufacturing based countries).
Add to this lack of production ability the fact that for the past decade the Federal Reserve has been pumping trillions of dollars into financial markets around the globe. This means trillions of dollar held overseas only on the promise that those dollars will be accepted by major exporters as a universal store of value. If faith in that promise is lost, those trillions could come flooding back into the US through various channels, and the buying power of the currency would crumble.
There is a delusion within the American mainstream that even if such an event were to occur, the transition could be handled with ease. It’s fantastical, I know, but never underestimate the cognitive dissonance of people blinded by bias.
The rebuilding of a production base within the US to offset the crisis of losing the world reserve currency would take many years; perhaps decades. And this is in the best case scenario. With a plummeting currency and extreme price inflation, the cost of establishing new production on a large scale would be immense. While local labor might become cheap (in comparison with inflation), all other elements of the economy would become very expensive.
In the worst case scenario there would be complete societal breakdown likely followed by an attempted totalitarian response by government. In which case, forget any domestically funded economic recovery. Any future recovery would have to be funded and managed from outside the US. And here is where we see the globalist plan taking shape.
The banking elites have hinted in the past how they might try to “reset” the global economy. As I’ve mentioned in many articles, the globalist run magazine The Economist in 1988 discussed the removal of the dollar to make way for a global currency, a currency which would be introduced to the masses by 2018. This introduction did in fact take place as The Economist declared it would. Blockchain and digital currency systems, the intended foundation of the next globalist monetary structure, received unprecedented coverage the past two years. They are now a part of the public consciousness.
Here is how I believe the process will unfold:
The 2008 crash in credit and housing markets led to unprecedented stimulus by central banks, with the Federal Reserve leading the pack as the greatest source of inflation. This program of bailouts and QE stimulus conjured an even bigger bubble, which many alternative analysts have dubbed “the everything bubble”.
The growing “everything bubble” encompasses not just stock markets or housing, but auto markets, credit markets, bond markets, and the dollar itself. All of these elements are now tied directly to Fed policy. The US economy is not only addicted to stimulus measures and near-zero interest rates; it will die without them.
The Fed knows this well. Chairman Jerome Powell hinted at the crisis that would evolve if the Fed ever cut off stimulus, unwound its balance sheet and hiked rates in the October 2012 Fed minutes.
Without constant and ever expanding stimulus measures, the false economy will implode. We are already seeing the effects as the Fed cuts tens-of-billions per month in assets from its balance sheet and hikes interest rates to their “neutral rate of inflation”. Auto markets, housing markets, and credit markets are in reversal, and stocks are witnessing the most instability since the 2008 crash. All of this was triggered by the Fed simply exerting incremental rate hikes and balance sheet cuts.
It is also important to note that almost every US stock market rally the past several months has taken place while the Fed’s balance sheet cuts were frozen. For example, for the past two-and-a-half weeks the Fed’s assets have only dropped by around $8 billion; this is basically a flatline in the balance sheet. It should not be surprising given this pause in cuts (in tandem with convenient stimulus measures by China) that stocks spiked through early to mid-January.
That said, Fed tightening will start again, either by rate hikes, asset cuts, or both at the same time. The Fed’s purpose is to create a crisis. The Fed’s goal is to cause a crash. The Fed is a suicide bomber that does not care what happens to the US system.
But what about the dollar, specifically?
The Fed’s tightening policies do not only translate to crisis for US stocks or other markets. I see three primary ways in which the dollar can be dethroned as the world reserve.
1) Emerging economies have become addicted to Fed liquidity over the past ten years. Without continued access to the Fed’s easy money, nations like China and India are beginning to seek out alternatives to the dollar as a world reserve. Contrary to the popular belief that these countries would “never” be able to decouple from the US, the process has already begun. And, it is the Fed that has actually created the necessity for emerging markets to seek out other sources of liquidity besides the dollar.
2) Donald Trump’s trade war is yet another cover event for the loss of reserve status. I would note that the primary rationale for tariffs was to balance the trade deficit. The trade deficit with China has done the opposite and is continually expanding each month. This suggests much higher tariffs on China would be required to reduce the imbalance.
It must also be understood that the trade deficit with China has long been part of a larger agreement. China is one of the largest buyers of US debt in the world and has continued to utilize the dollar as the world reserve currency. If the trade war continues through this year, it is only a matter of time before China, already seeking dollar alternatives as the Fed tightens liquidity, will start using its US treasury and dollar holdings as leverage against us.
Bilateral agreements between multiple nations that cut out the dollar are being established regularly today. If China, the largest exporter/importer in the world, stops accepting the dollar as the world reserve, or if they start accepting other currencies in competition, then numerous other nations will follow their lead.
3) Finally, if the war of words between Trump and the Fed becomes something more, then this could be used by the establishment to undermine faith in US credit. If Trump seeks to shut down the Fed entirely, the globalists are handed yet another perfect distraction for the death of the dollar. I can see the headlines now – The “reset” could then be painted as a “rescue” of the global economy after the “destructive actions of populists” who “bumbled into fiscal destruction” because they were blinded by an “obsession with sovereignty” in a world that “requires centralization to survive”.
The specifics of the shift to a global currency are less clear, but again, we have hints from the globalists. The Economist suggests that the US economy will have to be taken down a few pegs, and that the IMF would step in as the arbiter of forex markets through its SDR basket system. This plan was echoed recently by globalist Mohamed El-Erian in an article he wrote titled “New Life For The SDR?”. El-Erian also suggests that a global currency would help to combat the “rise of populism”.
The Economist notes that the SDR would only act as a “bridge” to the new global currency. Paper currencies would still exist for a time, but they would be pegged to the SDR exchange rates. Currently, the dollar is only worth around .71 SDRs. In the event of the loss of world reserve status, expect this exchange rate to drop significantly.
As the global crisis deepens the IMF will suggest a “reset” to a more manageable monetary framework, and this framework will be based on blockchain technology and a cryptocurrency which the IMF has likely already developed. The IMF hints at this outcome in at least two separate white papers recently published which herald a new age in which crypto is the next phase of evolution for global trade.
I predict according to the current pace of the trade war and Fed liquidity tightening that de-dollarization will hit the mainstream by 2020. The process of “resetting” the global monetary system would likely take at least another decade to complete. The globalist preoccupation with their “Agenda 2030” sustainable development initiatives suggests a decade long timeline.
Without ample resistance, the introduction of the cashless society will be presented as a natural and even “heroic” response by the globalists to save humanity from the “selfishness” of destructive nationalists. They will strut across the world stage as if they are saviors, rather than the villains they really are.
Interesting . Have always been perplexed with banking and its insatiable greed. Perhaps it’s like a drug addict or alcoholic ? Their addiction drives them to more and more insane measures.
Human nature is an interesting thing. A handful of people inflict wide-ranging misery yet the populace does nothing to remove them.
As far as the president is concerned will hold off judgement for now. It’s quite obvious the Establishment is against him and that means he’s working in my best interest.
The bankers and their enablers, media and politicians are depending on people’s ignorance, apathy and and sometimes plain stupidity to carry out their plans.
We can continue to try and educate our fellow citizens . It looks like an uphill battle.
And then they’ll promote their wonderful tattoo of numbers they’ll put on your hand so you can buy or sell.
Tangibles, the most important of which are the Holy Bible and our walk with Jesus Christ.
This article lead me to re-read Philippians 4:19. The truth today, tomorrow, forever.
Already, many in the preparedness community embrace bitcoin. How gullible are we?
I’ve been reading about the collapse of the dollar for two decades. Relative to many currencies, it’s only gotten stronger.
Yes please box up and mail to me all of your useless and failed dollars. I will be sure to find them a good home.
In the Rabbit Hole touched on this the other day. In a nutshell, they said there are say, 40 steps between now and a complete collapse of the dollar as currency. In steps 1-39, dollars are still useful.
I will also accept worthless socialist dollars in exchange for glass beads.
You could wipe your @ss with them….
Just sayin’
I’m not an economist and I’m not a world traveler, but what I observe through various media sources is that all economies of all countries are struggling with the same or similar influences. So is that the “globalist plan” or is it that every one is cat scratching to get to the top of the sovereign nationalism heap? I have faith in the USA, it’s manufacturing capability, it’s creativity and economic inventiveness. It needs to be allowed to function and not be manipulated. I’m not going to comment on Biblical prophecy’s role in that.
The world’s “informal”, reserve currency has changed approximately every 80-100 years. I say “informal” since there is nothing mandating the use of said currency, but it seems the world flocks to the new reserve currency after each transition.
Ironically, that 80-100 year cycle seems to align with the transitions mentioned in the 1997 book The Fourth Turning. In the book the authors discuss a repeating pattern with every fourth generation.
https://amzn.to/2B467wO
The next transition might be to the Chinese Yuan. However, China would need to develop a Bond market. Watch for this.
I personally believe a large war will precede the transition. The war would be a distraction to the debt problem.
For goodness sake people, gold and silver do not have any true intrinsic value, just like everything else. Gold is only worth, what, $1500 an ounce because people are willing to buy it for that much. It’s a figment that can and does change daily. I know a lot of you choose to invest in it, but what you’re hoping is that gold’s value will decrease less in comparison to other items in a crash. You may well be right, but it isn’t magic.
Yes, but all fiat currencies eventually inflate away to near zero. That will never, ever happen with gold and silver. There is safety in a diversified portfolio. Everyone who has any substantial net worth should keep 10 to 20% of that in precious metals. It is your fire insurance on the Dollar.
Agreed, there is always safety in any diversified portfolio. There is even precedent where landowners in the South were able to pay taxes on their properties after the collapse of the Confederate dollar using tangibles. But when people swear to me that gold will never decrease in value, it makes my eye twitch.
Correct me if I’m wrong, but even if we returned to the Gold Standard tomorrow, there would still be fluctuations in currency markets and exchanges based on the value of gold. I don’t see how it fixes the situation?
I didn’t say that “…gold will never decrease in value…” I said that it would never go to zero. Again, gold is not a traditional investment for speculative gain. It is for wealth preservation. Buy on the dips.
JWR, comment wasn’t directed at you. You don’t say that, but other people have in conversation. I’m willing to bet other people here have heard similar. Long story short, whenever gold comes up I see people engage in what I consider magical thinking, which I find odd for a group otherwise firmly rooted in risk analysis.
I agree with you 100% Mr.Rawles. Gold, Silver, precious metals, will never be reduced to zero. Bitcoin and all the other “electronic” forms of money are of little value if you cannot access them. What you can carry in your pocket, or in the larger sense, what you have available to trade, purchase what you want or need will be the only thing of value in the long term. Paper dollars or any form of currency simply made it more convenient than carrying around a pocketful of gold or silver. It is supposed to be based upon the value of gold held in trust, bit for probably the last 80 – 100 years has not been the case. I’ll put my trust in what I can physically control, all other is simply here today, and when you wake up the next morning, you’re flat broke with no recourse. All it takes is the right virus with a bad attitude and all of a sudden an entire continent, or worse, is flat broke.
Add to that all the Verucia Salt’s (“I don’t care! I want it NOW!”) out there, and you can see where things are headed. Stick to gold and silver! They will always turn heads!
I believe things will steam along fine until the rapture hits. The rapture will cause chaos and set the stage for the antichrist to overtake the world rapidly as it’s savior (white horse). Once in control, he will force Israel to give up Jerusalem, which is the causation of the war in Isaiah. This is the red horse. The end of this battle will cause the peace treaty to be signed and the Great Tribulation begins. Next comes the black horse famine. This will be the result of the loss of many of the American farmers due to the rapture, and through financial collapse of farms. Either the crops don’t get planted, or don’t get harvested. Next comes the ashen horse with death and disease in it’s path. Also during this time, animals will loose their fear of man, so you may not be able to trust your dog. By the time these riders have ridden, one quarter of the Earth’s population will be dead. And this is just the start of things to come!
From the time of the rapture to the signing of the peace treaty, there will be no Christians on Earth. Then the two witnesses appear and save the 144 thousand from Israel. They in turn, save all that can be saved during the tribulation. This is just as it was before. The Word went out first to the Jews, and then unto the Gentiles. This is my goal in prepping! To give my blessing to those caught in this time who have come to our Lord. My hope is to provide them with what they need to survive until the Kingdom, and also to minister to others.
PM’s have “intrinsic” value as chemically inert electrically conductive, reflective, etc. However their value as “money” is that they are easily identifiable, rare, and durable…”pretty” has not hurt them, either. These intrinsic physical properties have historically given them real value as media of exchange AKA money. That will not go away. So JWR is correct, fiat money, and especially electronic money the value or availability of which to particular individuals can be politically controlled CAN and often will go to zero (or negative, if your transaction traces you). PMs’ value can go low, but not to zero.
Many Globalists view the death of many of us, as their ultimate goal. Economics and Politics is just part of the process, to ultimately kill-off a large number of people. Yes, there are Globalists that want a lot of people around to boss about, and rule over. But, there’s always the specter of death. Mao, Stalin and Hitler were all mass murderers.
China had the one child policy; there are still limits to the size of families now. In many places in China now, there’s now a two child policy; plus, apparently no forced abortions for women that conceive triplets. [The Globalists want to send many of the USA jobs and manufacturing plants to China. The Globalists want to get richer, using their economic slaves in China and elsewhere.]
There’s information available, that couples in the USA, will voluntarily limit the number of children they have, when there is a bad economy.
It’s commonly taught in USA schools and colleges, that = there are too many people in the world. … Movies and video games such as Fortnite, portray the ‘elimination somehow’ of most of the people in the world, as an opportunity to live in paradise; or to live a more exciting life. [Fortnite the game is described on Wikipedia]
The possible collapse of our system will not be fun. … SurvivalBlog has useful information about living through a collapse. On the SurvivalBlog site, is also information about how to store the needed information, and keep it available for later use.
Thank you to JWR for posting this column.
Thank you Brandon, You very clearly laid out the problem. What you failed to do is present a solution by which people, at least thinking people, might resist or overturn this head long rush to the final days. As I see it the only thing that is presently sustaining the U.S. place in the world is that we have had one of the preeminent military forces in the world with nuclear capabilities. (As social changes in the military proceed there is a question as to how long the preeminence is maintained.) I believe a large percentage of veterans would agree that this is no longer the country for which they were willing to put their body in harms way. I would not want my father (U.S. Army -N. Africa / Italy) to ave seen what the U.S. is becoming. The cultural. social, economic shifts are being brought on intentionally by a dumbing down of Amerikans, which is prevalent at every level of education (exclusive of private and home schooled). On a college level professors teach what THEY believe as fact rather than teaching the student to use empirical data and logic to think for themselves. Brandon, you mention the fall of the British Pound, let’s remember there was a Hungarian, disavowed Jewish, Nazi sympathizer who was a key player in that debacle , with great benefit to himself. (I will not mention his name but will say that when he whistles, Satan’s dogs come running. ) Returning to the Global reset, I believe that it will financially have multiple steps. I believe the steps will be Currency (paper money) precious metals, lead. Interestingly enough Americans are so complacent that the “lead” phase may never materialize. However I do believe that the country will see an active black market / tangibles/ precious metals economy thrive, albeit illegal. (think of the penal industry as a growth industry) While paid off real estate is a great hedge for the present keep in mind how easily it can be confiscated.
Anyone that is looking can see the problem. AGAIN BRANDON, what is the solution??
The Economist is pining for the slowing of globalization:
https://www.economist.com/leaders/2019/01/24/the-steam-has-gone-out-of-globalisation
Will Globalists Sacrifice the Dollar to Get Their ‘New World Order’?,
In a hot minute.
Great article. Brandon Smith is one of my favorites. Here is the last line of it that I would like to make a comment on.
(Without ample resistance, the introduction of the cashless society will be presented as a natural and even “heroic” response by the globalists to save humanity from the “selfishness” of destructive nationalists. They will strut across the world stage as if they are saviors, rather than the villains they really are.)
My question is what kind of resistance is Brandon talking about? If there is still a system in tact if/when the dollar collapses is it possible to live outside of it?
Outside of a (God forbid) world wide EMP there is no doubt going to be a system. Even those of us that are prepping for a collapse are are going to be hard pressed not to be dependent on it in one way of another unless we go totally cave man.
But I’m thinking that for those of us that are Christian there will be a way. Why? Because it looks like Jesus has warned us about this. In Luke chapter 21 he made this statement.
34 And take heed to yourselves, lest at any time your hearts be overcharged with surfeiting, and drunkenness, and cares of this life, and so that day come upon you unawares.
35 For as a snare shall it come on all them that dwell on the face of the whole earth.
I wonder how many people through the ages have scratched their heads wondering what he could possibly be talking about that would affect the whole world. It’s not hard to see now what it could be. It’s something that almost the whole world has become dependent upon to be able to eat, drink, clothe ourselves, house, play, raise families, ect.
How many are aware that in 2019 there will be held what is called ‘The World Social Security Forum’?
https://hvw.fgov.be/nl/world-social-security-forum-2019
The goal is to give every one on earth a number. Until I looked it up I wasn’t aware that most countries already have a numbering system in place for their populace.
Getting back to my question of how can we resist. It’s a tough one. How many of us have given much thought of how dependent we are upon our number? Without ID it is now almost impossible to navigate through society. And all ID is generated through the birth certificate and ss#.
May the King of Kings and Lord of Lords give us wisdom.
Your thoughts?
A “cashless” society doesn’t really mean “cashless” but means that more transactions will be cashless and even mandated to be cashless. I will still buy my groceries and gas with cash. But my question is this: Will a “cashless” society mean that the police will be able to seize for forfeiture any cash you are carrying? This assumes that today they only seize suspicious amounts of cash, presumably cash in excess of $10K.