Does There Still Have To Be A Currency Crisis?

A decade ago, the world seemed like a complex place. But in retrospect, it was pretty simple:

The fiat currency experiment had produced a hyper-leveraged financial system that would soon fail spectacularly. Existing currencies would be replaced via a monetary reset, probably involving some kind of gold standard.

This would be a messy but survivable process in which people who shifted out of financial assets like bank accounts and government bonds and into real things like precious metals, oil wells, and farmland would survive and maybe thrive. The thesis could be explained in a 15-minute podcast, and the actionable advice could be implemented with a few hours of research.

Then everything changed. “Neocons” took over in Washington, and the US — dragging a hapless NATO in its wake — started blundering into WW III. A government/academia/social media “censorship industrial complex” emerged and began silencing legitimate dissent. The criminal justice and public health systems were weaponized against the political opposition. And America’s southern border was thrown wide open to millions of unvetted military-age men and unaccompanied children.

We found ourselves falling head-first into a dystopia with one-party rule, secret police, and endless war.

In response, the straightforward gold-bug financial crisis strategy had to be expanded into full-spectrum prepping, complete with guns, second passports, bugout bags, “strategic relocation,” and aggressive privacy protection. “Survivalist” became the logical lifestyle choice, as our formerly simple world became darker and far more complicated.

Back to Simple?

Then last week’s landslide election happened, and beginning the very next day, a new government started dismantling the nascent dictatorship. Obviously, a lot has to happen before we’re out of the woods. But it’s now possible to at least envision a future where a garden-variety currency crisis is once again the main threat. Wow.

So Why Does There Still Have To Be a Currency Crisis?

Money is about math, not politics. When debt reaches a certain point relative to the size of an economy, chaos ensues no matter how well or badly the government is run. And the US, along with most of the rest of the developed world, passed that point long ago. You’ve all seen these charts…

…and you probably understand that government debt is just the beginning of the story. Credit card debt, student loans, mortgages, commercial real estate loans, underfunded pensions, and car loans are all at debilitating levels for various groups. And derivatives, well, no one really understands those things, but the notional value of the credit, interest rate, and currency swaps on bank balance sheets now approaches half a quadrillion dollars.

Can’t We Just Eliminate the Debt — Or At Least the Deficit?

There was a time, maybe as recently as the 1990s, when it was mathematically possible to bring the government’s “structural” deficit into reasonable balance. But those days are long past, for several reasons:

Demographics. Social Security and Medicaid were designed to generate surpluses early on and then spend that extra money on retiring Baby Boomers in this decade. But the surpluses were, by current accounting, $75 trillion too small and will soon be gone, leaving the government with two options: cut Boomer benefits (politically impossible) or borrow whatever it takes to finance millions of joint replacements and chemo rounds. We’ve chosen the latter course, and no one is proposing to change it.

Interest expense. As the above chart illustrates, debt has risen to the point where the resulting interest is a major budget item. Which means interest rates will have to stay artificially low to prevent interest costs from swamping government budgets. Put another way, the Fed no longer has the tools to control inflation, and the currency death spiral has begun.

The death spiral is global. Past currency crises were country-specific. One government would spend and borrow too much and its currency would collapse. But everyone else remained on a gold standard, so the damage was limited to the badly run country and its main creditors. This time, most of the developed world is running fiat currencies with US-level budget deficits, so the crisis and resulting currency reset will be global in scale. More widespread means harder to control.

“Drill baby drill” won’t eliminate the national debt. Energy independence is a good thing. But ramping up oil, gas, and coal production sufficiently to retire trillions of dollars of Treasury bonds will, by definition, lower the price of those fuels. This will cause energy companies — which need future prices to be high enough to produce a profit — to green-light fewer projects, causing production to fall short of expectations. So you can’t fix the deficit this way.

It’s Already Starting

The BRICS countries are aggressively buying gold while discussing ideas for a shared (possibly gold-backed) currency. Eastern European countries are doing something similar. See: Europe Is Finalizing Preparations for a Gold Standard, which features this chart showing the US and Western Europe being left behind in the race to accumulate gold:

A return to a developed-world gold standard would require a gold price of at least $10,000 per ounce. So that part of the gold-bug investment strategy remains intact.

Meanwhile, Other Commodities Look Great

Let’s assume the easy money and rising inflation that produce tomorrow’s currency crisis also enable the financing of multiple AI server farms, electric car factories, and nuclear reactors. We’re talking ridiculous amounts of copper, silver, and uranium, which will only be mined if prices rise enough to make that mining profitable. So the commodities investment thesis is, if anything, more positive in our hypothetical free speech/low regulation world.

There is, in short, serious money to be made in what’s coming. Let’s figure out how.

A decade ago, the world seemed like a complex place. But in retrospect, it was pretty simple:

We found ourselves falling head-first into a dystopia with one-party rule, secret police, and endless war.

Back to Simple?

So Why Does There Still Have To Be a Currency Crisis?

Can’t We Just Eliminate the Debt — Or At Least the Deficit?

It’s Already Starting

A return to a developed-world gold standard would require a gold price of at least $10,000 per ounce. So that part of the gold-bug investment strategy remains intact.

Meanwhile, Other Commodities Look Great

There is, in short, serious money to be made in what’s coming. Let’s figure out how.

For 30 years, Japan was the land where interest rates went to die.

The Bank of Japan used yield-curve control to keep long-term rates sedated. Traders joked that shorting Japanese bonds was the “widow-maker trade.”

Not anymore.

On November 20, 2025, everything changed. Quietly, but decisively.

The Bank of Japan finally pulled the plug on decades of easy money. Negative rates were removed. Yield-curve control was abandoned. The policy rate was lifted to a 17-year high.

Suddenly, global markets had to reprice something they had ignored for years.

What happens when the world’s largest creditor nation stops exporting cheap capital and starts pulling it back home?

The answer came fast. Bond yields in Europe and the United States began climbing. The Japanese yen strengthened sharply. Wall Street faltered.

The rate cut narrative is calcifying into gospel: the Fed must cut to save the consumer.

Bankrate reports that 59% of Americans cannot cover a $1,000 emergency without debt or selling something. And yet stocks are roaring, liquidity junkies are celebrating, and the top 10% now account for half of all consumer spending.

Here’s the plot twist: before 2020, consumer confidence faithfully tracked equity markets. After 2020, that relationship broke. As one analyst put it, “The poor don’t hate stocks going up. They just don’t feel it anymore.”

So when the Fed cuts rates in one of the hottest stock markets in history, who exactly benefits? Not the 59%. Not the middle. Certainly not anyone renting and watching shelter inflation devour their paycheck.

Only the late-stage dot-com fever dreams did better in recent memory — back when analysts were valuing companies by the number of mammals breathing inside the office.

For the moment, stocks appear unsinkable, unslappable, and perhaps uninsurable. But this is what generational technology shifts do: they take a kernel of genuine innovation and inflate a decade of growth into a 36-month highlight reel. We’ve seen this movie. It premiered in 1999 and closed with adults crying into their PalmPilots.

And just as the internet continued reshaping the world long after Pets.com curled up and died, AI will keep marching on whether or not today’s multiples survive a stiff breeze. The technology is real. The valuations, however, will eventually need to stop hyperventilating and sit down with a glass of water.

Wheelbarrows are not chickens. A chicken is a biological production unit. A wheelbarrow is a capital good. A wheelbarrow doesn’t produce work. But it CAN be a productivity multiplier.

And that’s how we have to think of all those GPUs the hyperscalers are spending money on. If their thesis is right, trillion in AI and data center spending now, will translate into a massive burst in productivity and new technologies in the next two decades. That is the only justification for the current valuations/multiples at which these stocks trade now.

The American poet William Carlos Williams wrote, “So much depends, upon a red wheelbarrow, glazed with rainwater, beside the white chickens.”

Today the wheelbarrow is Nvidia Green. And so much of the stock market depends on that wheelbarrow being a big enough productivity multiplier to offset $340 trillion in debt.