Empires Fall, Currencies Collapse, Humanity Survives
Much has been written about politicians spending our country into oblivion – the empire and currency is about to collapse…. Woe is me!
Wikipedia provides seven pages about “Empires That Fell.” Most I’ve never heard of – from the “Empire of Vietnam,” (lasted 5 months) to the big winner, “Kanen-Bornu Empire,” lasting 1193 years.
Merriam-Webster’s empire definition:
“A major political unit having a territory of great extent or a number of territories or peoples under a single sovereign authority.”
When currencies and governments fall, the people survive, continuing to work to provide for their family.
Chuck Butler is in good company predicting the weight of our huge debt will eventually cause the currency to collapse, including significant government upheaval. Empires rise and fall – the people survive – and so will we!
Since Nixon took our dollar off the gold standard, government debt as a percentage of Gross Domestic Product (GDP) has nearly quadrupled.
Economists proclaim that once the debt to GDP ratio passes 100%, you are at the point of no return.
The St. Louis Federal Reserve explains how it’s (theoretically) possible for a government to bring the ratio down:
“Essentially, the debt-to-GDP ratio can be reduced in three ways:
- Fiscal austerity (i.e., spending cuts, tax increases or both)
- Negative real return on bonds (i.e., a nominal interest rate that is less than the inflation rate)
- Economic growth (i.e., GDP growing faster than debt)
For example, the high level of inflation after 2020 lowered the real rate of return on bonds, which ultimately led to the reduction of the debt-to-GDP ratio.”
Cut the crap – get real!
- Our current, most optimistic growth estimates fall woefully short of any meaningful reduction.
- Congress is unable/unwilling to cut spending or raise taxes.
- Inflate away the debt remains; however, it’s likely to lead to a currency collapse.
Politicos are incentivized to create inflation to cover their sins; and only get concerned when the public storms the ballot box.
MY PREDICTION
I predict the empire will fail and the currency will collapse – eventually! Please understand my sarcasm. My prediction is not bold, eventually, (sooner or later), I’ll be right. One more entry on the Wikipedia site, “US empire, start year 1776, end year…” (when it collapsed), just like all the others.
I’m not an economist. Everyday common sense tells us when you habitually spend more than you earn, while borrowing the shortfall to pay your bills, you eventually collapse under the weight of debt. Individuals can change their ways; historically politicos cannot, or will not, do so.
Since the 2008 bank bailouts US debt has spiraled out of control. The US Treasury explains: “The U.S. government has spent $5.35 trillion in fiscal year 2025 to ensure the well-being of the people of the United States.”
Cut the BS! In short order, DOGE uncovered billions being spent for worldwide special interest groups, including funds kicked back to political parties, politicians and their families. They spend more for their well-being, not ours!
No matter what political party is in power, the train is speeding toward the cliff; eventually (whenever that is) the world will reject US dollars, followed by an economic shock; our standard of living will decline.
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Overview
Interest is the cost of renting money. Rates are based on the law of supply (money), demand (borrowers looking for money), length of time of the loan (inflationary risk) and the perceived ability of the borrower to repay the loan (risk factor).
The government attempts social engineering, regularly intervening in the free market; setting rates, meddling with the money supply, spending billions more than revenues collected; all eventually causing major problems.
Establishing the Federal Reserve, under the guise of steering the ship by controlling interest rates and money supply, was a terrible decision. Congressman Charles A. Lindbergh Sr. warned:
“The Federal Reserve Act establishes the most gigantic trust on earth. When president Wilson signs this bill, the invisible government of the monetary power will be legalized …. the worst legislative crime of the ages is perpetrated by this banking and currency bill.
…. That board administers the finance system by the authority of…. A purely profiteering group. The system is private, conducted for the sole purpose of obtaining the greatest possible profits from the use of other people’s money.
…. From now on, depressions will be scientifically created. Like two con men working on a mark, the Fed made credit easy while establishment newspapers hyped what riches could be made in the stock market.”
Soon after, the stock market crashed and we experienced The Great Depression.
Andrew Jackson warned:
“Gentlemen! I too have been a close observer of the doings of the Bank of the United States. I have had men watching you for a long time, and am convinced that you have used the funds of the bank to speculate in the breadstuffs of the country. When you won, you divided the profits amongst you, and when you lost, you charged it to the bank. …. You are a den of vipers and thieves.”
Today’s Fed is the “Great Enabler,” facilitating politicos spending trillions, bringing our deficit to historic levels. In 2008, banks deemed “too big to fail” were bailed out by the US taxpayer. They keep the profits; taxpayers subsidize their losses…. Those politically connected gain cushy jobs and garner gigantic speaking fees from bankers at their regular boondoggle.
What Can We Do?
Don’t get fooled by the constant political hysteria. The government broke it and is unable to fix it. Inevitable will become imminent; a final straw will trigger a “Minsky Moment.” It could be a stock market collapse, another massive bank bailout, creditors refusing to buy our debt – but, sooner or later, it will happen.
We must weigh the consequences of preparing, (perhaps years in advance) for something we know is eventually coming – versus – trying to scramble in the aftermath of the “Minsky Moment,” along with millions of desperate, panicking investors. Many in 1929 lost everything! I’m hedging my bets.
Expectations
2020 offers a major clue. With interest rates well below the inflation rate, creditors stopped buying our debt at the Fed’s “decreed” rate. The government’s choice was between a free market auction (paying more to rent money) – or the Fed could create money out of nothing. They chose the latter; the Fed created $9 trillion.
Inflation quickly skyrocketed.
This will happen again, and more dramatically. Our challenge is to be prepared so inflation will not wipe out the buying power of our life savings.
History
The highest inflation for many of us came during the Carter years.
Inflationdata.com provides the inflation data:
Expert Chuck Butler constantly preaches “Got Gold?” for a good reason. During periods of high inflation, you want to own assets that appreciate more than the inflation rate; providing an umbrella effect for the loss of buying power you incur in dollar-denominated assets.
Last time around, gold did the job:
Thanks to Wolf Street for the following graph. Central banks are stocking up; a major factor in the recent gold price surge:
Gold recently topped $3,400/oz. Some wonder if they waited too long to buy. Trying to time the gold market is a crapshoot at best.
I Googled “Gold Price Prediction for 2023” and the responses were all over the place. Here is a screenshot of what popped up.
The swing was a low of $1636 and a high of $2100, almost $500 oz. (25%) differential.
Here’s what happened:
Gold prices rose well ahead of inflation.
It’s evident the “One Big Beautiful Bill” contains no meaningful spending cuts to reduce the deficit and/or debt. Central banks and prudent investors are going for the gold.
What will the gold price be in the next few years? No one knows.
We do know, with a high level of certainty, government debt will continue to grow. Like 2020, creditors will stop buying our debt, the interest offered won’t cover the inflation risk. The government has once chosen to create money out of nothing, and they will likely do it again – dwarfing what we saw last time around. It’s also a reasonable expectation that gold will, once again, do the job as it has throughout history.
Why Gold?
Aristotle defined the four characteristics of “sound money.” Bullion Vault compares alternatives:
Fiat money has zero intrinsic value: it’s nothing more than a politico’s promise.
I would add additional items – “Easily bought or sold and the market price readily available”. Coins like Silver Eagles or Canadian Maple Leafs are government-minted. Their weight and purity are accepted worldwide. The price is readily available and they are easy to sell.
I’ve researched “We Buy Gold” stores that convert jewelry into cash. With no exceptions, we found they ripped off uneducated consumers who don’t know how to assay their jewelry – with a limited market where they can sell. They offered 50% (or less) of the true value. At $3400/oz. they would skim $1,700. Generally, a reputable coin dealer will charge around 3% to buy an eagle or maple leaf – more like $100.
Buy recognized value coins from reputable dealers who will guarantee to buy them back should you choose to sell in the future. We will all survive, and many will thrive….
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On The Lighter Side…
Thanks to all who sent along well wishes for Jo and her recent rotator cuff surgery. She is rehabbing regularly and becoming more independent – despite being required to wear a sling around the clock…. While she is counting the days (less than two weeks) until the sling comes off, she also knows rehab will become more aggressive. I feel blessed, rather than take shortcuts, she works hard at it, she wants to get back to normal.
I came home from some errands yesterday morning and she was grinning from ear to ear. She totally dressed herself including putting her sling back on. It’s amazing how she is learning to use her left hand. At first, she couldn’t operate her computer mouse, now she trucks right along.
We added a few new subscribers last week. Thank you to the readers who went to our Miller On The Money Facebook page and are now liking and following us. It doesn’t cost anything, and the more activity we get, the more visibility Facebook provides. If you are a Facebook user, please check us out.
Quote Of The Week…
“We are all just one accident, one diagnosis, one unexpected phone call away from a completely different life. Stay humble and don’t take anything for granted.” — Unknown
I’ll add my thoughts to this one – “Appreciate what you have and make sure you enjoy every day as best you can.”
And Finally…
Chuck Butler shares some gems of wisdom for our enjoyment:
- The older I get the tighter companies are putting the lids on jars.
- Every time I try to eat healthy, along comes Christmas, Easter, summer, Friday or Tuesday and it ruins it.
- The fitness trainer asked me, “What kind of squats are you accustomed to doing?” I said, “Diddly.”
- Folgers got it wrong. The best part of waking up is going to bed after you pee.
- The best murder weapon would be a Tupperware lid because no one would ever find it.
- Starting your day with an early morning run is a great way to make sure your day can’t get any worse than it started.
- One big difference between men and women is that if a woman says, “Smell this,” it usually smells nice.
- Cell phones bring you closer to the person far from you. Make sure you don’t take away from the ones sitting next to you.
- A million kids want to clean up the earth. A million parents want them to start with their bedrooms.
- There is no such thing as a grouchy old person. The truth is once you get old you stop being polite and start being honest.
- I finally figured out what I want to be when I get older. Younger….
- Beware of the new Amazon scam. My husband ordered me some expensive jewelry, but motorcycle parts came instead. Thankfully they fit his bike.
- I may not have lost all my marbles yet, but there’s a small hole in the bag somewhere.
And my favorite:
- Life’s short. Make sure you spend as much time as possible on the Internet arguing with strangers about politics.
Until next time…
Dennis Miller
“Economic independence is the foundation of the only sort of freedom worth a damn.” – H. L. Mencken
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