Gold vs Silver – Gold STILL Wins

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GOLD VS SILVER 

The past year has been wild and crazy for both gold and silver. After peaking at about $120 oz. scarcely one week ago, silver gave up almost 40% of that in one day, with an intraday low at $73. A strong reversal to the upside brought the price back to $84 at the close (January 30, 2026). Silver closed today (February 6, 2026) at $77, down 8% since last Friday’s collapse.

Gold, after peaking at $5500, dropped below $5000 with a loss of about 11% (January 30th) and closed today (February 6th) at $4966, a few dollars below last Friday’s close.

Rather than try to predict what might or might not happen next, let’s take a look at where we’ve been. More specifically, we will compare gold and silver performance since 2016, 2011, 1999, and 1980. As good as silver’s price performance has been, gold STILL wins.

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Musical ‘Fed’ Chairs – Same Old S—*

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MUSICAL ‘FED’ CHAIRS

Eight years ago: “President Trump nominated Jerome H. Powell as the new Chairman of the Federal Reserve Bank. Don’t look for much to change.” (see New Fed Chairman – Same Old Story)

Two weeks ago: “I am pleased to announce that I am nominating Kevin Warsh to be the CHAIRMAN OF THE BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM. Congratulations Kevin! PRESIDENT DONALD J. TRUMP (Truth Social)

Before Powell was Janet Yellen…

“…if Ms. Yellen makes it through the current year unscathed, she won’t be hanging around afterwards. She won’t want to extend her risk of being at the helm when the ship sinks. And don’t trouble yourself worrying about who the next Fed chief will be.  It doesn’t matter.”  

WHY DOESN’T IT MATTER? 

Expectations that a “new” Fed chair will make a difference are shortsighted. The Federal Reserve has its own agenda.

The Fed is a private institution; a bankers bank. Banks exist for the purpose of creating money, lending it out, and collecting interest – in perpetuity. Also, the inception of the Fed was authorized by Congress AFTER a promise was made to insure that the U.S. government never ran out of money.

Deficits are funded by the Fed via monetization and placement of Treasury securities with primary dealers (banks). Any treasuries not sold to investors remain on the books of the banks, including the Federal Reserve.

NOTE: The largest single holder of U.S. Treasury debt is the Federal Reserve Bank, at about $6 trillion. This is 16% of the total debt ($38 trillion) and five times the amount of U.S. debt held by Japan.

Japan holds nearly twice as much ($1.2 trillion) U.S. debt as China ($680 billion) which is third on the list behind the United Kingdom ($889 billion).

THE FEDERAL RESERVE CONTROLS THE PURSE STRINGS 

Government spending is dependent on the creation of money by the Federal Reserve. Without the Federal Reserve, government spending would come to a screeching halt due to a lack of funds.

Nominees must be vetted (unofficially, of course) by the Fed before approval by Congress. If you think that is hogwash, then ask Judy Shelton. (see The Federal Reserve vs. Judy Shelton And Gold)

ANYONE who is nominated and approved, and sits on the Federal Reserve board in any capacity MUST/WILL fit right in.

CONCLUSION 

The Federal Reserve System operates independently, and in the interest of the banks and those who own the banks. It has never been about “doing the right thing” or “serving the public” or “correct policy”.

The Fed and its member banks have created the inflation that has destroyed more than 99% of the purchasing power of the U.S. dollar. The effects of that inflation have left the entire world awash in debt and hooked on cheap credit. The U.S. government approves of this because it is a primary beneficiary of the largesse.

Where we are today is the culmination of decades of irresponsible financial/fiscal policies and a complete abdication of fundamental economics.

The Fed now spends most of its time and effort trying to contain the damage stemming from a century of inflation which it created, interest rate manipulation, and market intervention.

Greenspan, Bernanke, Yellen, Powell, (or Warsh) make no difference. It is the same old story, same old song, same old s___. (also see Federal Reserve – Conspiracy Or Not?)

Crypto Collapse Shatters The Fantasy

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(The original version of this article was published at Talkmarkets.com as New Lows For Bitcoin and Ripple )

Cryptocurrencies are collapsing. Just a few hours ago today (Thursday), the price of Bitcoin (BTC-USD) touched $60k, down 23% from its $78k price in my original article on TalkMarkets two days ago. The selloff in Ripple (XRP) was worse. Its price at about the same time as Bitcoin reached its latest nadir, was $1.14 – down down almost 30% from its $1.60 print on Tuesday.

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Silver Price Implosion – What About The Fundamentals?

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The price of silver literally collapsed Friday, declining more than $45 oz. from its intraday peak of just over $120 oz. the day before. The spot price intraday low had a $73 handle, and in less than one day the silver price implosion amounted to 39%. On a net closing price basis ($115 oz. to $84 oz.) the decline ($30 oz.) is more moderate at 26%.

In my previous article Do The Fundamentals Justify $100 Silver?, the price of silver was perched at $94 oz. At the time, it had not broken through the $100 mark, but it appeared that it could/would do so shortly…

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Do The Fundamentals Justify $100 Silver?

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Silver closed at $98 oz. on Thursday (1/22/2026). Momentum could take it right through $100 and higher. Projections of $120,  $500, and even $1000 oz. are plentiful. We are told that the fundamentals indicate and support such lofty projections. But, do they?

Only a couple of weeks ago, silver was closer to $70 oz. At that time, I posed a question to my friend at Chatgpt:

“How much of a factor is pure price speculation in the higher silver price increase from $30 to $70+ vs. real fundamentals? In other words, do real fundamentals justify current price of $70+ and predictions of $100 or more? Please be specific when using percentages and price levels.” 

Here is the complete answer I received followed by my own comments…

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Why Is The Fed Buying T-Bills?

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(This article was originally published on TalkMarkets.com December 11, 2025)

The expected reduction in the Fed funds target rate was announced today. The target rate was lowered to a range between 3.50-3.75%. The Fed also announced that it will begin purchasing about $40 billion per month of short-dated Treasury bills starting December 12.

The announcement to purchase a significant amount of short-term Treasury securities every month might be more important than the interest rate reduction. Why is the Fed buying T-bills?

NEW YORK FED AND OMOs

The Trading Desk at the New York Federal Reserve is the operational unit that executes open market operations on behalf of the Fed — buying and selling securities via its primary dealers.

Open Market Operations (OMOs) include the purchase and sale of securities (mainly U.S. Treasury securities, agency debt, and agency MBS) in the open market by the Fed.

Per ChatGPT, OMOs “are the core mechanism by which the Fed adjusts the amount of reserves in the banking system to influence liquidity and interest rates.”

Another way to say it is that OMOs allow the Fed to “steer” the federal funds rate to its desired range and maintain adequate reserves/liquidity in the system.

REASONS FOR CONCERN

Ordinarily, the Fed lends (repurchase agreements, called repos) or borrows (reverse repos) cash temporarily, often on an overnight basis. These actions are short-term oriented and intended to help keep rates stable and maintain liquidity.

This works when reserves are reasonably ample, or abundant. If not, stronger measures a necessary.

The purchase of “shorter-term Treasury securities” is a stronger measure. In other words, today’s announcement is an indication that financial system liquidity is a big concern for the Fed.

The Fed policy of higher rates for longer has had material effects on the bond and money markets that threaten the structural integrity of the financial system. Hence, expect more aggressive actions by the Fed to contain the damage.

Liquidity issues in the overnight money markets are likely prompting the Fed to take this action. The action is similar to the Fed’s aggressive acquisition of long-dated securities in the bond market at the onset of the 2008 financial crisis, when credit markets imploded.

The purchase of Treasury bills is beginning as the Fed winds down its efforts to reduce the size of its balance sheet, which resulted from its 2008 accumulation. This time, the focus of accumulation is on short-term securities.

By purchasing T-bills in the open market, the Fed is injecting needed reserves/liquidity into the system.

That implies that system liquidity is the primary concern, and not just for the Fed, but for investors, businesses, and individuals.

(also see System Liquidity Risk and Liquidity Problems Could Overwhelm Inflation’s Effects )

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED

 

More Downside For Gold And Silver?

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You can bet that most vocal proponents for spectacularly higher gold and silver prices will see Tuesday’s huge intra-day reversals as just another dip in price before the next jump to warp speed.

The longer and more severe the “correction”, the more frequent use of the phrase “temporary setback” can be expected. After all, the fundamentals demand higher prices, right? A day of reckoning is at hand.

The euphoria surrounding higher gold and silver prices seems to know no bounds. I remember how it was in 1980, as those of us in the trade at that time experienced a similar situation.

Notwithstanding the grim circumstances of double-digit interest rates (fed funds at 17.6% in April 1980), consumer prices averaging increases of almost 12% annually for three consecutive years, and enthusiastic calls for the “death of the dollar”, there was a pronounced peak to the price action in hard metals in January 1980.

In 2011, a government shutdown began on July 1st and lasted for twenty days. The gold and silver price peaks in 2011 came amidst similar sentiments regarding government debt, inflation, and the dollar.

Now, here in 2025, we can only wonder whether a similar situation is unfolding. If it is, it might be worth considering what happened after the peaks in 1980 and 2011.

GOLD AND SILVER AFTER PEAKS IN 1980, 2011

The price peak for gold in 1980 came on January 20th at $843 oz. Within a few days, gold was priced in the mid-$600s – a drop of almost $200. That might not sound like much, but it was a decline of more than 20%. A similar decline now would take the gold price below $3,500.

After a few more weeks, the gold price had broken the $500 level. In less than two months, gold had declined by more than 40%. Measuring from its recent intraday peak of $4,355, a similar drop at this time would take gold down to $2,600.

Silver fared worse. After peaking at close to $50 oz. on January 20th, 1980, silver’s price dropped by more than 30% in two short weeks. By February 3rd, silver was priced at $34.75. A similar decline at this time would take silver down to $37.80 by the end of next week.

Gold found temporary stability around $500, but silver continued to plummet, losing 76% in less than four months. Measuring from its recent peak of $54 oz, a similar drop now would take silver down to $13 oz.

Prices for gold and silver declined in nominal and real terms over the next two decades, reaching respective lows of $260 for gold and $4 for silver. The cumulative declines totaled 70% for gold and 92% for silver.

The gold price decline after its 2011 peak amounted to 45 % and the silver price decline was approximately 80%. Similar declines at this time could take gold as low as $2400 and silver as low as $11.

MORE DOWNSIDE FOR GOLD AND SILVER?

Quite possibly, yes, especially when considering what has happened in the past. The specific conditions are not necessarily the same, but they are similar. Also, there are other factors that are more important as to whether gold and silver continue to decline, how quickly, and by how much.

Liquidity concerns and deflation are the bigger forces at work that could stop in a heartbeat the relentless march of inflation-fueled higher asset prices (see No Winners When The Inflation Balloon Pops). As far as gold and silver are concerned, their price increases have outrun the fundamentals for now.

That does not mean they cannot go higher at this point. They could. You might not want to bet against that possibility, but you would be foolish not to be prepared for some sizeable declines. (also see The Case For Gold Has Nothing To Do With Its Price)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED

The Case For Gold Has Nothing To Do With Its Price

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THE CASE FOR GOLD

The case for gold is straightforward…

Gold is a proven long-term store of value that retains its purchasing power over extended time periods. When used as money (medium of exchange and measure of value), gold acts as a restraint on a government’s propensity to overspend. Also, using gold as money – without government intervention – guarantees price stability.

Gold is practical and convenient, and was money before fiat currencies. Goods and services were priced in ounces and fractional units of gold (grams, grains, etc.). Because the supply of gold is relatively stable and reasonably scarce, the threat of inflation is greatly reduced, although not eliminated. (see Even Gold Is Subject To Inflation)

Gold is not issued by a government or central bank, so it carries no default risk and is immune to political manipulation.

As if that were not enough, gold has additional (secondary) value because it is desired and used for ornamentation and jewelry.

Lots of things have been used as money. Only gold has stood the test of time. Gold’s universal acceptance is independent of government policy or intervention.

Notice that, so far, we have not said anything at all about the price of gold. When gold was the circulating medium of exchange, there was no price for gold. Gold, itself, was the measure of value for everything else.  How much gold you held – not its price – was indicative of your purchasing power, or wealth.

In other words, the gold price has nothing to do with gold’s fundamental value, i.e., its use as money.

HISTORY OF GOLD AS MONEY 

Gold emerged as the money of choice through competition.  Many other things (beads, grains, various industrial metals, etc) were tried throughout history.  For one reason or another, they didn’t work consistently over longer periods of time.

The first gold coins appeared around 560 B.C.  Over time, it became a practice to store larger amounts of gold in warehouses.  Paper receipts were issued certifying that the gold was on deposit.  These receipts were negotiable instruments of trade and commerce, which could be signed over to others.  They were not actual currency but were a presumed forerunner to our modern checking system.

The warehouse proprietors (‘bankers’) decided they needed to find a way to increase their profits.  Earning fees from their depository and safekeeping services wasn’t enough.  Since most of the gold remained in storage and most transactions involved exchange or transfer of paper receipts for the gold on deposit, they decided to issue ‘loans’ of the gold/money to others and charge interest.  The cumulative amounts of gold loaned out could not exceed the amount of gold held in storage.  Hopefully, not too many depositors would ask to redeem their physical gold at the same time.

By this time, there were reasonable indications of just how much gold needed to be kept available to meet the ongoing, day-to-day withdrawal demand.  The warehouses (banks) began issuing loans in the form of receipts backed by the gold held on deposit. That shouldn’t be a problem as long as people continue to trade with their paper receipts. Occasional redemptions of receipts (withdrawals of gold from storage) were met with smiling faces – business as usual.

It seemed to be a workable system.  But apparently, the ‘bankers’ were not content.  They soon started issuing more loans/receipts for gold that did not exist.  Of course, they saw no need to inform anyone of their actions, and the receipts still stated that they were redeemable in fixed amounts of gold.  And when some wanted to take possession of their gold on a physical basis, they could still do so – up to a point.

Questions arose, however, as to the value of the receipts. More and more individuals, companies, and countries opted for real money – gold.  There simply wasn’t enough gold to meet the redemption demands.

As late as the early twentieth century, U.S. paper currency was issued with a clear statement specifying that it was redeemable for specific amounts of gold (and silver) at fixed rates.  In addition, gold (and silver) circulated concurrently with U.S. paper currency and were interchangeable.  One was as good as the other. Supposedly.

In 1933, President Roosevelt issued an executive order “forbidding the hoarding of gold coin, gold bullion, and gold certificates within the continental United States”.  Then, in 1971, President Nixon suspended convertibility of the U.S. dollar into gold by foreign nations.

For more than half a century, there has been no fixed convertibility of U.S. dollars (i.e., fiat currency) into gold (i.e., real money).

THE PRICE OF GOLD

The price of gold in dollars is an inverse reflection of the purchasing power of the U.S. dollar. Under the watchful eye of the Federal Reserve, the U.S. dollar has lost more than 99% of its purchasing power.

The dollar’s loss of purchasing power results in higher prices for goods and services. The gold price reflects the dollar’s loss of purchasing power by continually rising over time, albeit irregularly and in a volatile fashion.

Of particular note is that increases in the gold price come after the effects of inflation have worked their way into economic activity and are readily apparent.   The huge increase in the gold price from $35 oz. to $843 oz. happened over nearly a decade (1971-80) and was reflective of the loss of dollar purchasing power that had occurred over the previous several decades.

The phenomenally huge increase, however, was followed by huge declines. Eventually, more than thirty years later (2011), the gold price peaked again, this time at $1895 oz.

The gold price had more than doubled from its peak in 1980, but the huge price increase did not mean that gold was more valuable. In fact, the value, or buying power of gold at $1895  oz. in 2011 was consistent with its value in 1980 at $843 oz.

Similarly, what one can buy with an ounce of gold today at $3700 is comparable to what one could buy with an ounce of gold in 1980 at $843.

Since 1980, prices have risen more than fourfold. An upscale, new car at $16-18k in 1980 was the equivalent of approximately 20 ounces of gold ($843 times 20 = $16,860). A comparable vehicle today costs closer to $70-75k, and can still be purchased with 20 ounces of gold ($3700 times 20 = $74,000).

CONCLUSION 

The case for gold is the same today as it was centuries ago. Gold is real money; honest money. The price of gold tells us nothing about gold. The gold price tells us the extent to which the dollar has lost purchasing power.

Similarly, it does not matter whether gold is priced in dollars, yen, euros, yuan, etc. The price of gold in any fiat currency is nothing more than a reflection of  changes in the value of that particular currency.

Higher prices notwithstanding, the value of gold remains constant and unchanging. (also see Gold’s Singular Role)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED

What Powell Said And Why It Matters

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WHAT POWELL SAID

“a marked slowing in both the supply of and demand for workers…suggests that downside risks to employment are rising. And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.” and “…the shifting balance of risks may warrant adjusting our policy stance,” Jerome Powell – Jackson Hole, WY 8/22/25

An AI summary of Powell’s remarks sans the emotion and frothiness of investors and others said that “Powell’s Jackson Hole remarks were carefully calibrated—not a firm commitment to cutting rates, but a clear signal of readiness to pivot if economic conditions warrant it. He recognized rising risks in the labor market and suggested that, given such risks and the Fed’s already restrictive stance, a policy adjustment might be justified. However, any change would be data-driven and cautious.”

WHY IT MATTERS 

Investors and the media interpreted those remarks as the signal that “the race is on”. Someone said that Powell’s remarks “opened the door to a possible interest rate cut”. 

Investors rushed through the door with complete abandon and drove stock prices up to new highs, seemingly oblivious to Powell’s expressed statements  that conditions “may warrant adjusting our policy stance” and “any change would be data-driven and conscious.”

The door was kicked open almost one year ago when the Federal Reserve announced its intention to lower the Fed funds target rate in September 2024. After two successive cuts, the target rate has remained unchanged.

Jerome Powell acknowledges the growing risks in the labor market and the presumed risk of higher inflation from tariffs. The labor market threat is real and appears to be significant. Hence, Powell’s comments that labor market risks can accelerate “quickly in the form of sharply higher layoffs and rising unemployment” are noteworthy.

Tariffs are not inflationary.

“Tariffs are taxes imposed by a government on imported goods. Tariffs are assessed at the port of entry and must be paid before the goods can be unloaded. Whoever (businesses, consumers, etc.) imports the goods pays the tariff(s) to U.S. Customs and Border Protection, a government agency. Subsequently, remittance is made to the U.S. Treasury. (see Tariffs Are NOT Inflationary)

The effects of tariffs compound the risks associated with the labor market. Any acceleration in layoffs and unemployment will be exacerbated by the effects of tariffs. The results could lead directly to deflation and economic depression.

CONCLUSION

The Fed dilemma pertaining to interest rate policy remains the same. Lower interest rates and aggressive monetary growth will slam the dollar. Higher rates and restrictive monetary policy will depress economic activity.

Holding rates stable seems the more prudent choice. If nothing else, a disastrous day of reckoning might be postponed.

Far from being a boon to growth (domestic or otherwise), the effects of tariffs will magnify and accelerate problems in the labor market and the economy. Those effects can overwhelm Fed efforts to stave off financial and economic collapse.

The worst that could happen is likely to come quickly. (also see Complete Financial Collapse Is Unavoidable)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED

Complete Financial Collapse Is Unavoidable

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Throughout history, financial markets have risen and fallen in cycles of expansion and collapse. Booms are celebrated, but the busts usually come as surprises—even when the risks are supposedly understood.

Today, multiple warning signs point to the inevitability of a comprehensive collapse of global financial markets. Equities (stocks), bonds, real estate, and commodities will all be affected. This forecast isn’t based on fear or speculation.

It is based on historical precedent and recognition of three specific factors – structural imbalances, unsustainable debt, and systemic overvaluation – any one of which could trigger the collapse.

HISTORICAL PRECEDENT AND MARKET CYCLES

Financial collapses are not anomalies. They are the end result of any or all of the three factors mentioned above. The Dutch Tulip Mania (1637), the South Sea Bubble (1720), the Panic of 1837, the U.S. Banking Panic of 1907, the Great Depression (1929), the Dot-com Bubble (2000), and the Global Financial Crisis/Great Recession (2008) all demonstrate a repeating pattern: artificial expansion driven by leverage, followed by abrupt contraction.

Each cycle has a unique trigger, but the underlying mechanism is the same—excess credit, speculative fervor (fever) and eventual default. In every case, investors believed “this time is different.”  Each time, they were proven wrong.

STOCK MARKET OVERVALUATION

Today’s stock markets are historically overvalued by almost every traditional metric:

  • Price-to-earnings (P/E) ratios for major indexes like the S&P 500 remain well above historical averages.

  • The Buffett Indicator (market cap-to-GDP) has hovered over 170%, indicating markets are priced far beyond the productive output of the economy.

  • Corporate buybacks—a major source of stock market growth over the past decade—are financed largely by cheap debt.

Moreover, algorithmic trading, passive investing via ETFs, and highly correlated global markets increase the risk of flash crashes and liquidity spirals. When panic selling begins, the feedback loops will accelerate declines across all asset classes. (see If The Markets Turn Quickly, How Bad Can Things Get?)

BOND MARKET RISK IS ELEVATED

The global bond market—especially sovereign debt—is on a trajectory that cannot be sustained. Consider the following:

  • As of mid-2025, global debt surpassed $315 trillion, according to the Institute of International Finance.

  • U.S. federal debt alone exceeds $35 trillion, with annual interest payments now over $1 trillion.

  • A return to historically normal (higher) interest rates exposes debt holders to massive capital losses and some governments to rising default risk.

The inverse relationship between bond prices and interest rates means that the value of trillions in fixed-income securities will plunge as rates move higher. In the case of credit collapse, the higher rates are because of poor credit quality and defaults.

In the corporate bond market, companies issued record amounts of low-interest debt during the 2010s. Much of this must be refinanced in the coming years at higher rates, which could trigger downgrades, defaults, and bankruptcies.

Bond investors are trapped in a market that can no longer promise safety or positive real returns. (see The Looming Threat Of Credit Collapse And Deflation)

REAL ESTATE 

Commercial Real Estate (CRE)

The CRE sector is already collapsing in slow motion:

  • Office vacancy rates in major U.S. cities (San Francisco, Chicago, New York) have soared past 20%–30%. This is at least, in part, a consequence of the shift to remote work.

  • Billions in loans tied to these properties are maturing in 2025–2027.

  • Many buildings are underwater—worth less than the debt attached to them—and face rising interest costs for refinancing.

Banks, especially regional ones, are heavily exposed to CRE. As defaults rise, balance sheet impairments will increase, leading to bank failures or taxpayer bailouts.

Residential Real Estate

While home prices soared from 2020–2022, rising mortgage rates have now priced out many buyers. The affordability crisis means:

  • Home sales have plummeted.

  • Inventory is artificially low due to rate-locked sellers.

  • When forced sales begin (due to job losses or debt stress), prices will adjust sharply downward.

In places like Canada, Australia, and parts of the U.S., price-to-income ratios are in unsustainable territory. A correction is inevitable—and history shows that housing bubbles rarely deflate gently.

COMMODITIES – VOLATILITY, NOT STABILITY

Commodities are traditionally considered inflation hedges or safe havens—but they are not immune to collapse:

  • Oil and energy markets remain vulnerable to global demand shocks. A deflationary recession will crush consumption and send prices lower, as seen in 2008 and during the COVID-19 collapse.

  • Agricultural commodities are tied to supply chains, geopolitical tensions, and weather—but also price speculation. Price swings can be large and destabilizing.

  • Gold and silver, even with recognized monetary roles, are potentially subject to huge declines in price.

INTERCONNECTION AND FRAGILITY

Central banks hold massive amounts of government bonds and mortgage-backed securities on their balance sheets. Pension funds, insurers, and sovereign wealth funds are heavily invested in real estate, equities, and credit markets. Systemically important financial institutions (SIFIs) rely on overnight funding markets, derivatives exposures, and leveraged trades.

A collapse in any one sector—stocks, bonds, real estate—will spawn reverberations that spread quickly. No part of the financial infrastructure operates in isolation anymore.

Central banks—especially the Federal Reserve—are caught between the proverbial rock and a hard place. If they raise rates to tame inflation, they destroy asset prices and increase default risk. If they lower rates or restart quantitative easing (QE), the increased inflation debases the currency.

CONCLUSION

Confidence is the last line of defense in any monetary system. Trust in the central bank is falling amid accusations of policy errors and inflation denial. Dishonesty and deceit are rampant at all levels of government and in all departments and agencies; and, financial institutions are plagued by scandals and corruption.

As seen historically—from Weimar Germany to Argentina to 1970s America, as well as currently — the erosion of confidence leads to the flight of capital, currency devaluation, and civil unrest.

Geopolitical instability (e.g., war in Eastern Europe, Middle East conflict, U.S.-China tensions) exacerbates the financial stress and hastens the the eventual collapse.

A complete collapse of financial markets is not only likely—it is inevitable under current conditions. It will be the cumulative result of decades of unsound money practices and disregard of fundamental economics.

Today’s modern financial and economic system, based on fiat currency and leverage (credit), is ripe for failure. (also see No Winners When The Inflation Balloon Pops)

Kelsey Williams is the author of two books: INFLATION, WHAT IT IS, WHAT IT ISN’T, AND WHO’S RESPONSIBLE FOR IT and ALL HAIL THE FED