Where’s the Bottom?

Somebody has asked me about America hitting bottom.

Keep in mind something: the political, economic and social domains are not exactly synchronized. One can easily bottom out without the others. Further, “hitting the bottom” means something different for each of them.

For society, you could say we are about there already. The political situation is much more complicated, largely because the people running our government are determined to destroy the US. Their aim is very specifically to destroy the economy, while keeping the centralized control intact. The bottom for politics will come when the states effectively withdraw from the Union; I’m altogether certain they will. Then, we all have to start over trying to figure out what our new, decentralized government plans to do.

The bottom for economics is even more complicated. While our politicians are trying to destroy the economy, it’s not altogether in their hands. The bankers/financiers appear to be operating independently on some issues, but generally working with the government. Keep your eye on the acronym “ESG” — environment (global warming crap), social (wokism crap) and government (socialist regulations and policy). Most of the 50 states have already taken steps to challenge the ESG agenda by refusing to do business with any bank that works against petroleum, the 2nd Amendment, and a few other things.

Texas recently began working on a bill to break the Fed monopoly over monetary policy. I know that other states have been discussing internally what might be necessary to do something similar. This is a very good sign. Legalizing precious metals as money and working toward a new currency when the dollar becomes too dangerous is very smart.

The dollar isn’t going to crash completely. While the petro-dollar will soon be far less relevant to international trade, there will still be way too many humans on this planet using dollars for it to simply collapse. It will be worth less, but not worthless.

The Fed has been backed into a corner. If they allow inflation, it will mean the Fed cannot prevent the working class from getting raises. The last thing the Fed wants is for the little people to start prospering again. The Fed is committed to keeping the majority of the population poor so that the top 1% stay wealthy.

But if the Fed clamps down on inflation, banks will fail faster than they already do. Very few banks have any kind of safety margin to survive higher interest rates, after they had a decade of zero interest. This is the invisible danger. The issue is that rising interest rates make new bonds worth more than old bonds, and banks are packed with old bonds. When their assets decline in value, the biggest depositors know about it, and will pull out, making the banks insolvent. A great many banks are on the knife edge already.

A major element in the economy is the perception of the common people. If they think everything is okay, then there’s no panic and banks survive on paper thin margins. If people believe the banks are collapsing, they’ll pull their deposits and accelerate the process. If consumers think the dollar is worthless, they’ll put their money into something safer, and accelerate the loss in value.

Whatever an economic bottom means, it will not be a total cessation of economic activity. The single biggest change will be that non-local products will disappear from the market for a time. However, anyone with local products or services will be eager to get your business. This is why the advice has been to keep a stock of canned and dry food items so that you can ride out that initial freeze up. The estimates very; you’ll need to make sure you understand how business is done in your locale. Where I live, it won’t take but a couple of weeks for people to shift gears one way or another.

On top of that, you need some idea of what your state government is thinking about in terms of responding to the economic slow-down. The biggest thing in saving lives is the readiness of a state government to quickly authorize a different medium of exchange, or some other way to work around a sudden decentralization. The second thing is being ready to take care of everyone whose income depends on the federal system. That’s a monumental task, and plenty of states will bungle it. Just ignoring the problem will virtually guarantee the collapse of the state government.

Another issue to watch for is how the big national and multinational corporations handle the collapse of central political and economic authority. States will continue to cooperate in regional groups, but there are just way too many variables to estimate the timing and response. As long as the sun doesn’t puke and destroy the electrical grid, the single biggest risk will be in the communications networking industry. It’s more than the Internet; it’s cellphones, software, taxation, etc. Coordinating a sudden collapse of central federal authority will be a nightmare.

Along with others, I estimate that the end of 2024 will see us in a world we no longer recognize. A genuine federal collapse is likely to come quite suddenly, but an economic bottom is more likely to be in big chunks, and never really crashing completely.