Posted on 11/25/2025 4:19:21 PM PST by delta7
Governments assume they can print as much currency as they like and it will be accepted by force. However, the history of fiat currencies is always the same: first governments exceed their credit limits, then ignore all the warning signs and finally see the currency collapse.
Today, we are living the decline of developed economies’ fiat currencies in real time. The global reserve system is slowly but decisively diversifying away from a pure fiat currency anchor towards a mixed regime where gold plays the dominant role, not fiat currencies.
IMF COFER data show that, while the US dollar still dominates, its share of reported reserves has drifted down towards the high 50s. Gold has overtaken the US dollar and euro as the main asset in central banks for the first time in 40 years.
There is a reason for this historic change. Developed economies have surpassed all their limits to indebtedness.
Public debt is currency issuance, and the credibility of developed nations as issuers is fading fast. It started when the ECB, the Fed and major global central banks reported large losses. Their asset base was yielding negative returns as inflation and solvency issues became evident. Mainstream economists and governments dismissed these losses as insignificant, yet they demonstrated the extreme risk associated with the asset purchases made in previous years.
Inflation is a form of de facto gradual default on issued obligations, and global central banks are avoiding the debt of developed nations because they see a deterioration in the fiscal and inflationary outlook. Sovereign debt is not a reserve asset anymore.
Global public debt has reached about 102 trillion dollars, a new historical record, well above pre‑pandemic levels and close to the peaks hit during the most aggressive monetary expansion. Sovereign debt has driven this phenomenal rise, with countries like France and the United States running enormous annual deficits in non-crisis periods. Bidenomics in the United States was the clearest evidence of imprudent fiscal policy, running record deficits and increasing spending by more than two trillion US dollars in a period of strong economic recovery.
How did this loss of confidence happen? Monetary sovereign nations do not have an unlimited ability to issue currency and debt. They have clear limits that, when surpassed, generate an immediate loss of global confidence. Developed economies have breached the three limits, especially since 2021:
The economic limit is reached when ever-higher debt leads to a decrease in marginal growth. Government spending has bloated GDP, but productivity has stalled and net real wages are stagnant or declining.
The fiscal limit arises from the crowding out of productive investment by interest expense and entitlement spending. Despite financial repression, low rates, and monetary stimulus, interest expenses are taking up larger portions of developed nations’ budgets, making financing government obligations more expensive, even as the annualised CPI moderates.
The inflationary limit is reached as repeated monetary financing of government spending erodes confidence in the purchasing power of fiat money and cumulative inflation outpaces real wages, creating an affordability crisis.
The recent combination of high nominal debt, rising interest expense, and structural fiscal deficits in major advanced economies proves this crossing of all limits.
Central banks understand fiat money and know that sovereign debt is not the safe asset that provides stability and real economic returns anymore. Thus, they have responded with an unprecedented wave of gold purchases. Net official buying exceeded 1,100 tonnes in 2022 and remained above 1,000 tonnes in both 2023 and 2024, more than double the annual average between 2010 and 2021. By 2024, central banks officially purchased 1,045 tonnes of gold, marking the third consecutive year above the 1,000‑tonne level and extending a 15‑year streak of net additions. However, unofficial purchases are estimated to be significantly larger. Surveys show that around a third of global central banks plan to increase their gold holdings in the coming years, and more than four‑fifths expect global official gold holdings to keep rising due to concerns over persistent inflation, financial stability, and solvency issues.
The record gold demand is a direct answer to the lack of confidence in the sustainability of fiat liabilities issued by over‑indebted sovereigns. Gold has no default risk and no central bank control, making it a suitable investment when central banks themselves doubt the long‑term credibility of large nations’ currencies.
Many reserve managers believe that the way governments are heavily increasing their money supply during crises, along with only slow returns to normal policies, means that inflation and financial control are now permanent parts of the system instead of just temporary fixes. Thus, purchasing gold reserves is an insurance policy against the gradual taxation of savers through negative real yields and inflation.
Such an outcome does not mean an imminent collapse of the US dollar nor a dedollarisation process, but an unquestionable loss of confidence in fiat currencies altogether, from the euro and the pound to the yen and the US dollar. Indeed, the US dollar remains the dominant fiat currency, accounting for 89% of global transactions and holding 57% of global reserves. But it leads a declining empire of fake money.
Investors and central banks are moving to a hybrid reserve order in which fiat currencies coexist with a structurally higher allocation to gold but also a rising use of decentralised cryptocurrencies.
Some central banks are in panic. ....
Not enough Fiat money.
They discontinued the Fiat 500 but I liked (from afar) seeing that model. Nice colors, too.
Still no audit of Fort Knox. Hard to predict how the US will do if gold becomes a crucial component of currency value.
What Gold? we sure don’t have it
Bkmk
Hard to predict how the US will do if gold becomes a crucial component of currency value.
One analyst, Dowd, says we don’t have a piddly 8,100 tons....but more. Most question the 8,000 tons we say we have. Dowd claims we may have Libya, Iraq, and few other nations Gold as much of theirs “ disappeared” when we invaded them.
Could be. If not, our currency is in big trouble.
I will add, Judy Shelton has stated in no less than four interviews, the US plans to launch Gold bonds in July 2026, our 250th anniversary, redeemable in Gold at maturity 30-50 years.
We shall see.
Investors and central banks are moving to a hybrid reserve order in which fiat currencies coexist with a structurally higher allocation to gold but also a rising use of decentralised cryptocurrencies.
Which is the way things have gone ever since going off the Gold Standard.
So now...they're trying to bolster all this worthless debt with some gold backing now? Just imagine how much more stable the world would be without hundreds of $Trillions of fiat cash being been forced on it by the bankers & politicians.
Say goodbye to the Fed and the IRS while you still can. Pretty soon it will be too late because they’ll be gone.
Dollar is not worth a Continental.
“I will add, Judy Shelton has stated in no less than four interviews, the US plans to launch Gold bonds in July 2026”
No, she hasn’t.
“Hard to predict “
Easy for you to predict ... almost always WRONG!
“Yup. When the biggest money in the world,Central Banks, are ditching the Dollar for Gold, one must wonder why? Some of us know why.”
Russia is ditching gold. For what?
“Hard to predict how the US will do “
Major Misses: Timing’s the Killer
Here’s where the rubber hits the road—and your capital:
Euro collapse, circa 2015: Called it dead; instead, EUR/USD rose from ~1.08 to ~1.21 by 2020. Anyone betting USD heavy lost straight up (Tactical Investor).
Gold to $5,000 by 2016: Bold. Delivered zero. Gold peaked at under $2,100 and then drifted. Long gold bet would’ve butchered real returns (Tactical Investor).
China becomes the financial capital by 2015.75: Nope. The U.S. stayed dominant. China cooled off from 2015 onward. Investors loading up on China under‑weighted U.S. tech boom and got smoked (Tactical Investor).
Western sovereign default crisis (2015): The Big Bang never came. ECB backstops stabilised sovereign debt. Cash‑heavy positions missed double digit equity returns across 2015–2020 bull (Tactical Investor).
COVID crash non‑recovery: Armstrong predicted no recovery. Markets bottomed in March 2020 and soared by late 2020. If you sat it out—you missed one of fastest bull runs ever (Tactical Investor).
2022 crisis via war cycle: Predicted full blowout by 2023. Nope—markets ended 2023 up ~24% (S&P). Bear innings would’ve gutted portfolios (Tactical Investor).
https://tacticalinvestor.com/martin-armstrong-blog-sharp-insight-or-cyclical-nonsense/
No, she hasn’t.
https://www.youtube.com/watch?v=Q04BjMEpZtA
https://www.youtube.com/watch?v=kgmEhvuiZmU
....and more. You are not in my league, uninformed.
Not those videos, again.
Let’s see some quotes.
“the US plans to launch Gold bonds in July 2026,”
How is that possible? You predicted the US will not longer exist in 2026 ...
“You are not in my league, “
Correct. I don’t lie and promote a scammer.
“I will add, Judy Shelton has stated in no less than four interviews, the US plans to launch Gold bonds in July 2026, our 250th anniversary, redeemable in Gold at maturity 30-50 years.
We shall see.”
We shall see that, once again, you post rubbish.
Stalkers are to be despised.
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