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2018-2019 Pop Goes the Bubble: The Collapse of Fiat Paper Money

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By Robert Darryl Schoon  /  GoldSeek

Fiat paper money: Once gold and silver derivatives

Today, instruments of debt issued by central banks

After the 2008 financial crisis, Fed Chairman Ben Bernanke invoked Milton Friedman’s theory that a helicopter drop of money could prevent a collapsing credit bubble from becoming a Great Depression.

When credit bubbles burst, defaulting debt and disappearing demand cause the velocity of money to plunge; and, in 2008, Bernanke resorted to Friedman’s untested theory hoping to prevent the US economy from collapsing as it did in the 1930s.

Velocity of Money

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Friedman’s helicopter drop of money increased US bank reserves an extraordinary 65 times, i.e. from $13 billion to almost $850 billion; adding unprecedented trillions of dollars to the Fed balance sheet. Between 2008 and 2014, Fed liabilities ballooned from $850 million to $4.4 trillion, mirroring in nominal terms the exponential growth of the US national debt during the Reagan presidency.

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Friedman’s helicopter drop, however, proved to be a band aid, not a solution. Central bankers hoped the historic helicopter drop of $4.4 trillion would return the velocity of money to pre-crisis levels and reverse deflationary forces set in motion by the collapse. It didn’t.

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Deflation is the pathological slowing in the velocity of money

Professor Antal E. Fekete

At best, the bankers’ helicopter drop bought time, i.e. ten years (2009-2019). At worst, it created the largest asset bubble in history in stocks, bonds, commodities, real estate, and cryptocurrencies..

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In December 2018, the massive asset bubble began to deflate, confirming a prediction made in December 2014 by Richard Hoey, chief economist at BNY/Mellon,:

I’m worried about 2018. I think about that time everything will come due. We’ll have wage inflation, the Fed will have to tighten hard…and the oil price collapse in 2014 will give you the oil price spike of 2018…Most of our recessions are triggered by oil price spikes…The big recessions always come from the big spike in oil prices. I’m not worried about 2015. I’m not worried about 2016…not too much about 2017. I think the bill comes due 2018 but that’s too far in the future to worry about now.

Don’t Worry About The Us Economy…Until 2018 Richard Hoey, CNBC Interview, December 31, 2014

Richard Hoey was right about 2018. On December 17, 2018, CNBC reported:

The stock market is on pace for its worst December since the Great Depression. Both the Dow Jones Industrial Average and the S&P 500 are on pace for their worst December performance since 1931 when stocks were battered during the Great Depression.

On December 18, 2018, The Financial Times wrote:

Sharp stock market sell-off on Fed rate rise…Shares tumbled after the US central bank lifted the target range for the federal funds rate by another quarter point to 2.25-2.5%, in a unanimous decision, and suggested it was not done raising rates.

THE COLLAPSE OF FIAT PAPER MONEY

Today’s crisis will be even more devastating than the Great Depression. In 2018, currencies are no longer anchored to gold as they were in the 1930s. Not only will economies collapse, so, too, will fiat paper money.

According to the founder of the world’s largest hedge fund, Ray Dalio, the US dollar could soon fall as much as 30% which could leave it looking like the Turkish Lira…the US might have to go through a similar type of inflationary debt crisis which is currency being suffered by emerging market economies like Argentina and Turkey. Triple-digit inflation has taken countries around the world by storm in 2018. Argentina, Iran, Turkey, Sudan, Yemen and Zimbabwe currently have annualized inflation at the hundred and 111%, 187% 38%, 127% 27% and 170%…

TheGoldTelegraph, Is the US dollar on the verge of a major currency crisis? December 10, 2018

Shortly after the 2008 financial crisis, I talked with Sandeep Jaitly about when the financial endgame might begin. At the time, in April 2009, we agreed it was not possible to then know when the massive imbalance of credit and debt would self-correct, i.e. self-destruct.

Today, we know. In 2018, the historic $100 trillion asset bubble has started to collapse and, in 2019, Sandeep, myself and Durant Schoon will offer a securitized crypto token, Wampum, designed to profitably survive the collapse of the fiat asset bubble, to investors in a securitized token offering, a STO.

Information regarding Wampum is posted at https://bullionplay.com/directors-thoughts/ as is the background of the project, see www.bullionplay.com.

The video of Sandeep and myself discussing the timing of the collapse, The Grain of Sand and the Economic Collapse can be seen at https://www.youtube.com/watch?v=mce_lncZL74.

In September 2018, Ray Dalio described financial markets as ‘being in the seventh inning’. Two more innings and the game’s over. Of course, there’s always the possibility of overtime and if you want to bet on it, go ahead.

These are most interesting times.

Buy gold, buy silver, have faith.

Darryl Robert Schoon

www.drschoon.com

About – BullionPlay

 

 
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    • jknbt

      So where is the long overdue market reset everyone has been warning us about? David Rockefeller orchestrated a major stock market crash every seven years starting in 1973 & 1980. We are still getting over the mess he made in 2007-2008. He had help with his fed reserve banker bros that own the Federal Reserve & its banks. By doing this, Chase bank has become the biggest bank in the world, & he plus his banker buds all became multi-billionaires. Wells Fargo Bank, Bank of America, and Citi bank have all grown enormously through this manipulation. Rockefeller died, & guess what? The stock market resets stopped. We have been due one since 2015, so we are very over-due. They did this to soak up all the federal reserve baseless fiat money they print out of thin air. They crashed the stock markets to let the little people take the loss. The super-rich strategy is to pump up the market, dump their stocks at the peak, crash the market, & buy them all back at the bottom (good old pump-n-dump). If an individual stock broker does this for a single stock, they will get caught by the Feds and put in jail for this felony (see the Wolf of Wall Street movie about Gordon Gekko). These people doing this are big enough that nobody will ever touch them. Old man John D Rockefeller did this by creating the stock market crash of 1929. He doubled his money in one year doing this. Burn in hell, John, until your pile of dollar bills you stole from poor and working people that is roasting your rich ass burns up. Enjoy the company of grandson David, who is no doubt in the jail cell next to yours. Was it worth it? Really?

      If the super-rich don’t crash the stock market again, one grim alternative is hyper-inflation. This is the worst sort of safety valve for all that bogus fiat money. Look at Venezuela. They have an inflation rate of 800,000%. The super-rich don’t want this, because they know it will deflate the value of their money also. The super-rich have set up a fiat money printing machine called the federal reserve in every country in the world. Now the value of money is distorted world-wide. For example, the Nigerian Naira has dropped in value by 90% in the last 30 years due to fiat printing of money. Even the Swiss & Chinese have this machine set up. That is why there is a special currency only for internal use by their citizens and a separate currency for foreign exchange. They know how to play the game to win so their people don’t get hurt. The geniuses that run the US will never figure this out.

      The sheeple out there don’t realize how broke the US is. The debt is 47 trillion dollars. That means that you could put everything in the country out on the street & sell it in a national yard sale, & it still would not pay off the debt. Every family knows that the endgame for insane, reckless overspending is bankruptcy. Then someone else has to take the loss. That won’t work with the US on a national basis. What will happen is the young people will give up on democracy & capitalism, and elect someone as sanguine as Franklin Roosevelt that is an amoral dictator like Hitler down inside. What a nightmare. Socialism only works until the money the new government steals finally runs out. Venezuela is the most recent example.

      The third alternative is war. When a small shop is about to go bankrupt & take the owner into bankruptcy also, a common solution is to burn the store down. They will say “the insurance got hot” as they call in the insurance man for a settlement. All the inventory shown on the books (but long ago stolen) “burns up”, and the insurance company takes the loss. Let’s hope the deep state doesn’t order a war to blot out the debt. These people are wicked enough to kill 200 million Americans and a billion other people in the world just to keep from losing some of their precious money. Hellfire is waiting for these people. They have no fear of God.

      It is going to be an interesting year….yee-haw…

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