Since ancient times, philosophers have used the image of the circle to illustrate the great question of life: only by seeing the circle fully can you understand its arcs — and vice versa. The same is true for the global economy, which now appears to be collapsing systemically, through specific phases and crisis points called “arcs” and “rifts.”
Arc 1: Public Debt – The initial core of the collapse
The root cause of this crisis is global debt, which has skyrocketed to historic and unprecedented heights. When a country’s debt exceeds 100% of its GDP, growth slows significantly, and as debt increases, economic growth turns into a utopia. The global economy as a whole is on a dangerous path, with total debt exceeding $300 trillion – three times global GDP.
Arc 2: The Politicians and Political Decisions
The root of the problem lies in the 1971 decision by the US to de-peg the dollar from gold, a move that allowed politicians to increase debt without any real restrictions. The preference for short-term profits, votes and power has led to a continuous increase in spending, sacrificing long-term stability and prosperity.
Arc 3: The Devaluation of Currencies
The release of the currency from the gold anchor led to uncontrolled money printing and credit expansion, causing a gradual devaluation of the currency. This means that, while governments are trying to cover their debt obligations, the real value of money is constantly decreasing, which is reflected in the decline in the purchasing power of the dollar.
Arc 4: The Fraud of Politics
From the time of Nixon, who promised a temporary release from gold, to today’s “modern monetary theories”, political deception is a key tool to maintain the illusion of prosperity. “Expert” economists often promote theories that promise solutions without consequences, although history shows the opposite.
Arc 5: Despair and Illusions
As the reality of the crisis becomes impossible to ignore, politicians turn to extreme measures and “magic” solutions such as tariffs, cryptocurrencies or artificial intelligence. All of these, however, according to historical and mathematical data, cannot reverse the downward trend, but simply prolong the inevitable collapse.
The Seven Faults of the Global Economy
The collapse of the global economy is not theoretical, but already visible through seven critical fault points:
Rift 1: The loss of confidence in the dollar. The world is moving away from the dollar, with many countries now trading outside the dollar, which undermines its position as the global reserve currency.
Rift 2: The stock market bubble. The US stock market is too concentrated in a few large companies, with prices directly dependent on the interventions of the Federal Reserve, creating a vulnerable and fragile market.
Rift 3: The lack of confidence in US bonds. Central banks are selling more and more US bonds and accumulating gold, indicating a feeling of insecurity about US public debt.
Rift 4: Precious metals panic. Demand for physical gold and silver is rising as investors lose confidence in futures contracts that were used to manipulate prices.
Rift 5: Central Banks’ gold holdings are increasing. The threefold increase in gold holdings shows that central banks are now investing in real money, moving away from the bankrupt dollar.
Rift 6: Loss of dependence on the petrodollar. Oil is increasingly being sold in other currencies, undermining global demand for the dollar that was supported by the oil market.
Rift 7: Social and political discord. Increasing social polarization, declining trust in governments, and rising tensions are creating an explosive social backdrop historically associated with systemic collapses.
The Deadlock and the Implications
Like any self-destructive system, the global economy refuses to admit its failure. Debt has reached levels that cannot be repaid or reduced by simple policy changes.
“Necessary disasters,” such as recessions, market reversals, and currency collapses, are the next stage that will lead to acceptance and reorganization.
While various proposals for “resets” and new monetary systems are on the table, the transition will be painful and unstable.
Traditional paper money will continue to lose value, while gold, the neglected “real money,” will rise to historic highs, demonstrating the loss of confidence in modern monetary systems.
Gold rally hits new all-time high
Gold prices hit a new all-time high as investors turned to the precious metal after the US interest rate cut last week and the Fed signaled further easing. Also in focus are a series of speeches by Fed officials and critical US inflation data later in the week.
Spot gold rose 0.7% to $3,709.29 an ounce, after hitting a record high of $3,711.55.
The U.S. core personal consumption expenditures (PCE) price index, the Fed’s preferred inflation measure, is due on Friday, and at least a dozen Fed officials, including Chairman Jerome Powell on Tuesday, are set to speak, likely offering further clues about the bank’s intentions.
The Fed cut interest rates by 25 basis points on Wednesday, but warned of persistent inflation. Investors widely expect two more cuts this year — from 25 basis points in October and December — with probabilities of 93% and 81%, respectively, according to CME’s FedWatch tool.
Gold, which typically performs well in low-interest-rate environments, has gained nearly 42% this year, helped by broader geopolitical and economic uncertainty, central bank markets and monetary easing.
