The U.S. shutdown adds fresh strain to an already unstable economy marked by stagflation and global uncertainty. While policymakers gamble with the dollar’s future, Brandon Smith of Alt-Market.com reveals the stakes are much higher than we realize…
The U.S. economy has been experiencing what I would call a form of “stasis” for the last year; it’s floating in the deep ocean, waiting for a catalyst. Either it finds dry land soon, or another anchor weight is added and it sinks into the abyss.
In my article Trump’s Return: Get Ready For Chaos To Be Unleashed And Blamed On You, published in July of 2024, I predicted that Biden would step out of the presidential race and that Trump would win the election. I noted that:
This year, Trump hinted in an interview with Fox Business that he “does not want to become the next Herbert Hoover” inheriting a time bomb economy from Biden. Biden argued in response that Trump was ALREADY like Herbert Hoover because of the jobs lost during covid.
This is, of course, a false claim. But the narrative is everywhere: “Trump will oversee a crash in America similar to 1929.”
Two paths for the globalist playbook
There were two ways to interpret the election outcome:
- The globalists put all their eggs in the Biden basket (and the covid basket) and made a detrimental error. Leaving the White House open to be taken by conservatives even with possible election manipulation.
- The globalists accepted their failure in turning the pandemic into a permanent medical tyranny, but were now setting up conservatives and populists to take the fall for an economic crisis they had been brewing in the background for years.
When it comes to the second scenario, it’s important to understand that it is impossible to reform the current economic system without triggering a rapidly escalating crisis. Libertarians have been chanting the motto “End The Fed” for decades, but I don’t think many of them grasp what this would actually entail. Any change in the status of the Federal Reserve means financial chaos.
In fact, the globalist system looks as if it was deliberately set up to self-destruct if it is tampered with.
When U.S. spending stops, the world feels it
We are already seeing the consequences of this with Trump’s closing of USAID and his implementation of tariffs. The effects are not as visible in America, but around the globe the throttling of US funding to foreign markets is causing panic. It’s astonishing to see just how dependent the rest of the world has been on US taxpayer dollars and the steady inflation created by the Federal Reserve.
Europe, for example, is scrambling to fill their security void with proclamations of increased military spending. Europeans often criticize Americans for not supporting socialist welfare programs like universal healthcare. What they don’t mention (or are too ignorant to realize) is that their socialist programs have been entirely dependent on U.S. defense spending.
We make NATO possible with hundreds of billions of dollars in military support so that Europeans can enjoy their free healthcare at our expense. Canadian officials across the border have admitted that if they increase their NATO spending to just 2% of GDP as they are supposed to do, their social welfare programs might take a hit.
This is just one example of the kind of instability that occurs when the US stops paying for the rest of the planet. We have seen numerous third world governments show up (like South Africa), demanding continued handouts from the US. They don’t ask, they expect. Their ruling classes have been growing fat on U.S. foreign aid for so long they now feel entitled to it. That is the globalist system we are currently living in.
So, you can imagine what might happen if all that cash is cut off at the source due to a government shutdown. Generally, a government shutdown affects foreign aid by halting new obligations and disbursements of funds.
While some aid can continue, the impact depends on several factors, including the type of program, existing contracts, and the administration’s policies. We have no idea at this stage how long the shutdown will last, but foreign governments and outside contracts must be sweating bullets. Trump has even argued that he can use the shutdown to cut programs and spending that he would not be able to nix otherwise.
This isn’t a terrible idea. In fact, I applaud him for it. However, I also acknowledge that the system won’t tolerate it without creating negative feedback. Loss of dollar circulation is going to put pressure on foreign banks to look for alternatives. I’m not talking about a BRICS currency because the BRICS aren’t capable of replacing the dollar. What I’m talking about is globalist institutions like the IMF and BIS which have both been quietly working on a digital (CBDC) dollar alternative for a number of years.
Stagflation at home and the message gold is sending
Meanwhile, the dollars that don’t spread out overseas will come back to the U.S., which is already experiencing persistent stagflationary conditions. The price increases have slowed since Biden was in office, but we certainly haven’t seen costs in necessities go down much.
I would point out that the housing market, as a canary in the coal mine, has been dealing with a rapid decrease in sales since the pandemic. Yet, the insane prices refuse to decline to meet market demand. We are also seeing this in groceries, gas prices, electricity, auto prices, etc. Demand is plunging, but prices will not adjust. Retail sales remain high, but only because Americans are spending a lot more for a lot less.
That mismatch between falling demand and sticky prices is a reminder that dollars themselves are losing their usefulness as a measure of value. Precious metals don’t suffer from that distortion. They’re not dependent on consumer demand curves or government accounting tricks – they hold value precisely when the system stops making sense.
Gold and silver are also trying to tell us something. Despite growing stagnation, metals are skyrocketing in price. This is good news for those of us holding onto physical precious metals, but it is also a signal that inflation is not going anywhere. One could argue that metals are merely catching up to where they should be in the face of suppression by banks, but I don’t think this explains it. The fact that metals are breaking out while the rest of the economy stalls is not an accident. It’s what they’ve always done in periods of stagflation and systemic strain.
Gold and silver are just about the only assets that thrive when trust in government money is eroding.
No, dollars are coming home to roost in the U.S. and this is going to keep prices high even in the face of a deflationary event (recession). That’s not good in the short term. Like I said, globalism is designed to punish anyone that tampers with it.
And then there’s the central bank. Concerns are rising in the mainstream that Trump may use recent events as a means to “reimagine” the Federal Reserve, thus ending its much touted “independence”. The Fed is, of course, not independent – it answers to international banks, as noted by former Georgetown University professor and historian Carroll Quigley in his book Tragedy and Hope (full text available at link). This is the structure that was put in place over a century ago to help finance the globalist edifice through unbacked paper money.
Interfering with the Fed: Crisis guaranteed?
By interfering with the Fed, economic blowback is assured.
This is not to say that nothing should be done; the entire globalist empire must be erased eventually. But it is naive to think that we can do it without a historic crisis. Even basic government spending cuts will trigger instability; upending the Fed would be a disaster. And guess who gets the blame for that disaster? You, me, anyone who backed the populist movement.
So be ready for the international ire and be ready to fight, because they’re going to try to crucify us when the anti-conservative narrative drops. I have always said that Democrats would never allow a shutdown on their watch. They would only ever support a shutdown while conservatives are in power.
If Washington insists on playing a rigged game where every policy response creates more instability, then ordinary savers need a refuge outside that system. Physical gold and silver aren’t tied to the Fed’s balance sheet or to foreign aid promises – they stand apart, which is exactly why central banks themselves keep hoarding record quantities of gold bullion.
Now, I could be wrong, maybe the shutdown will end quickly. The debate largely depends on the Democrat Party’s insistence that immigrants in the U.S., under pretenses of asylum (illegals), get access to ACA coverage (free healthcare). This is an indefensible position and they won’t be able to exploit it for long.
That said, the political left seem content to let the country burn to score political points. I worry that a budget agreement is not meant to happen and that a crisis is meant to fester. Is this the “inflection point” many of us in the alternative economic media have been expecting?
If so, then it is happening sooner that I thought it would. I figured we would have at least two years of Trump’s second term before the other shoe dropped. But the speed at which leftist groups and the globalists are accelerating their political violence suggests an economic reckoning is around the corner. Every major crash event in history tends to coincide with civil unrest and war and the pattern appears to be repeating.
If the reckoning is sooner than expected, then preparation has to be sooner, too. Every crisis brings scapegoats, but it also brings survivors. Historically, those who owned real assets – physical gold and silver – have been in the latter group. A lot of people have been swindled into believing gold ownership is for billionaires – they couldn’t be more wrong. There’s a good reason that refiners make 1 gram gold bullion bars! Better still, though, are the easily divisible CombiBars. My point is simply, every American family can afford to own at least a little “financial insurance.”
Silver, sometimes derided as “the poor man’s gold,” isn’t as popular among central bankers due to its greater volume-to-value ratio. That doesn’t mean it’s not a suitable asset for the rest of us. Silver, after all, has a much bigger historical role as a monetary metal.
The prudent will want some of both. Think of them as the financial part of your emergency kit or bugout bag. Let’s hope we never need them – but by the time we do need them, it will be too late to prepare.