July 17, 2024

Max Keiser, a notable financial commentator and Bitcoin pioneer, brilliantly explained the unsustainability of Ponzi schemes. The scheme can only continue as long as there is a steady flow of new investment. This concept is often applied to the Federal Reserve, as critics point to the ever-increasing debt and government spending, which they believe reflects a massive Ponzi scheme.

The major part of the problem stems from government spending which shows no signs of decelerating or reducing anytime soon. This is because the majority of government expenditures are tied up in so-called entitlements, which are unlikely to be cut given their popularity. These entitlements are expected to increase even more as the Baby Boomer generation enters retirement.

Meanwhile, defense spending is also likely to rise given the uncertain geopolitical climate we find ourselves in. And any attempt to reduce spending will be futile without making politically unpopular cuts to entitlements, defense and welfare.

The issue of interest expense only makes matters worse. It recently crossed $1 trillion for the first time and is expected to surpass defense spending and potentially Social Security soon.

Another serious problem is the rising interest costs on the federal debt, which necessitates even more borrowing and results in a debt spiral.

Income from taxes won’t be sufficient to offset the rising expenditures. Consequently, the debt will keep growing exponentially, with the only possible solution being the production of larger amounts of “fake money” by the Fed.

The Fed’s inability to keep interest rates low will lead to soaring costs which could the bankrupt the US government and bring down the entire economy.

Free-market Austrian economics founder Ludwig von Mises summed up this dire situation accurately. He contended that the only two options available are an early collapse due to a voluntary stop to credit expansion, or a later, more catastrophic one.

Given the increasing dependency on debt to fund rising costs, it appears as if the only option left is massive currency debasement, which would spell disaster for the financial system.

This troubling prediction invites us to prepare wisely for the upcoming financial crisis.

Failing to do so could result in devastating losses to regular people and savers, benefitting only politicians, central bankers and their associates. Don’t be a statistic in the long line of people throughout history who fell victim to financial collapse due to a lack of foresight.

Get informed on how best to prepare for this impending crisis by clicking here to download a PDF of “The Most Dangerous Economic Crisis in 100 Years… the Top 3 Strategies You Need Right Now.”

Frequently Asked Questions

What is a Ponzi Scheme?

A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors. This type of scheme leads to a collapse when the flow of new money deserts.

Why is the Federal Reserve likened to a Ponzi scheme?

Critics liken the Federal Reserve to a Ponzi scheme due to the continuous, unsustainable increase in debt and government spending. They argue that this pattern mirrors the nature of a Ponzi scheme.

What could be the consequences of this supposed Ponzi scheme?

Potential consequences include the bankruptcy of the US government, enormous wealth transfer from regular individuals to the political elite, and a possible total collapse of the current financial system.