Financial Blowout Ahead: Lobotomized Economists Clash on the Deck of the Titanic


by Matthew Ehret, Strategic Culture:

Under the new world order of “stakeholder capitalism” citizens will learn to own nothing and be happy, Matt Ehret writes.

As the geniuses running the western financial bubble sometimes called an “economy” continue to double down on their obsession to pump a dead financial system with ever more trillions in stimulus spending, arguments are raging among brainwashed economists living in denial over the oncoming systemic collapse. The thought of engineers on the Titanic passionately arguing over whether they should accelerate or decelerate the speed of the boat whose hull has long been torn to shreds by an iceberg comes to mind.


On one side of the debate, figures like U.S. Treasury Secretary Janet Yellen and Fed Chair Jerome Powell champion an emerging new wave of high interests as “a plus for society’s point of view” in order to counteract the increasing rates of inflation sweeping across every sector of the economy. This camp asserts that this spike in interest rates should not be done immediately however, and only begin in 2023, and until then interest rates should be kept at near zero percent.

On the other side of the debate, economists among Germany’s largest bank scream that waiting until 2023 is deadly. Not a second should be lost before increasing interest rates now in order to stop a “time bomb” from destroying both the USA and the world. On June 7, Deutsche Bank Chief Economist David Folkerts-Landau wrote passionately that Washington’s decision to wait until 2023 before raising interest rates “could create a significant recession and set off a chain of financial distresses around the world” leading to “a time bomb” waiting to explode… unless interest rates were hiked up to 20% just as they had been done in 1980 by then Fed Chairman Paul Volcker which saw interest rates collapse from 12.5% in 1980 to 3.8% in 1982.

Both sides however, are either completely ignorant or outright liars trying to distract citizens and policy makers from the real systemic nature of the oncoming meltdown that can only be dealt with if certain fundamental facts of recent history are kept in mind.

Why is Inflation going to Skyrocket?

Since a pandemic induced nations to lockdown their economies, rescue packages and unlimited money printing to keep people from literally starving, and banks from collapsing has become a new normal. $24 trillion dollars in COVID related debts have been generated internationally, while U.S. Federal Reserve balance sheets have doubled over the same period to $8 trillion with increasing rates of liquidity injections flushed into the Too Big to Fail banks since September 2019. So far, consumer price inflation has risen by 4.2% in 12 months, but based on the obvious reality of $28 trillion of totally unpayable U.S. debt, sustaining a $1.2 quadrillion derivatives bubble time bomb alongside the breakdown of supply chains and a dysfunctional green infrastructure program pushed by Biden, the runaway threat of inflation and even hyperinflation is firmly (or should be) on everyone’s mind.

Now if Deutsche Bank’s Folkerts-Landau was talking about the insane money printing disassociated from any systemic restructuring of the over-bloated Too Big to Fail zombie banks or serious recovery program, then he should be applauded for raising the spectre of unbounded inflation. His nation did after all have a direct experience with this disastrous policy back in 1923 when hyperinflation tore the German economy to shreds and set the stage for the rise of Nazism shortly thereafter. (1)

Sadly, both Folkerts-Landau and Yellen are instead pushing policies that will not only accelerate hyperinflation a century after Weimar, but usher in a new central bankers’ dictatorship that had only been subverted in 1933 due to the fortuitous intervention of U.S. President Franklin Roosevelt.

So What Did Volcker Do?

Since economists are told repeatedly that Volcker’s interest rate hikes of 1979-1982 saved the U.S. economy, let’s look at what really happened and why Volcker described his philosophy as a “controlled disintegration”.

While inflation did indeed spread across the USA in the 1970s, it is worth asking: why did this actually happen and did Volcker’s reforms have anything to do with solving that problem? Or did both the problem and its nominal solution drive a singular agenda of controlled destruction of the USA now playing out four decades later?

For one, the shift away from industrial long term development with the 1971 floating of the U.S. dollar off of the gold reserve standard went a long way to turning a once-forward thinking productive, manufacturing-driven economy into a consumer cult, post-industrial waste. This “post industrial” age was characterized by outsourced industries relying ever more on increased rates of imports of things the USA once made for itself. A FIRE economy (of Finance, Insurance and Real Estate speculation) increasingly took over the once powerful manufacturing sector.

Agro-Industrial production was replaced by service sector jobs as the USA became ever more reliant on cheap imports made from China, Mexico and other poor nations who were expected to remain labor intensive sweat shops for eternity.

This detachment of the “valuation” of the dollar from all physical measurable standards went a long way to killing the buying power and raising inflation as monetary circulation increased ever more by speculation on oil, currencies or other goods that often had no connection with reality. Investment rates into cutting edge science both in the atomic realm of fusion and the macro realm of space exploration were cut off drastically (see graphs) as general vital infrastructure maintenance and improvement collapsed drastically across all OECD nations trapped in the “new post-industrial normal”.

Non-military related science R & D also saw a collapse during this period from 2.5% of GDP in 1971 to a mere 0.4% of GDP in 2020 (see graph).

Deregulation and market liberalization castrated the role of the sovereign nation state ever more from 1971 onward, as “laissez faire” policies dominated a once-protectionist landscape. Rather than continuing the successful practice of “parity pricing” which defined the real growth of western nations during the 25 post-WW2 years, the markets run by speculators looking only towards maximizing profit defined the prices of goods.

Last but not least, oil price increases of 400% during the 1973 OPEC crisis is admitted to have played a big role driving the 1973-79 inflation, but as researcher William Engdahl demonstrated in his 1992 Century of Oil, then Secretary of State Henry Kissinger had more of a role in manufacturing this crisis from scratch by keeping hundreds of tankers replete with petrol from being unloaded in the USA and facilitating the 400% increase with the assistance of several high level oil ministers in the Middle East beholden to Kissinger. In recent years, Saudi Arabia’s former OPEC minister at the time corroborated Engdahl’s research stating:

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