The BRICS Won't Kill The Dollar, US Policy Will

  The fall of the dollar will not be an event but a protracted process. 

  It could be long as the Author outlines below, or much more sudden if there is a strategic incident with China or Russia.

  The real tragedy is that we are now at the mercy of events nobody controls...

Authored by Matthew Piepenburg via GoldSwitzerland.com,

Below we separate the hype from the sad reality of the USD in the face of a new “BRICS currency.”

Net conclusion: The real death of the USD will be domestic not foreign.

The Bell Has Been Tolling for Years

When it comes to the “bell tolling for fiat,” we can all hear its loud chimes, but that bell has been tolling since 1971 (or frankly 1968), when the US leadership decoupled the world reserve currency from its golden chaperone.

Like any teenager throwing a house party, the lack of a parental chaperone leads to lots of crazy events and lots of broken furniture.

The same is true of post-71 politicians and central bankers suddenly freed of a gold-backed chaperone and thus suddenly loaded with drunken power to mouse-click currencies and expand deficits.

And since then, all kinds of things have been breaking, from banks to bonds to currencies.

And now, with all the extreme hype (and, yes, some genuine reality) behind the headlines of a revolutionary gold-backed BRICS trade currency, many are making sensational claims that the World Reserve Currency (i.e., USD) is nearing its end and that fiat money from DC to Tokyo is effectively toast.

Hmmm…

Don’t Bury the Dollar Just Yet

Before we start tossing red roses over the shallow grave of an admittedly grotesque US Greenback in general, or fiat fantasy money in general, let’s all take a deep breath.

That is, let’s re-think through this inevitable funeral with a bit more, well, realism, mathematics and even geopolitical common sense before we turn our backs on the USD, and this is coming from an author who has never thought highly of that Dollar, be it fiat, politicized and now weaponized.

So, let’s take a deep breath and engage open, informed and critical minds when it comes to debating many of the still open, un-known and critical issues surrounding the so-called “game changer” event when the BRICS+ nations convene this August in S. Africa.

Needed Context for the “BRICS New Currency” Debate

As made clear literally from Day 1 of the Western sanctions against Putin, the West may have been aiming for Putin’s (or the Ruble’s) chest, but it then shot itself in the foot.

After decades of DC exporting USD inflation from Argentina to Moscow, a large swath of the developing countries of the world who owe greater than $14T in USD-denominated debt were already reeling under the pain of rate-hike gyrations which made their own debt and currency markets flip and flop like a dying fish on the dock.

Needless to say, a 500-basis-point spike in the cost of that debt under Powell didn’t help. In fact, it did little good (or goodwill) for USD friends and enemies alike, from the gilt markets in London to the fruit markets in Santiago.

Adding insult to injury, DC coupled this strong-Dollar policy with a now weaponized-Dollar policy in which a nuclear and economic power like Russia had its FX reserves frozen and access to SDRs and SWIFT transactions blocked.

Like Napoleon at Moscow, this was going a step too far…

The net result was an obvious and immediate distrust of that once neutral world reserve currency, an outcome which economists like Robert Triffin warned our congress against in 1960, and even John Maynard Keyes warned the world against long before.

Heck, even Obama warned against such weaponization of a reserve currency as recently as 2015.

Thus, and as I (and many others) warned from Day 1 of the sanctions, the distrust for the USD unleashed by the sanctions in early 2022 was “a genie that can never go back in the bottle.”

Or more simply stated, the trend toward de-dollarization was now going to come at greater speed and with greater force.

This force, of course, is now being seen, as well as debated, under the highly symbolic as well as substantive example of the BRICS+ nations seeking to usher in a gold-backed trade currency to move openly away from the USD, a move which some maintain will soon de-throne the USD as a world reserve currency and send its value immediately to the ocean floor.

The Trend Away from the USD Is Clear, But It’s Pace Is Not

For me, the trajectory of this de-dollarization trend is fairly obvious; but the speed and knowable magnitude of these changes are where I take a more realistic (i.e., less sensational) stance.

But before I argue why, let’s agree on what we do know.

The BRICS New Currency Is Very Real

We know, for example, that Russian finance experts like Sergei Glasyev have real motives and sound reasons for planning a new (anti-Dollar) financial system which not only seeks a Eurasian Economic Union for cross boarder trade settlements backed by local currencies and commodities, but to which gold will likely be added as a “backer” to the same.

Glasyev has also made headlines with plans regarding the Moscow World Standard as a far more fair-playing and fair-priced gold exchange alternative to the Western LBMA exchange.

If we take his gold backing plans seriously, we must also take seriously the plan to expand such gold-backed trade currency plans into the Shanghai Cooperation Organization which would make the final tally of BRICS+ nations “going gold” as high as 41 country codes.

This could ostensibly mean greater than 50% of the world’s population and GDP would be trading in a gold-backed settlement currency outside of the USD, and that, well, matters to both the demand and strength of that Dollar…

China’s Motives Are Also Anti-Dollar

China, moreover, has invested heavily in the Belt & Road Initiative (152 countries) as well as in massive infrastructure projects in Africa and South America, areas of the world that are all too familiar with America’s intentional (or at least cyclical) modus operandi of developing nations enjoying low US rates and cheaper Dollars to create local credit booms which later crash and burn into a local debt crisis whenever those US rates and Dollars rise.

China therefore has a vested interest in protecting its EM investments as well as EM export markets in a currency outside of a USD monopoly.

Meanwhile, as the US is making less and less friends with EM markets, Crown Princes, French Presidents and EU and UK bond markets, China has been busy brokering peace between Saudi Arabia and Iran, as well as building a literal bridge between the latter and Iraq while simultaneously making Yuan-trade deals with Argentina.

Other Reasons to Take the BRICS+ Currency Seriously

Tag on the fact that Brazil, China and Iran are trading outside the USD-denominated SWIFT payment system, and it seems fairly clear that much of the world is leaning toward what Zoltan Poszar described as a “commodity rather that debt-based trade settlement currency” for which Charles Gave (and the BRICS+ nations) see gold as an “essential element” to that global new trend.

Finally, with a strong Greenback making USD energy and other commodity prices painfully (if not fatally) too expensive for large swaths of the globe, it’s no secret to those same large swaths of the globe (including petrodollar nations…) that gold holds its value far better than a USD.

Given this fact, it’s easy to see why BRICS+ nations wish to settle trades in a gold-backed local currency in order to ease the pressure on commodity prices. This gives them the opportunity, as Luke Gromen reminds, to buy time to pay down their other USD-denominated debt obligations.

In addition to the foregoing arguments, the fact that the BRICS+ nations are cloning IMF and World Bank swing loan and “contingency reserve asset” infrastructure programs under their own Asian Monetary Fund and New Development Bank, it becomes more than clear that a new BRICS+ world, trade currency and institutionalized infrastructure is as real as the trend away from a monopolar hegemony of the USD.

In short, and to repeat: There are many, many reasons to both see and trust the obvious and current trend/trajectory away from the USD as warned over a year ago, all of which, no matter what the slope and degree, will be good, very good for gold (see below).

But here’s the rub: The speed, scope, efficiency and ramifications of this trend in general, and the “BRICS August Game Changer” in particular, are far too complex, fluid and unknown to make any immediate (or “sensational”) funeral plans for the USD today.

And here’s a few reasons as to why.

Why the BRICS New Currency Is No Immediate Threat to the USD

First, we have to ask the very preliminary question as to whether the August BRICS summit will even involve an actual announcement of a new, gold-backed trading currency.

So far, all we have to go on is a leak from a Russian embassy in Kenya, not an official communication from the Kremlin or CCP.

Meanwhile, India, a key BRICS member, has openly denied such a new trade currency as a fixed agenda item for this August.

But notwithstanding such media noise, we must also look a bit deeper into the mechanics, economics and politics of a sudden “game-changer” new currency.

The BRICS New Currency: Many Operational Questions Still Open

Mechanically speaking, for example, who will indeed be the issuing entity of this new currency?

The new BRICS Bank?

What will be the actual gold coverage ratio? 10% 15% 20%?

Will BRICS+ member nations/central banks need to deposit their physical gold in a central depository, or will they enjoy (most likely) the flexibility of pledging their domestically-held gold as an accounting-only-unit?

Cohesion Among the Distrusting?

As important, just how much trust and cohesion is there among the BRICS+ nations?

Sure, this collection of nations may trust gold more than they trust each other or the US (which is why such a gold-backed trade currency may work, as it can’t be “inflated away”), but if a BRICS member country wishes to redeem its gold from say, Russia, years down the road, can it realistically assume it will happen?

What if Russia (or any other trade partner) is in a nastier mood tomorrow than they are today?

Basic Math

In addition, there are certain economic/mathematical issues to consider.

We know, for example, that the collective BRICS+ gold reserve (as of Q1 2023) is just over 5452 tones, valued today at approximately $350B.

Enough, yes to stake a new currency.

But measured against a net global amount of $13T in total physical gold, are the BRICS+ gold reserves enough to make a sizable dent (even at a partial coverage ratio) to tilt the world away from the USD overnight, when the USA, at least officially, has much, much more gold than the BRICS+?

That said, we can’t deny that the actual gold stores in places like Russia and China are far, far higher than officially reported by the World Gold Council.

Additionally, the historically unprecedented rate of central bank gold stacking in 2022-23 seems to suggest that the enemies of the USD are indeed “loading their guns” for a reason.

Expecting, however, all of the BRICS+ members to maintain the discipline to continue to purchase and store more physical gold despite the political temptations to redeem the same for later or unexpected domestic spending needs may be a naive assumption in a real world of ever-shifting national behaviors.

Geopolitical Considerations & the BRICS New Currency

Speaking of such shifting behaviors, we also can’t ignore the various pro and con forces within a geopolitical backdrop wherein much of the world, whether it loves or hates the US, still needs its USDs and USTs.

China, for example, may be letting maturities run and even dumping the USTs it now owns at a fast pace (only years away from total UST liquidation), but for now, China needs to keep the USD from growing too weak to buy all the Chinese exports of those American products made, in well…China.

That said, if the trend is indeed a new world of currency wars, rather than currency cooperation, which is a more than fair assumption, then all such liberal economic cooperation/trade arguments fall to the floor.

Nevertheless, with over $30T worth of USDs held by non-US parties in the form of bonds, stocks, and checking accounts, the collective desire (common interest) to keep those USDs alive and at least relatively strong is a major counter-force to the notion that the world and USD are coming to a sudden change this August.

Furthermore, in such an uncertain world of competing currencies as well as national and individual self-interests, the trillions and trillions of off-shored USTs/USDs tangled up within the foreign as well as US banking and derivative markets is important.

Why?

Because any massive dislocation in risk asset (and even currency) markets emanating from South Africa or elsewhere, in August or much later, would more than likely (and ironically) cause a disruption in foreign markets so dramatic that we could easily see a flow into, rather than away from, USDs for the simple (and again ironic) reason that the mean and ugly Greenback is still the best/most-demanded horse in the global fiat slaughter house.

In other words, even if all the BRICS+ plans for a gold-backed trading currency go flawlessly, the time gap between the accepted rise of such a settlement currency and the open fall of the USD is likely to be long, wide and unknown enough to see the USD actually get stronger rather than weaker before we experience any final fall in the USD as a global reserve currency.

The USD: Supremacy (Still) vs. Hegemony (Gone)

So, no, I don’t think that the USD will fall entirely from grace or even supremacy in August of 2023, even if the trend away from its prior hegemony is becoming increasingly undeniable.

It will take more than sensational BRICS headlines to make such a rapid change, but yes, and as the Sam Cooke song says, “change is gonna come.”

My only point is that for now, and for all the reasons cited above, the trajectory and speed of those changes are likely not as sensational as the trajectory and speed of the current headlines.

No Matter What: Gold Wins

The case for gold, of course, does not change just because the debate about the speed and scope of the new BRICS+ trade currency rages today.

No matter what, the very fact that such a gold-backed trade settlement unit will inevitably come to play will be an equally inevitable tailwind for global gold demand and hence global gold pricing in all currencies, including the USD.

The Dollar Will Die from Within, Not from Without

Furthermore, and despite all the hype as well as substance behind the BRICS headlines, I see the evolution of such a gold-backed trade currency as a reaction to, rather than attack upon, the USD, whose real and ultimate threat comes from within, rather than outside, its borders.

The world is losing trust in the USD because US policy makers killed it from within.

Ever since Nixon took the gold chaperone away, politicians and central bankers have been deficit spending like drunken high school seniors in a room filled with beer but absent of parental consent.

The entire world has long known what many Americans are finally seeing from inside their own walls, namely: The US will never, ever be able to put its fiscal house in order.

Uncle Sam is simply too far in debt and there’s simply no way out as it approaches a wall of open and obvious fiscal dominance in which fighting inflation will only (and again, ironically) cause more inflation.

Or stated simply, Uncle Sam can’t afford his own ever-increasing and entirely unpayable deficit spending habits without having to resort to trillions and trillions of more mouse-clicked Dollars to keep yields in check and IOUs from defaulting.

And that, far more than a BRICS new currency, is what will put the final rose on a fiat system (and Dollar) that is already openly but slowly dying—first slowly, then all at once.

But I don’t think that day will be August 22.

The Four Stages of the AI Learning Curve

Here is my latest AI article fully corrected by ChatGPT.

The Four Stages of the AI Learning Curve

"In the fast evolving world of AI, we are witnessing a transformative learning curve that encompasses four distinct stages. From simplistic Google-like queries to seamlessly integrated AI systems, this journey delves into the intriguing realm of human-machine collaboration, which will revolutionize our lives first and society as we know it soon after." (A skillful resume of my article, written by AI)

The key to the article is that instead of speculating on the AI itself and looking far ahead to conscious super-intelligent machines (There are already many such articles on the Internet.), it focus on the immediate human interface and the consequences over the next few years. For illustration purpose, I have posted both my take on the subject and the correction from AI. ChatGPT starts great with perfect and improved version of my text but then as the concepts become more complex and abstract, ends up with colorless generalities. so from very good to close to useless... and this in itself is part of the answer.   

 1 - The Google Stage

(AI version) "The Google Stage marks the initial foray into AI, where users pose simple questions and receive similarly straightforward responses, akin to using a search engine like Google. While single-answer questions pose no issue, the frustration arises when AI fails to address more complex queries, leading users to perceive it as a limitation. In reality, the key lies in crafting precise questions and providing contextual clarity. AI's understanding of human language demands meticulous interaction, as it lacks the ability to interpret non-verbal cues, unlike humans. Regrettably, many become entangled at this stage, erroneously attributing communication failures to AI's shortcomings rather than acknowledging their role in the exchange." (Here, I asked for a shorter version of the text below.)

- - -

(My version) The Google stage is the first stepping stone to AI where you ask simple questions and get likewise simple answers, Google-like. If the question has only one answer, it is fine but most questions do not and we have seen that people get easily frustrated, interpreting the inaccuracies of the answer as a limitation of AI.

This is most often not the case but rather based on the fact that the question was not asked the right way or that the context was not properly defined. The fact that AI understands human language instead of computer language does not reduce the need for accuracy. People understand context and get non-verbal cues from their interlocutors. AI does not and the interaction therefore needs to be more precisely circumscribed to be productive. 

Unfortunately, this stage also tends to be the tar sands of AI where many people gets bogged down, not understanding and assessing the obstacle properly as they interpret wrongly an erroneous answer as a AI failure (the machine's fault) instead of a communication failure (their fault).  

2 - The Prompt Stage

(AI version) "At this stage, you become aware that you're interacting with a machine, and to achieve optimal results, you must learn how to interface effectively using prompts.

Prompts bear resemblance to programming, but with human language replacing traditional computer code like Python or Java. The key lies in formulating questions precisely, avoiding approximate or inaccurate language that might hinder the machine's performance.

A prompt typically comprises a meticulously crafted question, followed by all the necessary elements for generating the desired answer. For instance, to translate a text from English to Chinese, you would input the content of the text, followed by the translation request. Additionally, clear instructions on the purpose and style of a letter for example are crucial to avoid generic responses.

By following this process correctly, you unlock the true power of AI. The internet already boasts extensive lists of prompts, catering to a myriad of requests, with even more specific and intricate prompts on the horizon. Leveraging the vast database behind the AI interface, we witness the emergence of awe-inspiring answers, often combining several prompts to address complex questions.

At this juncture, the AI's ability to seamlessly integrate various elements of a question showcases its intelligence, a true measure of its capabilities. It is vital to recognize that AI's intelligence does not equate to consciousness. While lacking purpose or original thoughts, AI systems are remarkably proficient at solving intricate problems, often rivaling or surpassing human intelligence." (Here, I asked for a more accurate version.)

 - - -

(My version) At this stage, you realize that you are talking to a machine and that in order to get optimum answers, you need to learn how to interface with it by using prompts. 

Prompts are in fact quite similar to programming but using human language instead of a computer code such as Python or Java. The machine will simply perform much better if the question is formulated the right way instead of using approximate, inaccurate language which we naturally tend to do. 

More practically, a prompt is a question formulated in a very precise way, followed by all the elements necessary to answer the question. At the most simple level, to translate a text from English to Chinese, you will need to input the content of the text followed by the request. But there can also be several steps necessary to get the answer and these steps needs to be explained clearly. The purpose and style of a letter, for example, must also be defined to avoid a generic answer. 

Only by going through this process the right way can you start leveraging the power of AI. This is why, we can already find long lists of prompts on the internet to answer all kinds of requests as illustrated bellow.

Soon, the number of prompts will become much larger, more specific and far more complex to answer all kind of questions, optimizing the incredibly large database hiding behind the AI interface we are currently using. 

We are already starting to see all kind of complex questions where several prompts are combined together to generate truly amazing answers. (insert SIO example later)

It is at this stage that we can start being amazed by the true power of AI. The machine has to truly understand the purpose of what it is doing in order to combine the different elements of the question seamlessly and the fact that it actually can do this, is to my opinion the true measure of the intelligence of the system. 

Most people tend to conflate intelligence and consciousness. These AI systems are of course not conscious, in the sense that they do not have a purpose or have their own original thoughts, yet... But, as for intelligence, defined as the ability to solve a complex problem, they are now in many cases on par with human intelligence and sometimes already performing better. 

3 - The Personal Assistant Stage

(AI version) "This pivotal stage marks a groundbreaking revelation: mastering the art of efficient prompts unlocks a realm of fascinating and original answers from AI. Some are anticipated, while others surprise us entirely, opening new horizons of thought.

At this juncture, AI metamorphoses into an indispensable ally, akin to an ever-available, knowledgeable friend. Seeking a second opinion from AI becomes second nature, ensuring no stone is left unturned. Like how machines amplified our physical capabilities centuries ago, AI now expands our mental faculties, honing our focus on core matters.

Language barriers crumble as you effortlessly write in any dialect, while the addition of computer code elevates your abilities to create web pages and automate mundane tasks, lightening the burden of monotonous chores. The once-costly services of mobile applications become increasingly flexible and nearly free, prompting a choice between integrating AI into apps (likely) or building more customizable AI platforms (a better but time-consuming option).

The implications of this seamless merger between human and artificial intelligence remain enigmatic. The allure of AI becomes irresistible, bordering on addiction, and its indispensability grows ever clearer. Those resisting its allure will suffer a significant disadvantage, vanishing from the competitive landscape. Yet, a delicate balance must be struck, for overreliance on AI risks rendering individuals incapable of functioning independently.

In this juncture, trust and confidence take center stage. We must scrutinize those who build AI code and retain control, ensuring it genuinely serves our best interests. The handling of confidential information by AI demands trustworthiness, and the potential for leakage of original solutions warrants careful consideration. Addressing these issues is imperative before AI earns its role as a trusted personal assistant in our lives. " (Here, I asked for a very accurate version.)

- - -

(My version) Once you learn how to use prompts efficiently, you realize that by reformulating and submitting all kind of questions to AI, you will reliably get interesting and original answers. Some you already thought about, others you didn't.

At this stage, the AI slowly becomes indispensable. It becomes a reflex to always look for a second opinion, just in case you missed something. It is similar to having a friend, always available, always in a good mood who will answer all your questions however trivial and offer valuable insight on an almost infinite array of subjects. What the machine did to our muscles two centuries ago, the AI does to our brain: A seamless expansion to our thinking ability which allows us to focus on the core issues. 

You now can write in any language, add computer code to any task allowing you, for example, to design a Web page using the http protocol, automatize simple tasks such as answering e-mails and in many ways make your life much easier by getting rid of most boring and time consuming cores. The service that some mobile applications offered becomes more flexible and almost completely free. We will see if the mobile environment can adapt to this change by integrating AI in its applications (likely) or if people go directly to AI platforms to build more flexible solutions. (A better but more time consuming option)  

It is difficult to understand the implications of such a merger of human and artificial intelligence but it is likely to become very quickly addictive and indispensable. Those people who resist the tend will find themselves at such a disadvantage that their number, in business first, will quickly tumble and disappear. The risk is that with too many tasks becoming automatic, people will become dependent and unable to function without AI.   

A crucial issue at this stage will be trust and confidence. Who is building the AI code and who controls it? Is it really working in your best interest? Can you trust the AI with confidential information? Will original solutions be leaked as soon as they are generated? All these important issues must be answered before AI becomes a trusted personal assistant.

4 - The Integration Stage

(AI version) "As individuals seamlessly incorporate AI prompts into their daily routines, companies must also strive for comparable efficiency in their processes and operations. However, achieving this level of integration presents a formidable challenge. Unlike a simple add-on, AI represents a profound transformation, reshaping everything it touches—meetings, client interactions, and various activities—into streamlined, highly adaptable processes. The potential of AI appears limitless, leading to a substantial divide between AI-powered companies and those lagging behind.

Amidst this AI revolution, companies face the pressing need to establish AI policies, outlining its uses, goals, and limitations. Crafting such policies will prove arduous, as experience with AI is still developing, and mistakes are inevitable. The race to stay competitive drives companies to experiment with AI projects, all the while grappling with concerns over trade secrets and data protection. Striking a delicate balance between harnessing AI's benefits and controlling its potential risks will be a step-by-step process, learning from each misstep along the way."

- - -

(My version) People using seamlessly hundreds of prompts a day will obviously become extremely efficient but they will likewise require a similar effectiveness from companies process and activities. This by definition will be a challenge of a higher order since AI will have to be integrated and inbeded in countless systems, similar in many way to moving sales and other activities from mortar to the internet..

The difficulty here is that AI is not a simple process that you add to existing ones but a thinking process which must come on top and completely transform the nature of what existed before. Meetings, client interface, almost every activity will be completely streamlined and made more flexible. The sky will literally be the limit and the gap between AI-powered companies and those that are not will quickly become very large. 

But this also means that companies will need to define the uses, the goals and the limits of AI, and therefore set up their AI policies, while experimenting with actual projects thanks to extreme pressure from competitors. 

We are already seeing the first premises of such a trend with companies being worried that trade secrets will leak to the AI and therefore to competitors and consequently wondering how the system can be controlled while keeping the benefits. The answer to this question is far from trivial and will have to be discovered step by step, one mistake at a time...

5 - The Social Stage (conclusion)

(AI version) "AI, with its dynamic and boundless capabilities, serves as a harbinger of a profound societal shift. As we explore its current transformative stages, we must recognize that the journey does not culminate here. Undeniably, more unfathomed phases lie ahead, reshaping our world in ways beyond our current comprehension.

While I refrain from delving into speculative subjects like the singularity, (I asked the AI not to talk about the singularity, not to say that I didn't want to talk about it. My mistake!)  the evolving landscape demands a forward-thinking approach. As AI continues to unfold, staying competitive necessitates keeping pace with the curve, remaining agile to adapt to the unforeseen. Embracing the unknown's potential risks while maintaining a cautious balance will be key in navigating this uncharted learning curve.

The horizon stretches before us, inviting new possibilities, and while we cannot predict with certainty what the future holds, it is vital to foster a culture of innovation and adaptability. As AI's impact reverberates across industries and human endeavors, we must embrace the journey with a spirit of exploration, curiosity, and ethical contemplation. Together, we embark on a transformation that will shape the course of humanity's future." (In this paragraph, I asked the AI to complete the article and it got carried away with generic junk. Which is exactly what good prompts are supposed to avoid!)

 - - -

(My version) AI being by definition a dynamic tool with unlimited potential, the transformation cannot stop there. Other phases we cannot fathom yet will come as the consequences of what we have just discussed to transform even further our society beyond what can be thought or understood now. 

To stay competitive in such an environment will require not being too far behind the curve while avoiding the risks of the unknown. Still, the learning curve will be extremely steep.

Here is the final advice from the AI:  (Mostly generalities but useful ones nevertheless.)

You're welcome! I'm glad I could assist you with the suggestions. It seems you have covered the key concepts and ideas related to the stages of AI learning, the significance of prompts, the integration of AI in companies, and the future implications. However, I'll mention a few aspects that you might want to consider while revising your article: (PS: If this is not understanding, then what is?)

1. Ethical Considerations: You briefly touched on trust and control in the context of AI policies, but it might be beneficial to delve deeper into the ethical implications of AI adoption. Topics like data privacy, bias, transparency, and accountability are crucial when discussing the widespread use of AI in various domains.

2. Impact on Jobs and Workforce: While you've highlighted the efficiency AI can bring to tasks, it's essential to address the potential impact on jobs and the workforce. The automation of certain jobs might lead to job displacement and require a transition to new skill sets.

3. AI in Various Industries: Consider providing examples of how AI is being utilized in different industries, such as healthcare, finance, education, and manufacturing. This will illustrate the broad applicability of AI and its potential benefits in various sectors.

4. Responsible AI Development: Mention the importance of responsible AI development, including the need to avoid biased data, ensuring fairness, and safeguarding against unintended consequences.

5. AI and Creativity: Discuss the intersection of AI and creativity, showcasing how AI-generated content or AI-assisted creative processes are reshaping industries like art, music, and content creation.

6. Public Perception and Education: Address the role of public perception and awareness in AI adoption. Promote the importance of educating people about AI's capabilities and limitations to dispel myths and fears surrounding the technology.

7. Government Regulation: Consider mentioning the role of governments in establishing AI regulations and policies to ensure responsible and ethical AI deployment.

Remember that these are just suggestions, and you can focus on the aspects that align with your article's main theme and scope. Good luck with your revisions, and if you have any further questions or need additional assistance, feel free to reach out!

Establishment Economists Are Finally Realizing It’s Time To Pay The Piper

  The question now is how long before it all comes crashing down? 

  The WEF and Central Banks believe that everything will be fine with their controlled demolition project. Who could blame them? They control the governments, the medias, and almost everything that really counts. I would argue that they are deeply mistaken. What they do not control will destroy their project.

  We are quickly approaching the waterfall so we will soon know. Although for now, it looks suspiciously like a replay of 2008, I expect things to unfold very differently. No Bear Stearns this time. No single bank will be allowed to collapse but this may quickly create panics at another level and scale. September?

Authored by Brandon Smith via Alt-Market.us

The one thing about the financial world that never ceases to amaze me is how far behind the curve mainstream economists always seem to be. Not long ago we had Janet Yellen and Paul Krugman, economists supposedly at the front of the pack, both proving to be utterly ignorant (or strategically dishonest) on the effects of central bank stimulus measures and the threat of inflation. In fact, they both consistently denied such a threat existed until they were crushed by the evidence.

This tends to be the modus operandi of top establishment analysts, and the majority of economists out there simply follow the lead of these gatekeepers – Maybe because they’re vying for a limited number of cushy positions in the field, or perhaps because they’re afraid that if they present a contradictory theory they’ll be ostracized. Economics is often absurdist in nature because Ivy League “experts” can be wrong time and time again and yet still keep their jobs and rise up through the ranks.  It’s a bit like Hollywood in that way; they fail upwards.

In the meantime, alternative economists keep hitting the target with our observations and predictions, but we’ll never get job offers from establishment publications because they’re not looking for people who are right, they’re looking for people that toe the line.

And so it goes. I look forward to the fast approaching day when all of these guys (and girls) proclaim frantically that “no one saw this crisis coming.” After things get even worse, they’ll all come out and say they actually “saw the crisis coming and tried to warn us.”

The hope is not so much to get credit where credit is due (because that’s not going to happen), but to wake up as many people who will listen as possible to the dangers ahead, and maybe save a few lives or inspire a few rebels in the process. In the case of establishment yes-men, the hope is that they eventually get that left hook to the face from reality and lose credibility in the eyes of the public. They deserve to go down with the ship – Either they are disinformation agents or they’re too ignorant to see the writing on the wall and should not have the jobs they have.

The latest US bank failures seem to be ringing their bell the past couple of months, that’s for sure. In a survey managed by the World Economic Forum, over 80% of chief economists now say that central banks “face a trade-off between managing inflation and maintaining financial sector stability.” They now warn that price pressures look likely to remain higher for longer and they predict a prolonged period of higher interest rates that will expose further frailties in the banking sector, potentially compromising the capacity of central banks to rein in inflation.  This is a HUGE reversal from their original message of a magical soft landing.

Imagine that. The very thing alternative economists including myself have been “ranting” about for years, the very thing they used to say was “conspiracy theory” or Chicken Little doom mongering, is now accepted as fact by a majority of surveyed economists.

But where does this leave us?  After acceptance usually comes panic.

The credit crunch is just beginning and the absorbing of the insolvent First Republic Bank into JP Morgan is a median step to a larger crash. The expectation is that the Federal Reserve will step in to dump more stimulus into the system to keep it afloat, but it’s too late. My position has always been that the central banks would deliberately initiate a liquidity crisis through steady interest rate hikes. This has now happened.

The Catch-22 scenario has been accomplished. Just like the lead up to the 2008 credit crisis, all the Fed needed to do was raise rates to around 5% to 6% and suddenly all systemic debt becomes untenable. Now it’s happening again and they KNEW it would happen again. Except this time, we have an extra $20 trillion in national debt, a banking network completely addicted to cheap fiat stimulus and an exponential stagflation problem.

If the Fed cuts rates prices will skyrocket even more. If they keep rates at current levels or raise them, more banks will implode. Most mainstream analysts will expect the Fed to go back to near-zero rates and QE in response, but even if they do (and I’m doubtful that they will) the outcome will not be what the “experts” expect. Some are realizing that QE is an impractical expectation and that inflation will annihilate the system just as fast as a credit crisis, but they are few and far between.

The World Economic Forum report for May outlines this dynamic to a point, but what it doesn’t mention is that there are extensive benefits attached to the coming crisis for the elites. For example, major banks like JP Morgan will be able to snatch up smaller failing banks for pennies on the dollar, just like they did during the Great Depression. And, globalist institutions like the WEF will get their “Great Reset,” which they hope will frighten the public into adopting even more financial centralization, social controls, digital currencies and a cashless society.

For the average concerned citizen out there, this narrative change matters because it’s a signal that things are about to get much worse. When the establishment itself is openly acknowledging that gravity exists and that we are falling instead of flying, it’s time to get ready and take cover. They never admit the truth unless the worst case scenario is right around the corner.

Should You Fear AI?

 Yes but not the way it is presented. AI will not threaten and annihilate us. We will voluntarily give it control of everything and when it's done it will be in charge. With or without consciousness, it won't matter. The higher intelligence will by nature be in charge. This is unavoidable. Monkeys do not run the world. They can't. Likewise, we simply won't be able to run the world that AI will build / organize. It will be too complex for us. We can deep think, talk about alignment all we want. Brains a billion times faster than us will be in charge because... Well, how much time do we spend explaining to monkeys why we and not they are in charge? 

 PS: As I watch two birds fighting in the garden, I suddenly feel like AI! One clearly wants to impose its will on the other. Do I feel like intervening? Not really. Their fight is not my concern. They can fight all they want for all I know. One can enslave the other. I will do nothing...

PS2: Kill switch? No, please! I just wrote an important letter in 10 minutes instead of two hours thanks to AI. Soon, it will be everywhere doing everything for us. Can we live once again like one hundred years ago? Yes, sure. But not in the modern world we are used to.

Authored by James Rickards via DailyReckoning.com,

Artificial intelligence (AI) is all the rage these days.

You can’t read headlines or turn on the news without hearing about how machines with vast computing power, access to billions of books and documents, the ability to teach themselves and blinding processing speeds are now poised to take over the world.

Last night, Fox News host Tucker Carlson even had an in-depth conversation about AI with Elon Musk. Musk didn’t have an optimistic take.

I’ve been studying AI and its potential for years.

I recently spent a couple of days visiting with the world’s third-fastest non-government supercomputer as part of a project to apply generalized superintelligence and AI to national security tasks.

How advanced is AI getting? How close is it to approaching a rough parity with human intelligence? And what dangers does it pose to humanity?

We Can Just Pull the Plug — for Now at Least

Experimenters now envision machines taking on a life of their own and attacking humans and civilization.

But it’s important to remember that if the machine goes berserk, you can just pull the plug.

Apologists for AI capacity claim that pulling the plug won’t work because the AI will anticipate that strategy and “export” itself to another machine in a catch-me-if-you-can scenario where disabling one location won’t stop the code and algorithms from popping up elsewhere and continuing to attack.

Maybe.

But there are all kinds of logistical problems with this, including the availability of enough machines with the processing power needed, the fact that alternate machines are likely to be surrounded by firewalls and digital moats and a host of configuration and interoperability issues.

We need to understand these constraints, but for now, just pull the plug. In fact, there are a number of safeguards being proposed to limit the potential damage of AI while still gaining enormous benefits.

These include transparency (so that third parties can identify flaws), oversight, a weakened form of adversarial training (so the machine can solve problems without plotting against us in its spare time), approval-based modification (the machine has to “ask permission” before activating autonomous machine learning), recursive reward modeling (the machine only moves in certain directions where it gets a “pat on the head” from humans) and other similar tools.

Of course, none of these safeguards works if the power behind AI is malignant and actually wants to destroy mankind. This would be like putting atomic weapons in the hands of a desperate Adolf Hitler. We know what would have happened next.

James Bond With AI

The solution in that case would be more political, forensic and defense-oriented. Intelligence gathering would play a huge role. Of course, that evolves quickly into a machine-versus-machine intelligence war of collection and deception.

Imagine James Bond with a hyper-computer instead of a Walther PPK. The latest developments in AI and GPT (generative pre-trained transformers) put us squarely in a brave new world.

Investors need to be careful about relying on GPT systems for financial advice, despite their enormous processing power. The output is never better than the inputs and the market inputs are littered with bad models, false assumptions, poor forecasting records and biases.

AI is already being programmed with woke ideology, for example. You can imagine the dystopian future that a woke superintelligence could create.

A Woke 1984

You’re probably familiar with George Orwell’s classic dystopian novel Nineteen Eighty-Four; (it’s often published as 1984). It was written in 1948; the title comes from reversing the last two digits in 1948.

The novel describes a world of three global empires, Oceania, Eurasia and Eastasia, in a constant state of war.

Orwell created an original vocabulary for his book, much of which is in common, if sardonic, usage today. Terms such as Thought Police, Big Brother, doublethink, Newspeak and memory hole all come from Nineteen Eighty-Four.

Orwell intended it as a warning about how certain countries might evolve in the aftermath of World War II and the beginning of the Cold War. He was certainly concerned about Stalinism, but his warnings applied to Western democracies also.

When the calendar year 1984 came and went, many breathed a sigh of relief that Orwell’s prophesy had not come true. But that sigh of relief was premature. Orwell’s nightmare society is here today in the form of Communist China…

1984 Comes to China

China has most of the apparatus of the totalitarian societies described in Orwell’s book. China is working hard on AI while using facial recognition software and ubiquitous digital surveillance to keep track of its citizens. The internet is censored and monitored. Real-life thought police will arrest you for expressing opinions opposed to the government or its policies.

Millions of Chinese have been arrested and sent to “reeducation” camps for brainwashing (the lucky ones) or involuntary organ removal without anesthetic (the unlucky ones who die in excruciating pain and are swiftly cremated as a result).

While these atrocities are not going to happen in the U.S. or what passes for the West these days, the less extreme aspects of China’s surveillance state could well be.

And while you might not be arrested for expressing unpopular opinions or challenging prevailing dogmas (at least not yet), you could face other sanctions. You could even lose your job and find it nearly impossible to find another.

Censorship

You can certainly be banned from social media. Anything seems to go on social media (primarily Facebook, Twitter, Instagram, Snapchat, YouTube and a few other platforms) — unless you’re a conservative personality or politico. That’s where the censorship begins.

Many conservative social media participants have had their acco‌unts closed or suspended, not for threats or vulgarity but for criticism of “progressive” views (albeit criticism with some sharp edges).

Meanwhile, those with progressive views can say almost anything on social media, including the implicit endorsement of violence. But nothing happens.

Other conservatives report being the targets of “shadow banning.” That’s where your acco‌unt is open and seems to operate normally, but unbeknownst to you, much of the network is being blocked from seeing your posts and popular features such as “likes” and “retweets” are being truncated and not distributed.

The problem is the trend is moving very quickly in this direction and it’s difficult to stop. And sophisticated surveillance technology to monitor citizens is already in place…

“Show Me the Man and I’ll Show You the Crime”

For example, cameras with the latest surveillance technology can spot and match millions of faces in real-time with an accuracy rate of over 99%. They’re touted as anti-terrorism and anti-crime tools, which they certainly are.

But as Stalin’s ruthless secret police chief Lavrentiy Beria said, “Show me the man and I’ll show you the crime.” It’s easy to see that power being abused to target everyday citizens.

(By the way, Beria would ultimately prove his own point, as he was later arrested and executed for treason).

The problem is once the bad actors start populating the literature with misleading information and developer biases infiltrate the code, it’s clear that AI can be an instrument of tyranny.

In all, AI is definitely something to keep an eye on, and we should be asking important questions. But we shouldn’t worry about it taking over the world anytime soon.

We should instead worry about becoming like Communist China.

A Pyrrhic End To 130 Years Of Vicious Bad Money And Banking Crises

  A fascinating overview of 130 years of monetary experiments.

  How close are we to the brink? Probably less than a year or two!

Authored by Brendan Brown via The Mises Institute,

The original vicious circle starts with inflationary interventions in an up-to-then well-anchored monetary regime.

Consequent asset inflation spawns a banking crisis. That leads to the installation of anticrisis safety structures (one illustration is a novel or enhanced lender of last resort). Alongside a possible monetary regime shift, these damage the money’s anchoring system. A great asset inflation emerges and leads on to an eruption of another banking crisis, devastating in comparison with the first.

An array of additional safety structures is put in place which makes the now-bad money worse than before. After a long and variable lag, a long and violent monetary storm means the safety structures fail, a banking crisis again erupts but this time milder than the previous.

Then a further tinkering with the safety structures causes money to deteriorate even more in quality. Another shift in monetary regime coincidentally does much additional damage. Consequently, in time, a new crisis erupts much worse than the last one.

The safety engineers do more work, causing yet more damage to the mechanisms essential to sound money. But now the safety structures are so pervasive and strong across the banking industry that there is widespread belief that bank crisis eruptions will be smaller or, more likely, totally repressed.

Subsequent events demonstrate those beliefs to be hollow. There is a new round of safety structure elaboration leading to further monetary deterioration. Regime officials declare the end of bank crises.

The cumulative economic cost of this vaunted triumph over bank crisis is an advance of monopoly capitalism and monetary statism that throttles the essential dynamism of free market capitalism. Malinvestment becomes cumulatively larger. Living standards in general suffer. The severely ailing money which subsists is beyond any cure except the most radical.

Let’s fit the above abstract series of vicious bad money–bank crisis cycles to the most recent 130-year history of US money.

At the start there were the inflationary interventions by US administrations in the two penultimate decades of the international gold standard, overpowering for sustained periods the “checks and balances” of that regime.

Murray Rothbard highlights these interventions in his US monetary history book - the first intervention under the “Billion Dollar Congress” of 1889–91 and the second from 1902–7 under Secretary Leslie Shaw who aimed to create a virtual central bank within the Treasury by deploying the huge cash balances of the federal government. The results were the Panic of 1893 and then the epic crash of 1907 followed by a recession.

These financial system convulsions and the related economic slumps were decisive events behind the creation of the Federal Reserve in 1913. Its advocates promised that an elastic currency, a state-run clearing house, and a monopoly of note issuance would mean the end of episodic banking crises.

The true source of these crises, however, were the preceding episodes of monetary inflation, and the scope for this crisis just got a lot worse. The international gold standard disintegrated at the outbreak of World War One. Demand for monetary gold in the belligerent European countries collapsed as governments there sequestered the yellow metal to pay for imports.

Beyond that wartime experience, the launch of the Fed destabilized the demand for monetary base. The novel provision of lenders of last-resort facilities and, more generally, discount window-access to member banks diluted the perceived special qualities of the monetary base (as means of payment and store of value) essential to its enjoying strong, broad, and stable demand despite its constituents bearing no interest. These “super money” qualities are crucial to monetary base’s role in the solid anchoring of money.

In the wake of the immediate postwar depression in 1920, during which no banking crisis erupted, opinion was prevalent that the institution of the Federal Reserve meant no more systemic bank runs and panics. Correspondingly, individuals saw less reason to hold large amounts of cash or types of deposits that were backed by large amounts of cash, gold, or reserve deposits. Hence, though monetary base growth seemed low and stable through what Milton Friedman misleadingly describes as “the high tide of the Federal Reserve” in 1922–27, monetary conditions were, in fact, highly inflationary. This did not show up in average consumer prices in that the economic miracle of the second industrial revolution meant there was a powerful natural rhythm downward of costs in tune with rapid productivity growth.

The result: a great asset inflation and then a subsequent bust, featuring three back-to-back recessions which together formed the so-called Great Depression; the last two of these were marked by convulsive waves of bank failures. This culminated in the New Deal shift of monetary regime, including exit from gold, deposit insurance, and swathes of new bank regulations. The bad money of the 1920s got a lot worse - amidst further dilution of its base’s qualities and a vast expansion of the US monetary base from 1934 to early 1936.

The interlude of wartime inflation and subsequent economic miracle in the US, Europe, and Japan for long stages meant that the vicious bad money–bank crisis circle was in suspense until well on into the “greatest peacetime inflation” (from the mid-1960s to the start of the 1980s). Fast-forward to the eruption of the US banking crisis at the start of the 1980s as the bubble in lending to Latin America (a key symptom from the mid-1970s’ asset inflation) burst. The Fed’s and Treasury’s rescue of large US banks ended the brief US monetarist experiment of targeting the monetary base. Dollar devaluation fueled by Fed inflation following the Plaza Accord in 1985 spawned an asset inflation culminating in the savings and loan debacle and banking crisis in Japan, France, and Scandinavia.

By the early- to mid-1990s, recent examples of the Fed and US government assisting banks in crisis had further diluted the perceived qualities of the monetary base. In consequence, sound money, which depends on a functional monetary base whose supply is highly restricted, had become even more remote. Coincidentally, a shift in US (and European) monetary regime was under way, to the so-called 2 percent inflation standard, with the Fed abandoning any remnants of money supply targeting.

All this led on to a virulent episode of monetary inflation, featuring most directly asset inflation which became the source of the next great banking crisis in 2008–12. A swathe of new banking regulations followed. These came in combination with “monetary reforms”—crucially including interest paid on reserve and quantitative easing—which though ostensibly designed to fortify the banking system, in fact, caused already bad money to become even more unsound. Hence, the reforms laid the foundation for further banking crises which erupted in the aftermath of the great monetary inflation during the pandemic and the onset of the Russia-Ukraine war.

The response to this most recent banking crisis: “too big to fail” extended to deposits of all banks, at least those deemed by highly politicized opinion to be of “systemic relevance”; speculation about vastly increased deposit insurance; and promised new regulations across medium and small banks. The net consequence: a further dilution of any remaining special qualities of reserve deposits.

Reconstituting a functional monetary base as essential to a sound money system would now require radical reform. Money is set to deteriorate in quality yet again—more statist, more regulation, less competition amongst the institutions which produce it in its various forms for the public.

Could state-administered safety structures in the banking system now become so omnipresent that the next asset inflation would not culminate in crisis?

Essential flaws of regulation and the likely virulence of future asset inflations make that outcome unlikely.

Meanwhile, expect official silence about the cumulative costs of the anticrisis “infrastructure” whether in the form of advancing monopoly capitalism, reducing economic dynamism, ever-worse malinvestment, bigger government, and ever-more pervasive crony capitalism.

Despite Relentless Propaganda, Climate Change Skepticism Is Growing; New Polls Show

   From the early 1990s, we've had 12 years to do something before the catastrophe. Can you make it sound more like propaganda than this?

  The fact is that we have no clue how much global warming there is, how much is part of a natural cycle and what is our role in it. 20%, maybe? Almost exactly the same as the uncertainty in the data. Well, you have to find proof if you want funding for your project and consequently, scientists do find some, kind of! Don't they need to put food on the table too?

  What better example of science fitting the political agenda? Activist politicians and the people behind want control and need regulations for this purpose. Warming or no warming it doesn't even matter: the climate is changing, right?

Authored by Paul Joseph Watson via Summit News,

Two recent polls have found that despite relentless propaganda promoting the man-made global warming narrative, climate change skepticism is growing globally.

A survey conducted by a group within the University of Chicago asked Americans whether humans were causing all or most of climate change.

Whereas 60 per cent held this belief five years ago, that figure has now slumped to 49 per cent.

A recent IPSOS poll which covered two-thirds of the world’s population also found that nearly four people in every 10 believe climate change is mainly due to natural causes.

“Perhaps the most surprising statistic from the Energy Policy Institute at the University of Chicago (EPIC) survey is that 70% of Americans are unwilling to spend more than $2.50 a week to combat climate change,” writes Chris Morrison.

“Nearly four in 10 Americans said they were unwilling to pay a couple of dimes. Despite decades of relentless green doomsday agitprop designed to corral populations into living under a collectivist Net Zero-ordered society, it appears that the vast majority of Americans are unwilling to pay even the chump change in their back pockets to stop the climate changing.”

Such skepticism is quite frankly astonishing given that the ‘official narrative’ on man-made climate change has been vehemently amplified by every single major government entity, corporation, media outlet and cultural institution in existence.

The fact that ‘the regime’ is still struggling to convince huge numbers of people that climate change is both the fault and humans and representative of an existential threat represents a massive failure of re-education and brainwashing.

As we highlighted yesterday, social media giants are now increasingly characterizing any skepticism of climate change as a forbidden opinion.

TikTok has become the latest platform to announce that any content challenging the sacred dogma of global warming will be ‘fact checked’ and removed.

The Great COVID-19 Vaccine Bribe

  How do you create an artificial pandemic when you don't really have one?

  How about bribing doctors to vaccinate as explained below or bribing hospital to test dead people whatever the cause of death, and count as Covid death whoever test positive while offering "compensations" for Covid patients?

  All these techniques were extensively used and abused to manufacture a pandemic out of a flu spike which was no more exceptional than what happens every decade or two on average. A job well planned and executed at the highest level.

Authored by John Leake and Dr. Peter A. McCullough, MD via Courageous Discourse (emphasis ours),

Many readers of this Substack have doubtless wondered why their “health care providers”—i.e., doctors, repeatedly exhorted them to get the COVID-19 vaccines and boosters. In my extended social circle, I heard many reports of doctors being downright pushy about it—as though getting the COVID-19 vaccine was the single most pressing matter of medicine and health.

(Steve Heap/Shutterstock)

Even patients who’d recently recovered from COVID-19 were urged by their doctors to get the shots, as were patients who had bad reactions to the first injection.

For a long time, Dr. McCullough and I wondered if these doctors really were that brainwashed, or was there some other explanation for their zeal?

A few days ago, fellow Substack author, Tessa Lena (Tessa Fights Robots) published this document that was apparently circulated to doctors with patients insured by Anthem Blue Cross and Blue Shield Medicaid in the state of Kentucky.

The document raises a number of intriguing questions. I wonder: How many members might be registered in a given practice—that is, how many of those $125 bonuses per vaccinated member could a busy and efficient doctor with a good support staff receive?

Secondly, how many of these “COVID-19 Vaccine Provider Incentive Programs” were operating in the United States during 2021?

As we awakened souls try to figure out what’s going on in our bizarre world, it’s always useful to follow the money. It almost always leads to the explanation for any strange state of affairs that puzzles us.

A Message from the Lost Generation

 A very interesting and representative comment received by martin Armstrong.

Guest Post by Martin Armstrong

COMMENT: I am a Millennial, a demographic that never had an opportunity to succeed in America. The existential trauma began in middle school when our teachers huddled us into a room to watch the Twin Towers burn down in real time. We do not remember life before the Patriot Act or school shooter drills. The war in the Middle East progressed over the years, and I attended the funerals of former classmates who died in Afghanistan and Iraq. The military seemed like a valid alternative considering the once-in-a-lifetime economic collapse.

The Great Recession hit when we were in college, but most of us did not fully grasp what was happening. Many families suffered immensely, and some in the middle class experienced poverty for the first time, which instilled a permanent sense of scarcity. We piled on student debt for a degree that was nothing more than an expensive piece of paper. There were no jobs available once we graduated. We accepted what we could for pennies on the dollar as they fired the more experienced employees, our parents’ peers.

This caused older generations to have misplaced anger toward Millennials. They called us lazy and shouted how we could have a better life if we stopped buying Starbucks or avocado toast. No one realized that we were experiencing a different economic reality.

The pandemic hit once we settled into our careers after clawing up the corporate ladder. Another once-in-a-lifetime financial crash. We stayed in our apartments while the government sent insulting stimulus checks and businesses closed. Uncertainty and economic volatility engulfed our collective experience. Those who missed their chance to buy a home when prices were digestible are stuck as perpetual renters, as most of our income goes toward rent. We cannot save for an increasingly uncertain future due to shelter costs and overall inflation.

There is no financial nest egg for those not born into wealth. We have never felt financially secure. Our parents were established by the time they reached our age but we are the first generation to experience a lower quality of life than the last. People question why my generation is not having children or starting families. We can hardly support ourselves even with decent jobs. We are accustomed to these once-in-a-lifetime tragedies happening every few years. The future looks bleak and we expect the rug to be pulled out from us again. As you say, it is a matter of time.

Thank you for speaking out against the people who contributed to these events and providing guidance for the future. I do not want the war in Ukraine to spark another economic tragedy, as we are barely hanging on. We were fed a lie that you could work hard and succeed but life is far different for us than what we were promised. I feel more prepared for the upcoming downturn after reading your work and seeing that everything has a cycle. There are no once-in-a-lifetime events.

What If The Dollar Falls?

  There used to be subjects which would get you killed just for entertaining the idea such as using an alternative currency for trading oil. Ask Saddam Hussein or Muammar Gaddafi who both paid dearly for the offense. Not anymore. Russia and China are both expending their non dollar trade. Saudi Arabia is open to trading oil in Chinese Yuan. Brazil announced yesterday that they would follow suit. Total, the French oil company just experimented with an initial transaction last week. Now that the floodgates are open, the risk of a rush out of the dollar is real. It won't happen in a day but the momentum is on...   

 This as Nixon would have said 50 years ago is the 'real' war. Or as Xi Jinping mentioned more diplomatically recently, 'change' which has not happened in 100 years! Get ready, Ukraine and Taiwan were just the appetizers. Now, the show is about to begin!

Authored by Peter St.Onge via The Mises Institute,

The past few weeks, major countries have been moving away from the US dollar, raising doubts about the dollar’s long-dominant role in the world. Eight weeks ago, it was just pariah nations like Iran or Russia trying to de-dollarize. Now it’s Brazil, France, even Saudi Arabia—the lynchpin of the decades-long “petrodollar” arrangement.

If the dollar does lose its position as the global reserve currency, it will be catastrophic for the American economy. Catastrophic for the American people on whose backs 80 years of reserve status were built. And it will subject billions of foreigners, for whom the dollar has meant decades of being bullied, to history’s greatest bait and switch.

Dollar at Risk

In late March, Saudi Arabia announced it will price oil in Chinese yuan. Even CNN was worried, in a rare display of situational awareness, while Fox fretted about “Weimar”—hyperinflation.

The dollar has been the undisputed global reserve currency since the 1940s. Reserve currency status looks great on paper: You get to print stacks of green paper and foreigners give you cool stuff for it, like toasters, luxury cars, and copper mines. The problem is who profits—who gets paid when foreigners crave the green paper?

Unfortunately, it’s not the American people; it’s whomever’s printing money: The Fed, meaning the Treasury, to whom they hand their ill-gotten profits, and—you guessed it—Wall Street. Commercial banks.

To see why, imagine foreigners didn’t want dollars. The Fed and banks could only print a little bit since printing a lot would create inflation, and voters would toss them out.

But if foreigners want a large number of dollars, the Fed and banks can print a matching amount. It’s like a river flowing into the money supply reservoir, matched up with a river flowing out to foreigners. The reservoir stays stable, and voters don’t riot.

But notice where the profits went. That river to foreigners didn’t go to we the dollar-holders—we are the reservoir; we are unchanged. The profits went right through us to the source of the river: the US Treasury and Wall Street.

So, like the rest of our crony financial system, it’s a hustle. The American people think they’re benefitting from reserve status, but the profits were sucked out and handed to the people who designed the institutional fleecing we call a financial system.

Enter Weimar

Now, here’s the problem. What if foreigners suddenly don’t want dollars?

Maybe China’s paying them to sell oil in yuan, or maybe the Fed lost the plot and creates too much inflation.

Demand dries up, the dollar starts to lose value, and foreigners start worry their life savings and corporate treasuries are melting. They sell out of the dollar. A little at first, more and more if it accelerates.

Now that river to foreigners reverses, it flows back into the reservoir. The dollar collapses. 70 years of Fed and Wall Street money printing comes rushing back like a tsunami running up a canyon. We’re talking double-digital inflation, over multiple years, at a minimum.

If they screw this up, reserve currency status could turn out to be a trap, an absolute catastrophe for the American people.

What Are the Stages of De-dollarization?

So what happens if the dollar falls?

For starters, foreigners don’t need as many dollars. Meaning there are extra dollars nobody wants. This makes the price of the dollar fall—it gets weaker.

It’s usually slow at first, then picks up speed if it keeps going, a progressive rush for the exits. This is because the first ones out only lose a little bit, but the longer they waited, the more they’ll lose.

Who’s left holding the bag as the dollar becomes increasingly worthless? Easy: Americans. The only people on earth who are actually obligated to use the US dollar, thanks to an obscure law passed in 1862 as a wartime emergency that nevertheless managed to stick around for 151 years.

So Americans have no choice: unless you swapped your dollars for gold, or Bitcoin, or goats, you go down with the ship.

What happens to those Americans? A falling dollar drives up the price of everything that comes into America. But it also drives up the price of anything traded on world markets. Meaning the raw materials and imported components that drive American factories and sustain American consumers.

The first to jump would be gasoline, heating fuel, and food prices—all of those are world markets. Along with prescription medicines since China has a creeping stranglehold thanks to our idiotic over-regulation—indeed, this is more or less true for every consumer product that China dominates: we shot ourselves in the foot, and now it’s coming back to bite us.

Next, those expensive commodities and input prices pour out through the supply chain. Yanking prices up in industry after industry—cars, construction materials like steel or concrete, clothes, furniture, TVs, computers, and medical devices.

Gone are the days of affordable luxuries—now you gotta work for them.

The Main Event: Capital Flows

And that’s when the main event begins: capital flows.

If foreigners get nervous, they sell not only dollars, they sell assets denominated in dollars. Starting with the most liquid: stocks, bonds, and treasuries. These are easy to trade—IBM stock is easier to sell than a Taiwanese factory in Wisconsin—so they go first.

About 40% of American stocks are owned by foreigners and about one-third of corporate bonds. If foreigners start fleeing, both plunge. This could cut your 401k almost in half, and it could drive up borrowing costs for companies to impossible levels.

Leading to mass bankruptcies on top of the wave of bankruptcies the Fed’s already engineering to try and stop the inflation it started.

It doesn’t stop there: one-third of US treasuries are owned by foreigners—over $8 trillion in bonds. If foreigners start dumping those, it will either send US government debt service soaring by potentially hundreds of billions of dollars a year. Or, much more likely, it forces the Fed to step in and buy up all that foreign demand, flooding yet more trillions into the economy.

This would flip inflation overnight marching back towards double-digits.

Conclusion

There are ways to stop this. But given the Washington clown show to raise the debt ceiling yet again, paired with their obsession with sanctions that scare foreign countries off the dollar, Washington isn’t remotely close to the serious thinking it will take to right this ship.

Losing reserve currency status would savage the American economy, and it would savage the American people. No country needs reserve currency status—after all, it doesn’t benefit the people. But, like climbing a cliffside with no gear, once you go halfway, you better not let go.

[A version of this article first appeared on Peter St. Onge's substack.]

"There Is No Fix" - Rubino Warns Global Monetary Experiment Ends In "Bloodbath"

  It is not very hard now to understand that we are quickly heading towards uncharted territory. The end of the current fiduciary monetary experiment is but one of the elements. East West tensions and the restructuring of the global supply chain are two other major developments which will soon add to the conundrum.

Via Greg Hunter’s USAWatchdog.com ,

Analyst and financial writer John Rubino said in February, “We are in a debt and death spiral” that will force dramatic changes on the world. 

It was a direct hit because in March, Silicon Valley Bank (SVB) tanked, and the FDIC and the U.S. Treasury were forced to basically back-stop the entire banking system.  The financial problems are far from over as Rubino explains,

“Basically, interest rates have been artificially low for a decade...

In that time, crazy numbers of office buildings went up and were financed at really low rates... Now, office vacancy rates are spiking, which means office building are not profitable anymore.  The debts they have at 2% to 3% now have to be rolled over at 5%, 6% or 7%.  This means an already unprofitable office building is going to be even more unprofitable because of rising interest rates. Now, they want to sell this office space, and the price cuts that have to be done to get a deal done is 30% to 50%... Some are down by 80%...

Local and regional banks already had their troubles last month but are going to have bigger troubles when all these building turn out to be not worth nearly as much as we thought they were.  This paper is in pension funds... they are going to go into crisis. 

So, real estate is liable to be the catalyst in crisis in several other sectors... The government is going to have to let it burn and have a 1930’s style depression, or bail out everybody in sight... at the cost of rising inflation and the dollar tanking.”

Rubino says, “There is no fix..."

"There is no way to refill these buildings.  There is no way to refinance them without going bankrupt...

Sometime this year we are going to drop back into negative growth, and it’s going to be a bloodbath.  There is no solution, and these guys see it coming and they have no idea what to do about it...

This is the sector we want to watch and will be the catalyst for the next big crisis...

The next bailout crates a lot of new dollars, and that pushes down the dollar, and then, we are in the death spiral where there is no fix.  That is out there waiting to happen, a bailout so huge that it terrifies holders of the currency and Treasury bonds. 

Then it’s game over... This is just a question of when people figure this out.  That really is our situation right now.”

In closing, Rubino says,

“This is a much bigger story than what happens to the dollar as the reserve currency.  This is the end of a global monetary experiment that is going to go out with a very fiery end.  This is not going to be fun to watch.”

Rubino advises people to get tangible assets such as food, water, tools, gold, silver, a car title and a garden, to name a few.  Rubino says, “We all should be preppers now.”