Currently the US is facing two distinct crises, both of which are feeding on the other via a single feedback loop
BY GREGORY MANNARINO, Traderschoice.net
TWO CRISES, ONE FEEDBACK LOOP. EXPECT WAR.
Currently the US is facing two distinct crises, both of which are feeding on the other via a single feedback loop… but that is actually the least of our problems.
Let’s break this down.
1) Currency crisis (the Dollar Death Cycle).
A currency doesn’t “die” in a headline. It dies in a process.
Here is the pattern, it’s always the same.
Debt expansion, currency creation rises, purchasing power falls.
They can keep the system “functioning,” ONLY BY EXPANDING DEBT. Therefore, this single mechanism destroys the currency purchasing power over time. Eventually this mechanism hollows-out the economy… (and this is exactly where we are right now).
2) Liquidity crisis (the system needs constant “oxygen” via ANY MEANS).
BOTTOM LINE. This system is built on continuous debt rollover + collateral + funding. When this mechanism is interrupted in any way you get stress events… you see repo spikes, (this is happening now), widening credit spreads, (also happening now), and an eventual credit freeze (a complete locking up of the system).
KEY POINT. System stress is rising faster, and we can see this IN REAL TIME.
And now with that, quietly, the Fed is “preloading” reserves. (HIDDEN IN PLAIN SIGHT).
This is what’s happening right now.
The Fed has begun a new “liquidity” scheme, being called Reserve Management Purchases (RMPs). This has just started with $40B in Treasury-bill purchases in the first monthly period, this began on Dec 12.
The Fed states: they expect the pace to remain elevated for a few months. I expect this to become long term AND grow larger in scope with regard to asset purchases.
KEY POINT. I also expect that the Fed’s balance sheet will SKYROCKET as we move deeper into 2026.
Creature Powell is framing this as “supporting rate control.” Moreover, NY Fed President John Williams is calling this “a technical measure to maintain rate control and support liquidity.”
Translation… They are adding debt/credit/artificial liquidity flow, to keep the system from locking up. Without this “flow” the result is “credit/debt” stops flowing thru The System.” Result? A CREDIT FREEZE EVENT.
KEY POINT. When liquidity tightens, they inject liquidity to stabilize markets. Henceforth why the Fed is now engaging in Reserve Management Purchases (RMPs) as outlined above.
The fallout here with these RMP’s is it reinforces currency debasement dynamics. This debasement of the currency then pushes people toward hard assets and financial assets… which concentrates wealth at the top because assets reprice faster than wages.
ENTER THE FEEDBACK LOOP.
Liquidity shortage precipitates intervention, which precipitates more debt/monetization pressure, which precipitates a weaker currency, leading to higher living costs, AND then more intervention.
KEY POINT. When you see the Fed quietly managing reserves with “bill buying,’ you’re seeing the system admit… that without pumping the system with more debt in increasing amounts, the debt market itself will MELT DOWN.
MAJOR KEY POINT. Another mechanism/other mechanism(s) MUST work in concert along with fake liquidity schemes/debt pumping by the Fed.
Expect escalating geopolitical events… ESPECIALLY MILITARY ONES…
Why?
Because no other human endeavor generates more debt than war. Expect acts of war (like blockades or militarizing entire regions), or the buildup to war.
Expect that we will see more military actions/interventions disguised and masked over, sold to the American people as whatever polls best at the time.
PHYSICAL GOLD AND SILVER ARE WHERE WE NEED TO BE NOW MORE THAN EVER. (ACCELERATING SYSTEMIC STRAIN).
by Gregory Mannarino, TradersChoice.net
Metals signal for us just got EVEN louder.
Gold is back in the high-$4,200s and still flirting with $4,300+ (spot around ~$4,286, futures at $4,317 as of Dec 12).
Silver is now in the $63–$64 zone, sitting at fresh records after blasting through $62+.
Central banks are still the “structural bid” in gold, THEY are buying into strength… and IMO so should we.
Silver. London’s OTC market squeeze got so hard that metal had to be redirected in size (including shipments pulled from the US and China) to calm borrowing rates/premiums.
KEY POINT. The squeeze was fueled by a persistent, multi-year structural supply deficit and booming demand for PHYSICAL silver.
MAJOR KEY POINT. Lions… by their own number’s inflation is still rising. On the ground level, and according again to their own numbers, 34% of US small businesses raised selling prices in November… this is THE largest monthly jump in survey history. That’s “Main Street” pricing power (aka inflation pressure) re-accelerating- INFLATION IS NOT SLOWING DOWN, NOR IS INFLATION “A HOAX” ACCORDING TO PRESIDENT TRUMP.
The Cleveland Fed nowcast is pointing towards even higher inflation prints ahead, Cleveland Federal Reserve.
And just in case you were wondering, the Nov CPI release (Dec 18, 8:30am ET) won’t even include changes where October data is just “missing/vanished.” (Go ahead, make it up).
Labor cracks, (as we called it from many months ago are already here, and more coming).
ANOTHER KEY POINT. Job cut announcements have skyrocketed… and what the mainstream media will not tell you is this… “AI” is explicitly being cited.
KEY POINT. You should be aware that President Trump has now thrown his support behind a new Fed Chair candidate, after JP Morgan CEO Jamie Dimon who is now calling for Kevin Warsh for Fed Chair. Warsh is a major advocate for “AI Productivity Growth.”
Weekly jobless claims just logged the largest jump in 4.5 years (since the scam-demic)… week ending Dec 6.
What does this mean? The US economy is being hollowed-out AT THE MAIN STREET LEVEL exactly as we said would happen… hint? Its not even close to being over.
BOTTOM LINE.
(The Breakdown).
Here’s the accelerant stack driving the US systemic economic “freefall” faster.
Debt expansion is now self-feeding and worsening. Expect more borrowing (and easier money) just to keep the machine running.
Artificially suppressed rates = mispriced risk. Expect further malinvestment, more financialization of the system, and productivity to crater faster.
Inflation pressure embedded at the Main Street level will accelerate. US small businesses just printed a historic jump in price increases, Lions… that’s the “real economy” signaling it can’t eat costs anymore.
Labor market cracks are widening. An extreme move up in initial jobless claims is exactly the kind of economic stress that precedes a broader systemic meltdown slowdown.
Household stress. Debt delinquencies across the board are skyrocketing. This too will worsen moving forward.
Expect the current US small business WIPEOUT to worsen, faster from here, with closures/layoffs propagating outward.
Expect the US manufacturing/industry sector as a whole to continue to collapse faster as well. The less consumers are able to consume, the less manufacturers/factories/industry will produce. And mass closures and layoffs will follow at the industrial level.
