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If the American Empire were to collapse, when would you learn about it? A year ahead? A month? Or would we be told on the very day, as a by-the-way, that the American hegemony is no longer?
Since the American Empire has always rested on economic power more than anything else, it only makes sense for America to collapse on the economic front. We aren't likely to get invaded by any real or imaginary threat sporting firearms. Rather, not unlike Ancient Rome, the collapse looks to be a systemic, protracted, delayed and denied affair.
In this collapse, which might indeed be denied even after it has happened, money is going to be redefined. Or, to be more specific, our money. Later, we will go into why gold has to shove the U.S. dollar aside as this happens.
The trend of U.S. dollar reserves turning into gold is well underway in central banks around the world. But there are some chapters before we address that.
Weimar Republic, Bidenomics and a General Interlude
For as long as there has been a modern gold market, comparisons with the Weimar Republic have been used as a kind of boogeyman. But within less of a decade, the lines separating Weimar and the America of today grow thinner and thinner.
The more you look into what went wrong with Weimar, the more you will start to feel as if you are already living in it. Not the later stages, to be sure, yet. But the pieces are all there.
The reason Weimar is mentioned so often over, say, Venezuela, is that Germany has been a major player in global affairs for centuries. We feel it's much closer to home, and indeed, it makes sense to compare the relative collapse of a developed nation rather than an emerging one.
You will also notice that Weimar collapsed in name, but not in place. Germany is still there. It was there before, too. So it is likely to remain true of America should this pan out. We might see America renamed or overhauled as a result of its economic failures, but the people and the republic will remain.
As was true in Weimar, the collapse has to start and end with a loss of faith in currency. Once a nation's currency is truly forfeit, it has all but lost a say in any world affairs. That's why Venezuela still refuses to part with its toilet paper bolivar, as it would mean an admission of concession.
The same is true of America, where you'll continue to hear that everything is okay for as long as ears are there to listen. For the moment, let us remember that those with a sizable gold allocation were the only real economic "survivors" of the Weimar Republic. This has been the case with any collapse in history, and is unlikely to change.
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Debt & Federal Deficit: Why the U.S. Has No Money
Much of what we'll cover here is either under-reported or completely ignored in the mainstream as we're told of a great stock quarter and robust jobs growth. For that matter, one can throw in that purchases of secondary housing have grown by over 100% recently to further paint a rosy view.
But it can't be painted as such because of the hard data, which is making everyone want to look the other way. The U.S. now sports a national debt of over $33 trillion. The Congressional Budget Office runs a deficit that is going to "unexpectedly" double this year, going from 1 trillion in 2021 and 2022 to $2 trillion by 2024. Unexpected by whom?
If we've managed to keep the federal deficit under $1 trillion this entire time and it's gone up by another trillion in a year, it's pretty obvious where things are headed in that regard.
Michael Peterson of the Peter G. Peterson Foundation says that it's "well past time to address the fundamental drivers of our debt, which are mandatory spending growth and the lack of sufficient revenues to fund it." It's a good summary, if an irrelevant statement, because nobody's going to reverse course here and move back to a sound economy.
The government keeps spending and borrowing money to pump up what is an economy detached from reality, among other things. For Peterson's second point, we'll give a section of its own, because one might argue it's what's driving this collapse. The people have to pay for the government's spending, but how are they faring?
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Destroying the Middle Class Means Destroying the Economy
Even the mainstream media can't ignore what is becoming a pretty obvious destruction of the middle class. However, it's also important to note that the so-called "lower class" is faring worse than ever. So it's really both that are being destroyed, and they form the overwhelming majority of the population.
Let's examine some of that hard data again, the kind you don't often see in the mainstream. As of July, 61% of Americans had no savings, a 2% year-on-year increase. Interestingly, even if you are raking in up to $100,000 a year, you could still end up part of this demographic. How did the middle class end up with no savings? Inflation is a start, but there are many other layers to the story.
The results of this are visible across the nation already. UBS projects that 50,000 stores could close across the nation by 2027. That's an absolutely massive amount of jobs lost, and it's happening because these stores are under-performing. They're under-performing because consumers have no money to spend on overpriced goods, which have been ballooned up by the Federal Reserve policymaker, which we'll cover soon.
The closure of stores is just one of many ways through which the economy is shutting down. One could argue that stores and factories are the two pillars of a goods and services based economy. Needless to say, factories aren't faring any better, or they wouldn't be in Mexico.
Corporations could get away with moving factories to nations with cheap labor even if it dealt a huge blow to the economic structure for a while. But how is the same going to apply to stores? It won't, which is why they're trying to automate as much of it as possible.
The closure of stores is really a kind of acceleration of economic destruction that happened the moment a U.S. factory was shut down and built up abroad. It was very much a "we'll think about the repercussions later" ordeal. And that later appears to be here now.
Without factories and stores, there are no base jobs that build up an economy. And certainly, McDonald's recent attempts to go automated will tell you that this base is very encompassing.
You might have heard America called a welfare state, but it isn't really that. How many people do you know that get by on welfare? Any attempt to turn America into a welfare state is going to immediately strip it of its superpower status, yet it looks like the only way out, even as a short-term fix.
Later, we will cover why existing welfare is already imploding. First, though, let's move back to the mainstream to get a better idea of why we're getting Weimar vibes all over the place.
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Pundits and Outlets Agree: America's Economy is in a Good State
Examining this recent piece on Business Insider tells us why many will be informed that the American Empire has collapsed as a post-note. Business Insider is a mainstream outlet, but it isn't what most consider real mainstream media. The latter is worse in this regard. Business Insider is only going to be read by the economically aware, and tends to apply a reasonable amount of critique.
Still, we end up with a piece that debunks the 5 common myths about the economy. Here is the conclusions that the article presents us with:
1. We don't need to pay our debt, so long as we're paying the massively increasing interest on it
2. The debt to GDP ratio of 97% isn't a big deal. For reference, it was 135% during the pandemic lockdowns and 121% during WWII
3. Debt is good for the U.S. economy
4. There is no debt crisis despite a $33 trillion debt figure
5. Other countries like China have a huge debt too, so it's okay
If you apply this kind of rationale to your personal life, you will end up with nothing as sure as the sun rises up. Think of a family saying it doesn't need to pay off its debt, which is massive, so long as they're paying their interest rates. How about a corporation that is in the negative, as the U.S. is with its federal deficit? It's a train wreck in the making, for sure.
So why are we treating things any different on a national level? And really, mentioning China there really feels like the biggest affront. How many Chinese citizens turn their clothing, appliances and food over and see "Made in the U.S."? China, which has been urging its citizens to store their money in gold and buying it up while the U.S.' national reserves become more questionable by the day?
It's as if the two nations both took loans, but one built a business and poured it in off-the-books hard assets while the other partied with the money. Needless to say which is which here.
While sources like these say debt is good and not a problem, we can quickly see how it's one of the main reasons behind the coming collapse of the U.S. as we know it, alongside bygone production and hyperinflation.
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Consumer Credit Expands, Delinquencies Become the Norm
This analysis starts us off on why debt might not be such a good thing after all. Part of the reason why the government takes 50% of your income is that it's indebted and needs spending money. Back when the U.S. was a goods-and-services based economy that built a superpower, in the 19th but even a little of the 20th century, the government took little, if any of your money.
So, what do you do when you've had such a significant part of your income stripped away due to the government's "totally fine" indebtedness? You go into debt yourself, of course. But while you are far more accountable for your debt than the government, you can still become a delinquent on it.
To this tune, part of why we're hearing about a banking crisis is that banks are setting aside billions of dollars in funds to cover losses on loans. That's money they lent and won't get back. When things get rough, who will they turn to?
The government and its emergency bailout fund for banks, whose funds already number in the trillions of dollars with the slightest hint of a banking crisis. So the ridiculous and unsustainable cycle continues and worsens, until it no longer can. That's when you get a Weimar-style collapse.
Kevin Vanelswyk sums the analysis up:
"Government spending continues, the causes of inflation continue, and the cost of credit increases as real wages decline. Leviathan offers palliatives that sound earnest and responsive but do nothing for the street-level economy, which is being slowly tortured into default."
Indeed. The whole premise that debt is good comes from the idea that you're using it to fund a sound project in a sound economy. The moment we realize that people are turning to debt to get by, that narrative goes out the window.
When it Comes to Debt, Corporations Are Not Immune, For a Change
The tiers of privilege are something like this: the populace on the bottom, corporations in the middle and the state occupying the very peak. Some might argue that the state and the corporations will fight each other for the top spot, but that's neither here nor there.
When corporations are feeling the brunt of something, you know it's gotten out of control. 400 corporations have closed as of August 2023, the highest level since 2010. Remember, in 2010, you could hardly hear someone say that there isn't a massive crisis underway. These days, we're still wondering about a recession.
An overlook of these companies shows that these aren't your inexperienced brick-and-mortar first-timers, either. They're some pretty big names, which goes in line with their losses.
All the corporations in this category had a minimum of $2 million in assets or liabilities, but seemingly edging closer to a minimum of $10 million. How the small business is faring, if such a thing exists anymore, one dares not ask.
As of August, 16 of these companies that have filed for bankruptcy had over $1 billion in liabilities. We can again go into why this is happening, and why now, but it boils down to debt on one side and underperformance on another.
So if neither the citizen nor the corporation is exempt from economic collapse, surely the no-debt-problem U.S. outlined above still retains some leeway, right? Here is where you might be in for a "how bad things really are" surprise.
Related: Free Guide - How to Diversify Your IRA with Gold (Tax-Free)
The Government's Proxy Bankruptcy: Medicare, Medicaid and Social Security
These three programs form the basis of American welfare, which is another thing that separates it from undeveloped nations. But they aren't your Scandinavian government freebie. Just the opposite, really: Social Security is, for many, little more than a fancy way of saying "pension that you earned through decades of hard work".
This analysis gives us an in-depth overview of why the collapse of all three looks like a probability, with this quote on Social Security perhaps being most relevant to many:
"[…] the Social Security board of trustees in its 2023 report forecasts reserves in the Old-Age and Survivors Insurance (OASI) Trust Fund will be depleted in 2033. Ongoing tax revenue will be enough to pay 77 percent of scheduled benefits after that point. Beneficiaries in that year will see their monthly payment reduced by 23 percent."
Retirees are another backbone of any economy, of course. And this basic extrapolation suggests that they'll get a formal 23% reduction in their pensions from 2033 onwards.
Again, this is only the formal concession and doesn't account for the hammering of said pensions by inflation. But it shows why the collapse is to be a protracted affair with lots of reassurances on the way.
Pension Funds Want Gold, and You Should Too
Whether because of the broad signals of Social Security or simply because the traditional portfolio isn't returning and rests on flimsy foundations, pension fund managers have been turning to gold. Ohio's $750 million gold allocation sounds like a lot, but it isn't.
In reality, these funds should have such a safety-net allocation if we were in a 19th century style goods-and-services economy that's taking over global affairs. On the heels of the largest monetary debasement in history on behalf of the Biden administration, one that is soon likely to have competitors, some may argue they should have much more. And no state should be exempt.
Fortunately, with the help of a trusted gold dealer, you can take full control over your pension and choose to allocate whatever amount you want to gold.
Wherever we end up on the Weimar spectrum in one, two or five decades, we have a pretty good idea of how bullion assets might fare. Everything else, including our global reserve currencies, remains a speculative trade.
