The Federal Reserve has sabotaged the economy since 1913 with its socialistic interventions. Every single boom created via its artificial credit expansion has resulted in disaster, which includes the Great Depression, which was caused by nearly a decade of inflation that begun as an effort to help finance the government’s involvement in World War I.
The Federal Reserve’s efforts appear akin to a blind infant performing a piano concerto but the truth is far worse. No one can possibly know the correct interest rate. When not manipulated by the Federal Reserve, interest rates are determined by the ratio between savings and consumption among all the people, a ratio economists call time preference. Manipulating the interest rate lower merely pushes it out of step with the people’s time preference and plants the seeds of an inevitable crash.
By creating trillions of new dollars and thereby artificially lowering the interest rate, the Federal Reserve has created an “everything bubble.” Every asset class is ripe for a massive crash. Resist attempts to blame anyone else for rising prices. Government didn’t suddenly start running deficits and businesses didn’t suddenly become greedy or acquire the power to dictate market prices. The new dollars created by the Federal Reserve must go somewhere, and where they go, they bid up prices.
Further, as the new dollars are created, they’re almost always distributed to the rich and powerful before “trickling down” to the poor and middle class and bidding up the prices of the things they buy most. Thus, the rich and powerful are granted increased purchasing power, often for high-sounding causes. This explains increasing wealth inequality. This is also why inflation causes prices to rise faster when the new dollars are sent to the masses, for then those dollars don’t have to trickle down before they are spent and bid up the prices of what the recipients purchase.
Artificially lowered interest rates also “stimulate” people to take on projects and make purchases they otherwise wouldn’t, and many or most of these are inevitably unmasked as unprofitable when the interest rates inevitably rise. The boom was a binge that led to record levels of debt, including automobile, corporate, credit card, mortgage, small business, student loan, local government, state government, and the national government’s $30 trillion debt (with its unfunded mandates an order of magnitude greater).
Further, inflation’s unpredictable impact on the price structure causes a significant increase in business errors, which leads to a surge in businesses overextending themselves and going bankrupt, as well as shortages and surpluses. Finally, inflation causes a redistribution of wealth from those on fixed incomes, those unaware of the changes in the price structure, and those unable to raise their prices and wages early in the cycle to those who can and do raise their prices and wages early in the cycle.
So much of the economy is now addicted to the artificial credit expansion that even a small reduction in the injections is bringing on severe withdrawal symptoms. These symptoms are the beginning of a depression, a time when the people and government must pay off or liquidate their debt and accumulate new savings before reinvesting. This is where the Federal Reserve finds itself against a rock. If it stops inflating and raises interest rates significantly to encourage savings and end the binge, the national government won’t be able to make the interest payments on its debt with current tax funds. It’s also unlikely that enough taxes could be raised without triggering widespread unrest.
The national government, along with many businesses, local, and state governments, will go bankrupt if rates are raised significantly. However, this is where the Federal Reserve finds itself against a hard place: if it doesn’t raise rates significantly and cease inflating, prices will continue to soar. Contributing to this crisis is the precipitous decline in the use of the dollar internationally, primarily caused by the US government’s attempt to weaponize the dollar via sanctions and by the inflation’s reduction of the dollar’s purchasing power. Those dollars formerly circulating internationally are coming home to bid up prices even more.
Thus, the rock is default on the national debt and a widespread credit and debt crisis, while the hard place is ever-increasing prices until the dollar is drastically lowered in value or worthless. The latter is very likely the choice the Federal Reserve will make without massive political pressure against it because it would inflate away its debt. In short, the government will likely try to pay its debts by printing tons of dollars, but those dollars will be worthless or close to worthless, like your savings.
Can anything be done? Yes, the federal government can abolish regulations, all of which are pure waste, radically reduce its spending, and end its numerous expensive wars that also increase prices by obstructing trade and destroying resources. Finally, taxes can be drastically cut so people can pay off their debts and reinvest more quickly.
Further, every American can consume less and save more. This will help your personal finances, given the inevitable rise in interest rates on savings accounts, CDs, etc., that will be coming, by helping you pay the higher prices caused by the Federal Reserve’s inflation, preparing you to buy cheap assets in the coming crash, and readying you to reinvest more quickly. It will help the overall economy in the same way, by cleansing the system of debt.
The national government could also intentionally default. This has many of the same disadvantages as a default caused by failure to make interest payments, but it also has some things going for it. It would initiate a recession, since holders of the debt would take those losses, but openly admitting the government’s inability to pay has the advantage of discouraging future lending to the US government. Finally, some preparations could be made ahead of a planned default in comparison to an unplanned one.
It’s also important to understand that the US government is only bankrupt in monetary terms. Its debt is catastrophic, but its assets are astronomical. It has vast landholdings outside the continental US, tons of land in the western sections of the country, a great deal of admittedly obsolete weapons, and long lists of other assets that could be liquidated.
There is, therefore, a way out of the trap the Federal Reserve has set for us. The US government can disgorge itself of assets so that it doesn’t have to print dollars to pay its bills. Will the US government be willing to do such a thing? Rulers rarely if ever give up power voluntarily, but the people’s reaction to the coming crisis will likely force more pliability. Keep in mind that Americans own at least three hundred million guns and the ruling class are few while the people are many.
As people’s savings are wiped out, they’re likely to get scared and angry. Understanding these truths, the politicians are likely to change course under increasing political pressure and allow rates to rise to belatedly rescue the dollar. The system is far more vulnerable to revolution than people generally understand, but fear and anger are hardly conducive to a rational discussion of the problems, let alone a systemic improvement. We needed a great deal of wisdom a long time ago, before starting down this disastrous road.
Image by Tim Evanson via Flickr, CC BY-SA 2.0. Article cross-posted from Mises.
Two Storms, One Harvest
Every food crisis in living memory has been a one-shock event. The 2008 price spike was a commodity bubble. The 2020 shortages were a logistics failure. The 2022 grain scare was a war on one exporter’s ports. Each time, the system bent, adjusted, and recovered, and each time the experts assured us afterward that global markets are simply too big and too diversified to fail.
What nobody in Washington seems eager to discuss is that 2026 is shaping up to be something the modern food system has never actually faced. Two independent shocks, one climatic and one geopolitical, are converging on the same harvest cycle at the same time. Not sequentially. Simultaneously.
Start with the weather. The Pacific Ocean is currently building toward what forecasters now openly call a record event. NOAA’s Climate Prediction Center puts the odds of at least a strong El Niño near 88 percent, with roughly two in three odds it reaches “very strong” status, the tier reserved for perhaps three or four events in the entire satellite era. Every major global model now projects a median peak in Super El Niño territory, and most of them project it exceeding the 2015-16 event, which until now held the modern record. Sea surface anomalies were already brushing the super threshold in mid-July, months before these events normally peak. The atmosphere has already shifted into El Niño mode, and the event is forecast to crest in late fall and early winter.
This is not about “climate change.” It’s about the standard cycles of weather, and the cycle we’re currently in is one that has likely devastated societies in the past. We’re better prepared as a society today, but not all Americans are equally prepared.
Serious households have started doing the quiet math on their own. Grocery bills tell part of the story, and the forecast maps tell the rest, which is why long-term food storage has moved from fringe hobby to mainstream line item in the family budget, with established suppliers like Heaven’s Harvest seeing demand from people who five years ago would have rolled their eyes at the idea. That instinct is not paranoia. It is pattern recognition, and the pattern is worth walking through carefully.
Editor’s Note: Heaven’s Harvest IS a sponsor, but the warnings of this article are real and would be written even if we didn’t have a survival food sponsor. With that said, those who take advantage of what they offer can use promo code “Patriot” for 15% off.
The Fertilizer Clock Is Already Running
While the Pacific warms, the second shock has been unfolding in the Strait of Hormuz. The conflict with Iran turned the world’s most important energy chokepoint into a contested waterway, and the consequences reach far beyond the gas pump. Roughly a third of global fertilizer trade moves through Hormuz, and the disruption sent urea prices up 86 percent year over year by March, with a 53 percent jump in a single month.
The World Bank projects energy prices rising about 24 percent in 2026 and fertilizer about 31 percent. By its own accounting, fertilizer prices ran 35 percent higher in the first five months of this year than the same period last year.
Here is the mechanism the nightly news will not explain. Fertilizer is not a grocery item. It is a time-delayed input. The nitrogen a farmer in Iowa or Punjab could not afford to apply this spring does not show up as a problem this spring. It shows up as a thinner harvest six to twelve months later.
The World Bank’s own food security brief concedes that the effects of reduced applications earlier this season “are likely to become visible only later in harvest outcomes.” Translate that from institutional language into plain English and it means this. The damage is already done, it is already in the ground, and we are simply waiting for it to arrive on the shelf.
Now check the calendar. Six to twelve months from the spring planting season lands us squarely in late 2026 and early 2027. Which is precisely when the strongest El Niño in the instrumental record is forecast to peak, bringing its signature droughts to Southeast Asia, Australia, southern Africa, northern Brazil, and South Asia, the very regions that grow the world’s rice, sugar, and oilseeds.
The World Bank warns openly that a strong El Niño “could disrupt multiple crop belts simultaneously” on top of the conflict-driven input costs. Their baseline projection assumes the Middle East disruptions ease by autumn. What in the last two years of Middle East history suggests that assumption is safe?
The System Has No Slack Left
The comfortable answer is that global markets always adjust. But adjustment requires slack, and the slack is gone. Global cereal production is expected to decline from last year’s records even before El Niño does its work. The UN World Food Programme, hardly a den of right-wing preppers, is calling this the most significant disruption to its supply chains since Covid and the invasion of Ukraine, and its supply chain director put the stakes bluntly.
Today’s supply chain challenges are tomorrow’s hunger crisis.
There is also a political dimension that markets cannot price. When food gets scarce, governments do not behave like economists. They behave like politicians. Export bans, hoarding mandates, and panic buying at the national level turned the modest rice shortfall of 2008 into a global crisis, and analysts are already warning that import-dependent nations are the first dominoes.
The 2015-16 Super El Niño, a far weaker event than what is now forecast, threw tens of millions into food stress across Africa and Asia. This one is projected to be stronger, and it arrives with fertilizer already rationed by price and shipping lanes already contested by missiles.
What Joseph Knew
Scripture does not treat preparation for lean years as faithlessness. It treats it as wisdom delivered in advance to those willing to act on it.
Behold, there come seven years of great plenty throughout all the land of Egypt: And there shall arise after them seven years of famine; and all the plenty shall be forgotten in the land of Egypt.
Joseph did not respond to that warning with a hashtag or a committee. He stored grain during the years of abundance, and when the famine came, Egypt stood while its neighbors begged. The lesson is not that famine is certain. It is that the time to prepare is precisely when preparation still looks optional.
Nobody who filled a pantry in a year of plenty has ever regretted it, and nobody standing in an empty aisle has ever been glad he waited for certainty.
None of this calls for panic, and panic is the enemy of sound judgment anyway. It calls for the same unglamorous prudence our grandparents considered ordinary. Keep some cash margin, know your local growers, and put real food in deep storage while it is cheap and available, because the entire arc of this story is that cheap and available is a closing window.
Families looking for a straightforward place to start can visit Heaven’s Harvest and use promo code Patriot for 15 percent off long-term storable food. The forecasts may yet soften, the strait may yet reopen, and we should pray they do. But hope is a fine thing to hold and a foolish thing to eat.
