Hyperinflation, stagflation, deflation, and more for our near future enjoyment. Iran, Russia and China cozy up to other perennial bad actors like the Taliban, North Korea, Venezuela and Cuba. These alliances produce economic ecosystems that don’t necessarily require Western involvement and are self sustaining. This is bad news for the Western oligarchs and powerful dynasties that had been enjoying unprecedented power and profit in the post-war era.
The Bretton Woods system created in 1944 established the US Dollar as the reserve currency of the world. By the late 1960’s, European powers had seen the huge advantages this had given the US and decided to attempt a change. The IMF created SDRs (Special Drawing Rights) as a sort of currency between central banks around the world. Seeing this as an attempt to take away dollar hegemony, President Nixon in 1971 took the US off the gold standard. The US dollar became a fiat currency.
To increase demand for dollars around the world, President Nixon and then Secretary of State Henry Kissinger started negotiations with the Saudi’s. The goal was to convince the Saudi’s to only accept payments for their oil in US dollars and to convince the rest of the OPEC nations to do the same. This goal was completed by the middle of 1975. The exponential increase in global demand for US dollars gave the American government unprecedented ability to produce debt and finance a great many technological and cultural advancements.
Still, all good things must come to an end. An end that appears to be rapidly approaching. The wheels had already begun to come off the cart. In 2008 the financial system died. Drowned in a tsunami of bad bets in the housing market that caused a cascade of defaults and bankruptcies world wide. All that was required to keep financial and possibly real Armageddon at bay was a ghastly sum of money. $720,000,000,000. There were closed door meetings in the Capitol. Members of congress were wiping away gallons of sweat. “It’s the end of the world? I got to get re-elected! Have all the moneys!!!”
But it didn’t stop there. $720B was the shock that brought the patient back to life. The tens of billions of additional dollars spent per month on purchases US debt since the 2008 crisis has added up to trillions. The monthly meds the now stricken patient must endure to stay alive. Try taking it away, like in 2013, and the markets tank overnight. So you just keep going like you are and hope that things get better.
But they don’t. After some stumbles in the markets of the fall of 2019, things were looking up in January of 2020. Not for long though. We got a little gift from the commies in China. You can say what you want about flash mobs looting a whole store, the Chinese stole everything they could from everywhere they went. Just like a spoiled child who doesn’t appreciate the cost and sacrifice of the thing they stole, sometimes things go wrong and tragedy strikes. If ever there were some corner cutting folks, the Chinese have more than their share. It shouldn’t be a surprise to anyone that something like this would happen.
On a global stage, China has never been a major player and only in the last couple of decades has wielded so much economic power. Arguably, China has some bad history with the Western Powers. The Opium Wars, Boxer Rebellion, and just being a punching bag for more powerful nations. The red headed step child of Communism, the Chinese Communist Party has been in charge since 1949. Around 70million Chinese citizens have died at the hands of the CCP since. Irrational and delusional adherence to socialist theories put to the ultimate test on a mass scale resulted in famines and deaths due to starvation into the tens of millions.
After Mao’s death, Deng Xiaoping comes back from living in rural China and decides to change direction a bit. The CCP created “special economic zones” that opened the door to foreign investment. These areas got insanely rich and soon, the whole country was opening up. By the time President Clinton was welcoming China into the World Trade Organization in 2000, the manufacturing base and economy of China were just getting warmed up.
By 2005, I was convinced that a war with China was as inevitable as it was likely. Being an excitable person, my time tables for things to happen are always sped up. It seems plain as day what’s going to happen, so it will happen soon is the way I think apparently. In truth, the relationship between China and the rest of the world was far stronger economically than the other sensitive issues could cause a serious crisis.
With the pandemic, the overreaction to the virus, the social and economic destruction of the lockdowns and mandates, and overall weakness we’re still feeling since 2008, the slightest provocation could cause the direst of consequences. Everything that has happened before now has been building to this moment. Very few issues operate in a vacuum, but are all connected.
Your government probably doesn’t want you to realize this too quickly, but nations of the world are choosing sides. Think about it like a playground fight. All the neighborhood kids are coming to the playground and as they do, they’re picking which group to ally with for the coming fight. It’s too early to just start coming to blows as of yet, not all the important kids have showed up yet.
Starting in 2020, the pulse of the news I was seeing was decidedly anti-CCP and China in general. The EU was cancelling deals with China, the Huawei scandals, China’s insistence on the Nine Dash Line’s legitimacy, and China ignoring the rulings of international courts when it doesn’t suit them. Desperate to feed their massive population, China is raping the ocean, including the protected waters around the Galapagos Islands. Peruvian, Ecuadorian and Chilean navies are constantly fighting the illegal activities of China’s massive commercial fishing fleet.
So with the border tensions between India and China heating up, Taiwan independence around the corner, Russia tired of a flirtations Ukraine, Israel on a hair trigger with Iran, China threatening to nuke an increasingly alarmed Australia, and with global warming opening up the Arctic to exploitation, the fight for Polar dominance will be coming regardless of any other flash point. Guess who doesn’t have any territory within the Arctic Circle but declares themselves a “Near Arctic Power”? Yep, China.
Not content to genocide their own people in western China, the PLA is building hundreds of missile silos in the area as well. Great. I’m sure they’ll never threaten the world with those. Orbiting hypersonic missiles? Hahahahahahahahahahahhahaha…. it’s only a matter of time. There’s no fucking way we’re going to let a genocidal, totalitarian regime threaten our friends and allies, right? You’d like to think so. There are no heroes. Only villains and the apathetic.
So here we are. Much like real life, we’re just walking down the street, head down, staring at a phone and walking straight into a bad neighborhood. You gonna find more than rare Pokemon there. When the first shots are fired, no matter where they start, it will go global. The world will use the crisis to “settle all family business” and previously simmering tensions on a million fronts will come to a boil. As the big sharks fight, smaller fish will feed on the scraps.
The pandemic only sped up something that was going to happen anyway. But this acceleration has caused the elites to work their machinations with haste. The rush has caused previously veiled duplicity and conspiracies to become more visible to more people. “Two Party” system my ass. Who still believes this? The government is primarily concerned with it’s citizens and not just the elite classes? LOL Our current government is a farce. Of course it’s going to have to become authoritarian to maintain it’s grip on power. So we have that to look forward to.
I wanted to live in Maine but that was in 2019. After the pandemic we got to see what states value freedom and how lost others have become. Gotta wait for the housing crash to happen in earnest. The housing market didn’t start crashing in 2008, it was the year before when prices peaked. Prices have peaked and many markets are starting to decrease in price at this moment. Zillow bailing on house flipping is a dead canary in the coal mine.
Most people think that inflation will only rise during a hyper inflationary period, but historical data shows that prices fluctuate wildly both up and down. Ultimately though, without a change in behavior, expect inflation to trend higher until confidence is lost by the public in the currency then inflation will go stratospheric.
Watch the movie “The Road”. That’s our future. All because we wanted low low prices….