With widening budget deficits, rising debt, and interest payments that can only be serviced by issuing a currency of decreasing value, the dollar can only be described as an elaborate Ponzi scheme at the nation-state level.
Dollars are backed by debt, which requires infinite economic growth to service – it is a credit-based currency. Without continued inflation to erode the value of the debt (and thus avoid bankruptcy…), and to transfer wealth from savers to the government and bankers, everything will collapse.
Without new borrowers to keep current consumer spending at a certain level, everything collapses. Without a petrodollar system where the dollar is no longer the world’s reserve currency and other countries are no longer forced at gunpoint to use dollars, everything collapses.
Just as a Ponzi scheme collapses when enough investors lose faith in it because there is no underlying value and there are not enough new… suckers to pay off previous waves of investors, the dollar collapses according to the same scenario.
And while President-elect Donald Trump’s plan to replace the income tax with tariffs should be considered, there is (at least) one very big problem. This is a country that, for decades, has had no manufacturing base, making the economic viability of the plan questionable at best.
Even if it somehow worked, it wouldn’t solve the problem of the world’s largest economies relying on government-sanctioned Ponzi schemes. Until we return to dollars that are tied to something of real value, like gold, the fraud will continue. And it has continued for so long that enormous economic pain is now a prerequisite for weaning ourselves off this unhealthy economic environment.
Everything Leads to Collapse
Just as the collapse of a Ponzi scheme hurts everyone lucky enough to be a part of it, the collapse of the fake petrodollar will hurt every American and, indeed, people around the world who will be left in the chaos of realizing that the dollar was fake throughout the last business cycle, and the line of new suckers for the U.S. debt market has officially dried up.
With 10-year bond yields rising and major pressures on interest rates to rise higher, the Fed and Trump are desperate to keep them low. But at $35 trillion, the “debt bomb” isn’t going away and the deficit isn’t going anywhere.
The higher interest payment burden and QE (monetary expansion) will blow the dollar Ponzi scheme into ever larger sizes, so the only question will be when it will burst.
The numbers that are staggering
The US national debt has surpassed the $36 trillion mark and is approaching an all-time high, according to the US Treasury Department. It is the largest national debt in the world in nominal terms and has increased by $2 trillion since the beginning of the year.
As of November 21 (the last day for which statistics are available), the national debt was just over $36,034,994,586,981.
The national debt is divided into two parts:
- intra-governmental and
- public.
Intra-governmental debt is debt owed to various government entities, such as pension funds. It makes up about 20% of the total debt and on November 21 was $7.3 trillion.
Public debt is owed to private entities, individuals, and foreign countries. It makes up the remaining 80% of the debt, or nearly $28.7 trillion as of November 21. On January 3, 2024, the U.S. debt exceeded $34 trillion for the first time.
As painful as the burst is, it is inevitable and necessary, and it will be more severe the longer the fraud continues. Just as more investors are hurt, and more spectacularly, when a Ponzi is able to grow, the collapse of the dollar will be more painful the longer the can is kicked down the road.
This creative catastrophe will be an opportunity to return to sound money, but as in the 2008/2009 crisis, the same elites who caused it will try to exploit it as an opportunity to implement an increasingly centralized system that gives them even more control over the economic sphere.
Unfortunately, we have passed the tipping point for the Ponzi scheme. We are at the point of no return. No amount of economic logic abuse, even of the right kind and on a large enough scale, by Trump or anyone else, can reverse or solve the problem without a major explosion that will cause tremendous pain throughout the economy.
Gold is a way to protect against disaster, but when it collapses, no one will be protected from the effects of such a spectacular explosion.
