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The Coming Currency Crash

No One Could Buy or Sell Unless He Had the Mark















I Was Right Again

On July 1, 2021, I stated that the U.S. economy was not in a state of inflation, but that it was in a state of stagflation (see my blog post, The Coming Inflationary Depression). Now, the so-called financial experts are finally catching up.


Most Experts Now Predict Stagflation. Forbes. March 2022
U.S. faces stagflation risk in 2024. Eurasia Group Economics. October 2023
It’s not the 1970s, but stagflation is back in the picture. CNN. December 2023
Could Stagflation be the Story for 2024. Business Insider. January 2024
J.P. Morgan warns investors of stagflation. February 2024

For the record, stagflation is where both depression and hyperinflation, which have inverse relationships, exist at the same time.


I Was Wrong Again

In March 2022, I stated that we were heading for a currency crash with one of the following outcomes (see my blog post, The New Feudalism Part 2).

BEST OUTCOME: RADICAL CHANGE - The Elites Lose
In this scenario, society wakes up and forces their elected officials to take the radical action of reshaping our economy. Can radical action really change our economy without a lot of pain? The short answer is yes because it was done not once but twice in the Weimar Republic and in Germany.
BAD OUTCOME: FEUDALISM - The Elites Win
People, by way of poor education and indoctrination, agree to become serfs in the new feudal system. This would have the populous living indebted to the elite for their very survival. It would also avoid the currency crash because the rental payments would be real money created by the work of the serfs.
WORST CASE OUTCOME: ECONOMIC CRASH - Everyone Loses
Eventually, the national debt will reach critical mass, and our economy will come crashing down. This will plunge the U.S., and the entire world, into the greatest depression ever. If and when this happens, there would be massive pain and starvation. So much so, that the populous will likely become violent and take by force the wealth stolen by the elites before feeding on one another.

I went on to state that…

Why Are the Elites Speeding up Their Plan?
Since the creation of the FED, the national debt of the United States has gone from near zero to twenty-seven trillion dollars. Therefore, it is only a matter of time before the debt reaches critical mass and the third outcome becomes reality. The elites certainly do not want the unwashed masses taking their stuff and holding them accountable. Therefore, it is imperative that they push us into the new feudal system as soon as possible.

I have since realized that the representatives of our oligarchical government have manipulated our economy for the worst-case outcome shown above to occur. However, to keep the public from erecting guillotines, the outcome will result in what I describe as "the bad outcome" shown above.


Why the Economy is Doomed to Crash

Let us take a step back and review the differences between money and currency. Money is a tangible asset that holds a value. Whether it be a precious metal, livestock, or hard work. Currency is not a tangible asset. Instead, currency serves as an I.O.U. for money. Before the concept of money, people bartered (traded) goods and services. Later, societies standardized commerce with the concept of currency. Currency made things easier because people did not have to bring a pig to the market to buy one pig worth of hay. Instead, they brought currency that held the same worth as real money (a pig). The first currencies were things like shells and whale’s teeth. These were replaced with gold. Because gold was scarce (tangible and held value), it was used as both currency and money. The first gold coins were struck sometime around 600 BC. Having individual coins with varying values eliminated the need to weigh gold during a transaction. Gold, however, was heavy and bulky, making it difficult to carry around. Hence, came the money changers (a.k.a. banks). The money changers would take gold and give people a receipt for it. When someone wanted to buy something, they would go to the money changer, give them the receipt, take their gold, and buy stuff with it. Eventually, people used the receipts as payment. Hence was the creation of the first form of currency and the first dollar bill.


What you should remember is that money is real, and currency is a convenient representation of real money. Therefore, currency gets its value from money. If there is no money to back up the currency, then the currency has no value, and it is called a faux currency. Money has worth because, having a limited supply, it is precious. Similarly, real currency has worth because it too is in limited supply - you cannot print more currency than you have real money to back it. Faux currency is not backed by anything and has no value because it can be printed at will and supplied without limit. For nearly two hundred years, the currency of the United States was backed by Gold. Prior to 1971, a person could take a dollar to the bank and trade it in for a dollar's worth of gold (a.k.a. real money). In 1971, Nixon created a faux currency by taking the dollar off the gold standard. If you take a dollar to the bank today, you can only trade it for other currency.


In the entirety of history, all faux currencies have crashed. It is only a matter of time before the faux currency of the United States will crash. Based on history, faux currencies crash when the economy enters a state of stagflation. If the United States economy is truly in stagflation, as I believe it is, then I predict the currency will crash within the next five years. Why? Because the only way other countries got out of stagflation was by replacing their faux currency with real currency after the faux currency crashed.


Case Study: The Weimar Republic 1921-1929

In 1921, the economy of the Weimar Republic, a.k.a. post World War I Germany, was in shambles. There simply was not enough gold in Weimar to pay the debt owed by the treaty of Versailles. In response, the Weimar government took the Reichsmark (Relm dollar), off the gold standard and issued a fiat currency in the form of the Papiermark (Paper dollar) that they could print at will. The economy was further damaged when the French took control of the Ruhr (the industrial heartland of Weimar) stagnating production and spurring mass unemployment.  The resulting loss of production, compounded with the out-of-control creation of fiat currency, lead to stagflation. The rate of inflation was so bad that the cost of a loaf of bread went from 160 Papiermarks to 200 billion Papiermarks in a single year. The bottom line is that the Weimar Republic was in far worse shape than the United States is today.

In 1923, Gustav Stresemann, a nationalist politician, helped turn the economy around by persuading the French to leave the Ruhr. Then, Hans Luther, Stresemann's minister of finance, disbanded the nation's fiat currency by replacing the Papiermark with the Rentenmark (Save dollar) that was issued at an exchange rate of one per one trillion Papiermarks. Since there was no gold left in Weimar, Luther backed the Rentenmark by land used for agriculture and business (real money). The work of Gustav and Stresemann set the Weimar Republic on a path to prosperity and started paying down the debt owed from the treaty of Versailles. 

Creating an economy based on real money was a threat to the central banking system, so the United States sent Charles Dawes, the US budget director, to Weimar. Dawes bartered a loan to Weimar for 800 million gold marks, which increased prosperity while turning Weimar into a debtor nation (much like the United States is today). This period of time, 1924 - 1929, was known as the golden age of the Weimar Republic.  As with all debtor nations, this prosperity was short lived. When hit by the Great Depression, the United States ceased loaning money to Weimar and called in existing loans. Then the United States, who was the largest purchaser of Weimar exports, put a tariff on goods from Weimar. 

Case Study: Germany 1929-1941

The Germany of 1933 had a large debt while dealing with low production, high unemployment, and no gold or physical resources with which to back their currency. So, they made use of the only tangible asset left - labor. The new German economy would see money not as something stored in vaults, but something that lies in the hands of German workers. Consequently, 1933 Germany saved its economy by eliminating unemployment, disbanding the central bank, outlawing usury, and backing their currency with the labor of their citizens (real money).

At this juncture, you may thinking that the currency of Germany in 1933, which was backed by labor, is not very different from the currency in the United States, which is also backed by labor. While similar, these two currencies are not the same because one is real and the other is fiat. Fiat currency does not have value because (like the Papiermark) it is backed by nothing more than the paper on which it is printed. As earlier stated, the purpose of real currency is to serve as an I.O.U. for something real. The currency of the United States is fiat because it is backed by the labor of future generations (something that does not yet exist) Conversely, the Germany of 1933 did not print currency until the work to back it was already done.


My Prediction

Our politicians know that the currency of the United States is doomed. This is why they spend like drunken sailors. In essence, they are purposely leading the economy to a crash. When the economy crashes your dollar will be worth absolutely nothing. Why, therefore, are politicians pushing us in this direction? Because they have a plan. After crashing the economy, they will tout themselves as heroes and come to the rescue with a new digital currency. Anything you had in the bank will now be backed by the new digital currency. As will be stocks and every other investment that is based on our current currency. As before, the digital currency will be a faux currency and doomed to crash. However, the new level of control will allow the elite to guide the populous into serfhood long before that happens.


Say the wrong thing on social media and the establishment takes digital dollars from your virtual account. Protest against the government and the establishment locks your account, so you cannot buy or sell. Refuse to accept the digital currency, then lose everything you have in the bank and everything you own.


Clues

If you think this cannot happen, then think again. Using the credit system as their proxy, the U.S. and other governments have already defunded those with whom they disagree.


On January 17, 2024, The U.S. House Judiciary Committee found that the Financial Crimes Enforcement Network, a branch of the U.S. Treasury, used large financial institutions to comb through the private transactions of their customers for charges on the basis of protected political and religious expression.


In 2022, Canadian Prime Minister Justin Trudeau used emergency powers to make it illegal for people to donate to the trucker protest. He subsequently froze the credit of anyone who donated money prior to this action. Trudeau did this by working with the credit companies to defund those with whom he did not agree. Imagine the power he could have had if their currency was digital?


In March 2022, President Joe Biden signed an executive order to regulate the crypto market. This was the US government’s first finger into the cookie jar.


The FED has since announced that it is working on a crypto dollar and is easing the public into this mode with the FEDNow payment system. Unlike the current peer-to-peer cryptos, where blockchains are maintained by miners (users), the cost of maintaining the blockchain will fall on the government and central banks. Therefore, government sanctioned crypto will be at a competitive disadvantage right out of the gate. How are these governments likely to level the playing field? By making peer-to-peer crypto illegal. Before they can go there, they will need to erode public confidence in the crypto market. This is achieved by the creation of proxy crypto currencies and dooming them to fail (see my blog FTX and the Death of Crypto).


How the Currency Crash Will Affect Us

If I am right, then the currency crash will have very little impact on our day to day lives in the short term. I imagine that our leaders will allow some chaos for the first week or so. The stock market will drop like a rock, and people will not be able to buy or sell. Then, the government will announce the digital savior. The stock market will rally, and people will be made whole again. In the long term, the government will squeeze a tighter hold on our ability to make a living, pay rent, and buy food. It will be the end of decent because only those with the program will have a livelihood.



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