The financial system extracts purchasing power from the working class to subsidize sovereign debt through currency debasement, functioning exactly as designed rather than being broken.
Money supply grows 7% annually in developed countries while wages lag behind, causing workers to receive a smaller share of the money supply over time as their salaries grow slower than the underlying debasement rate.
The fractional reserve banking system creates money through lending without corresponding interest, requiring perpetual debt expansion to survive and inevitably leading to wealth disparity until eventual collapse.
Governments, corporations, and wealthy individuals short the currency by borrowing at low rates to acquire scarce assets like real estate and business equity, while the bottom of the income stack without assets or favorable loan terms bears inflation’s full impact.
Financial repression occurs when governments hold interest rates artificially below money supply growth rate, siphoning value away over years or decades to reset the system without nominal default.
Developing countries borrow in foreign currencies like dollars, creating currency mismatches and instability, while developed countries borrow in their own currency, allowing gradual problem dispersion through debasement.
In the 1940s, governments defaulted through debasement by printing money and sharply devaluing currency rather than nominal default to manage extremely high public debt levels.
War, famine, or unexpected events can trigger currency crisis in developed countries, causing problems to surface all at once even if the system could generally last decades longer otherwise.
Social insurance programs like retirement and healthcare account for the vast majority of government spending in developed markets, making significant cuts unlikely without addressing these entrenched systems first.
Billionaire taxes have limits as raising rates too high incentivizes wealthy to leave jurisdictions and reduces business investment, while loopholes allow some to pay lower rates than lower earners.
Japan maintains harmonious society despite money supply growth by spending on healthcare and avoiding wealth concentration, contrasting with US and Europe where different spending and taxation policies create growing wealth disparity.
Bitcoin’s zero long-term supply growth offers a scarce alternative to fiat currencies and gold, providing purchasing power protection over its 17-year existence despite short-term volatility.
Bitcoin functions as a decentralized ledger using energy and code to prevent debasement, with capability to scale through layers like the US Fed system, settling a quadrillion dollars annually.
Monetary Metals enables earning 4% return on physical gold holdings in gold ounces, making gold productive instead of idle in a world where fiat currencies constantly lose value.
Fiat currency grows faster than goods/services with more dollars chasing slowly growing pool of goods/services, while gold remains scarce, allowing each unit to buy more over time through hidden inflation that interest on bank accounts and bonds doesn’t match.
America’s war with Iran, expected to last most of 2026, could trigger the end of the fiat currency system through a chain reaction starting with energy disruption at the Strait of Hormuz (carrying 20% of global oil supply), leading to higher bond yields, collapsing credit, and ultimately a monetary crisis as Iran aims to drive America out of the Middle East and undermine the petrodollar system.
China and Russia have established protective mechanisms for their currencies including potential gold standard adoption for international yuan and vaulting facilities in Saudi Arabia covering the Middle East, while pushing yuan-denominated pricing for gold and energy commodities to accelerate the demise of the dollar.
A 5% US 10-year Treasury yield could break equity markets, with yields already rising sharply across Japan, UK, Germany, and France, while Japan faces currency collapse with 255% debt-to-GDP ratio after 26 years of QE that left the Bank of Japan technically bust and owning 60% of JGBs.
Japan’s role as a major exporter of capital to G7 nations including America represents a critical vulnerability, with potential for significant correction in global markets if Japan’s economy falters and can no longer sustain its capital exports.
Chinese banks are heavily restricting physical gold availability with limits like 600 kg selling out within minutes of market open, while offering gold accumulation accounts moving 500 yuan/month into gold plans backed by Shanghai Gold Exchange vaults, creating a squeeze in physical demand.
The recent correction in gold represents a paper shakeout rather than fundamental reversal, with Far East demand continuing to suck bullion out from the West as retail demand in the West has declined but investment banks position for rising prices.
3 billion people in China and India drive enormous potential demand for gold and silver with 5-6 trillion equivalent in gold pre-demanded, leaving none available for latecomers as physical markets tighten.
The dollar’s trade weight can rise even during a credit and currency crisis as the entire fiat currency complex loses purchasing power compared to stable gold, creating counterintuitive market dynamics.
Turkey’s gold sales are misunderstood as they involve swaps between commercial banks and the central bank rather than actual sales to support the lira, which remains one of the worst-performing currencies globally.
Fiat currencies are credits, not money, with their value collapsing to zero, while gold has been real money since 548 BC as confirmed by Roman law and Justinian’s Pandex in 500 AD, making the only refuge from the credit system collapse.
Investors must get out of credit and into real money like gold, which will rise to infinity relative to fiat currencies as the current monetary system reaches its endgame phase.
Managing client portfolios requires fiduciary duty to prioritize returns over personal beliefs, as placing idealistic views in portfolios potentially shirks responsibility when managing other people’s money, regardless of personal libertarian ideals about individual freedom.
Geopolitical trends like industrial policy, NATO rearmament, and state capitalism are dominating the economic landscape and will have significant impact on portfolios in coming years, making them more important than personal preferences in allocation decisions.
The US-China technology race will determine the financial and economic architecture of the world for the next 50-100 years, with the winner able to implement their preferred system globally.
The US-China prisoner swap negotiations involve the US providing technology and energy to China in exchange for pharmaceuticals and rare earths, with both sides attempting to become independent of each other.
The fracturing of global supply chains combined with rising tariffs and national security concerns will lead to different prices for the same commodities in different regions, fundamentally impacting markets.
Geography, national interest, self-sufficiency, and hard power are becoming more important than price and efficiency in portfolio allocation, as the world shifts towards a Game of Thrones-style realignment lasting decades.
The US is in Iran to use energy as a tool against China in ongoing great power competition, maintaining boots on the ground despite lack of universal support.
Tail risks have changed dramatically, with supply chain issues, rising nationalism, and government intervention becoming more important than short-term volatility, requiring portfolios protected against long-term disruptions lasting years or decades.
Gold and hard assets are becoming more important in portfolios as the world shifts towards a realpolitik-based order, with Monetary Metals offering a way to invest in gold productively and generate yield.
Understanding realpolitik of global power dynamics is crucial for portfolio management, even when it conflicts with libertarian ideals, as deterrence, energy security, and hard power are the only currencies that work in the real world.
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