Tag Archives: fiat dollars

Debt-Based Monetary System Demands Ever More Debt—Part I


The National Debt was basically flat from A.D. 1900 through A.D. 1971. In A.D. 1971, President Nixon closed the “gold window” and the dollar became a pure fiat/debt-based currency.  Since A.D. 1971, the National Debt has persistently increased, without regard to which political party controls the government.  I strongly suspect that a debt-based monetary system cannot survive without government creating more debt.  Once the dollar was debt-based, the National Debt had to increase.

The Congressional Budget Office (CBO) recently released a 55-page report on the “long-term US budget outlook”. The report implied that the US government is on the road to fiscal chaos and possible collapse that could not be sustained beyond A.D. 2047.

I think the CBO is lying about the “long-term” budget outlook. Instead, I think we’ve only got a “short-term” to go before the debt hits the fan.

According to the report, the “official” National Debt ($20 trillion) currently stands at the highest level since shortly after World War II. (The report did not comment on estimates by others that, including unfunded liabilities, the real National Debt may be closer to $100 trillion or even $200 trillion.)  According to the report, if government maintains current policies and economic trends continue, the debt will likely double over the next 30 years, rising to about 150% of GDP.

I see the CBO’s predictions and “warnings” as bunk, bunk, and, uh, bunk.

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What Can’t Be Paid, Won’t Be Paid

National Debt Creditors About to Lose their Assets [courtesy Google Image]

National Debt Creditors About to Lose their Assets
[courtesy Google Image]

I’ve argued for five years that the U.S. National Debt is too great to ever be repaid in full, or even by half.  My personal guesstimate is that at least 80%–and probably 90%–of the National Debt will inevitably be repudiated.  That repudiation will take the form of hyperinflation, express repudiation (“Sorry, boys–but we’re too broke to pay that debt.”), or perhaps even WWIII (a good war could wipe out virtually all memory and enforce-ability of the National Debt.).

Here’s a graphic that illustrates my argument.  If you take a few minutes to view the graphic, you’ll see the size of the U.S. National Debt is:


1. Larger than the 500 largest public companies in America;

2. Larger than all assets managed by the world’s top seven money managers;

3.  25X larger than all global oil exports in 2015;

4. 155x larger than all gold mined globally in a year; and, my personal favorite:

5. Larger than all of the world’s physical currency, gold, silver, and bitcoin combined.
In other words, there’s not enough actual money and currency in the world to repay the U.S. National Debt.
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“Political” Limits on the Fed’s Ability to Print More Fiat Currency?

Printing "Monopoly Money" to Stimulate the Economy [courtesy Google Images]

Printing “Monopoly Money” to Stimulate the Economy
[courtesy Google Images]

Most people believe that the Federal Reserve has an unlimited capacity to print more fiat dollars and disperse them into the US and global economies.  Most people believe that the Fed will soon start another round of Quantitative Easing (“QE”; fiat currency printing) to support our sagging economy.

I have my doubts.  

Over the past several months, I’ve written more than once that I suspect that there’s a limit to the amount of fiat currency that the Fed can print.  More, I suspect the Fed is already encountering that limit and has lost its capacity and/or will to mass-produce more fiat dollars for another round of QE.

I can’t prove it and wouldn’t necessarily bet on it, but I’m unconvinced that we’re going to see another round of QE in the next few years.  

Some of the people who read this blog have posted comments that disagreed with my speculation about “limits” on the Fed’s ability to print more fiat currency.  I started to reply briefly to one of their comments but my reply grew in size until I realized that I was writing an “article” rather than a “comment” and might as well post it for all as an article on this blog:

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Posted by on May 28, 2016 in Federal Reserve, Fiat Currency, Fraud


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A House of “Special Effects”?

President of the First Fictional Bank of America (a fictional banker for a fictional dollar) [courtesy Google Images]

President of the First Fictional Bank of America
(a fictional banker for a fictional dollar)
[courtesy Google Images]

Bix Weir was recently interviewed by Greg Hunter on

During that interview predicted that an economic crash was virtually certain to strike before the end of this year.

More, Mr. Weir predicted that the crash would be “electronic” and at least start on computers.  According to Weir,


“All electronic assets will be frozen and wiped away”.


It occurred to me to ask, What’s the difference between an “electronic asset” (like the sum in your bank account that exists only as a series of digital 1’s and 0’s on some hard drive) and the “special effects” seen in a Star Wars movie?

Both “electronic assets” and “special effects” can make you jump and get your heart pounding and thereby seem “real”.

But aren’t “electronic assets” and “special effects” both illusions that have no tangible reality?  Aren’t we being fooled by “electronic assets” in bank accounts in the same way we’re fooled by “special effects” in movies?

Is investing in “electronic assets” the economic equivalent to buying a light saber or a pet Wookiee over the internet?

Can “electronic assets” be properly understood as nothing more than “special effects”?

If so, is our economy and financial system built on “special effects”?

Can our economy be more accurately described as a “house of cards”–or as a “house of special effects”?

Which is more stable?  A house of cards or a banking house of special effects?

How long can a banking house of special effects be expected to last?

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Posted by on May 24, 2016 in Banking, Fiat Currency, Fictions


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Alasdair MacLeod interviewed on Greg Hunter

James Bond's "Q" presents his latest weaponized pen. [courtesy Google Images]

James Bond’s “Q” presents his latest weaponized pen.
[courtesy Google Images]

You may remember the fictional character “Q” in the old James Bond films.  “Q” was the head of Q Branch–the fictional research and development division of the British Secret Service that devised all of those incredible gadgets for spies.  His speech was so articulate that he was almost a parody of intelligent Englishmen.  “Q” was “veddy British”.

Unlike “Q,” Alasdair MacLeod not a fictional character.  He’s a writer, pundit, and student of global economics.

However, like “Q,” Alasdair  is “veddy British,” “veddy articulate,” and “veddy intelligent”.  In fact, he could play “Q” in the modern James Bond films.

Alasdair MacLeod has an extraordinary, almost encyclopedic grasp of global economics and politics. Every time Greg Hunter asked a question, Alasdair had an automatic, articulate, and often concise answer.  He’s a brilliant communicator.

If you want to hear a classical Englishman speak who has “connected the dots” in global economics, this interview is for you.

video      00:37:01


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Bill Holter: Collapse Any Time; No Later than Election

video    00:31:05


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They Pretend to Pay Us; We Pretend to Work

Central Planning = Communism "From each according to his bank balance; to each according to his political connections." [courtesy Google Images]

Central Planning = Communism
“From each according to his bank balance; to each according to his political connections.”
[courtesy Google Images]

During the Soviet Union’s final 15 or 20 years, there was a “joke” that was both cynical and popular among Communist workers:  “They pretend to pay us; we pretend to work.”

I believe the attitude expressed in that “joke” was a fundamental cause for the “evil empire’s” demise.  The government wasn’t really paying the people for their work.  The people weren’t really working for their “pay”. 

Everyone was lying.  The Communist government lied about paying people.  The people lied about working.

The resultant breakdown in the relationship between the government-employer and the worker-employees destroyed what was once the second most powerful nation the earth had ever seen.

There’s a lesson in the USSR’s demise about the need to really “pay” people for their work and stop all the lying.  

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