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Re-Set: Reversing the Debt-Debasement Death-Spiral February 5, 2026
The end-game of debt-debasement is already visible. The only thing that's still up in the air is our response.
The unspoken foundation of the US dollar debasement narrative is TINA: There Is No Alternative to debasing the USD to zero because reversing course by reversing the expansion of debt and the money supply (i.e. monetary inflation) are impossible in a debt-dependent economy. Without a steady expansion of debt and a steady debasement of the dollar so debtors have an easier time paying existing debts, the economy would crash, and so doing more of what leads to collapse is the status quo "solution." The second assumption of the US dollar debasement narrative is that those who own crypto, precious metals and other tangible assets will not just survive the eventual crisis but emerge wealthy, as the value of their assets is not dependent on fiat currencies. This suggests the following thought experiment: since those holding the levers of power "know" the end-game of debasement is the collapse of the currency and the economy, and they "know" the economic devastation that this collapse will deliver not just to the majority but to the wealthy whose wealth ultimately depends on a functioning economy, wouldn't they consider pursuing a still-painful but less apocalyptic option that steers clear of the death-spiral? Let's also consider that history hasn't been kind to governments that let their currency collapse. Those in power who "know" this would be wise to seek a way to escape the debasement death-spiral simply out of self-preservation, as their power would not survive the (entirely avoidable) destruction of the currency and economy. Put another way: is there a way to escape the debasement death-spiral that actually re-sets the economy for legitimate advances in the quality of life after a painful excising of the fatal dependence on ever-soaring debt and debasement to prop up the illusion of "prosperity"? There is a way to reverse the death-spiral, and the key for those in power is to distribute the unavoidable pain evenly enough that no one class reaches the point where they have nothing to lose in seeking to dismantle the entire status quo. For the past 50 years, the status quo has slowly bled the bottom 80% while channeling all the gains to the top 10%. There were sufficient crumbs left by those feasting on capital gains to give the bottom 80% a reason to comply rather than revolt, but the pain of reversing debasement could make revolt more appealing than compliance. Note that this redistribution was the result of policy decisions that benefited those reaping the gains of financialization and globalization. It was a choice, not fate. Those in power must even out the distribution of pain so those who reaped the gains (the top 10%) bear the brunt of the financial damage while funneling enough of life's essentials to the bottom 80% to avoid revolt. Recall that the top 10% own the vast majority of financial assets, with the bottom 50% owning a wafer-thin 2.5% of financial assets, a 28% decline from their 3.5% share in 1990. The share owned by the top 1%, meanwhile, rose by 42% to 35.6%. 
The only way to reverse the debasement death spiral is to end the economy's dependence on ever-rising debt to fund consumption and an ever-expanding money supply to inflate the asset bubbles that fuel both soaring wealth inequality and the outsized spending of the top 10%--spending that generates a lopsided illusion of "growth." The most effective way to defend the dollar and suppress debt expansion is to influence supply and demand by jacking up Treasury yields / interest rates. Global capital will flow into US Treasury bonds to reap the higher rates while demand for new loans declines as rates rise. The federal government's borrowing costs will jump, squeezing spending while debt-based consumption falls off a cliff. This is the recession that's necessary to clear the dependence on debt, inflation and speculative excesses, the recession that's been put off for 45 years by excessive money / debt expansion. At the same time, the Federal Reserve lets the resulting bankruptcies and defaults reduce private-sector debt by refusing to bail out Wall Street and the "too big to fail" banks. Overleveraged banks will fail as the necessary step to re-establish some semblance of market discipline rather than backstop the biggest gamblers (i.e. Moral Hazard). As when the Savings and Loan debacle wiped out (often fraudulent) lenders, the appropriate public agencies will liquidate assets and spread the losses borne by the public over enough time to manage the pain. Note that federal debt (i.e. the national debt) of $38 trillion is about a third of total debt, with 2/3 being private-sector. Recall that private-sector lenders create most of the new currency: when a bank issues a new mortgage, that origination creates new currency. When the mortgage is paid off, that currency goes to Money Heaven--the money supply declines accordingly. Paying down debt or writedowns of debt both reduce the quantity of dollars. 
Concurrently, the Federal Reserve tightens liquidity / ceases creating USD out of thin air, reducing the money supply, which induces a scarcity of dollars globally as investors seeking to lock in the higher yields of Treasuries (see above) are in effect bidding for dollars, as Treasury bonds / bills / notes are denominated in US dollars. The dollar rises due to this shift in supply and demand, and while this punishes exporters, it increases the purchasing power of the dollar for workers and employers alike. Again, any reversal / re-set will generate extreme pain, and the only management strategy with any hope of success is to distribute the pain widely enough, and fairly enough, so that no one class absorbs all the pain. The long-avoided rebalancing of federal obligations and revenues is finally undertaken, reversing the past 50 years of policies that benefited owners of capital (the top 10%) at the expense of wage earners (the bottom 90%). Here's an example of such a policy change: apply the 15.3% social-welfare tax paid by self-employed workers to all unearned income: capital gains, stock option compensation, etc. As with self-employed workers, income tax is on top of this 15.3% social-welfare tax. On the expense side, ending the perverse incentives built into SickCare and the no-limits funding of all the sacred cows (Big Ag, Big Processed Food, Big Pharma, Big Defense, Big Banks, SickCare, Higher Education, etc.) would spread the pain to those elites and sectors that have enjoyed unimpaired federal largesse for decades. As recession cuts consumption and employment, mass defaults will wipe out trillions in debt. You can't get blood from a stone, and the owners of all this debt--auto loans, student loans, credit cards, mortgages, etc.--will eat the writedowns. All the currency created by the debt issuance disappears, and the quantity of dollars in circulation plummets, reversing the debt-debasement-inflation death-spiral. This is a chart of M2 Money Supply, which shows the expansion of the money supply in relation to the GDP generated by the money. (Note that M2 and GDP are imperfect / misleading measures, but everyone uses them anyway.) 
Yes, I get it, every one of these steps is "impossible" because some entrenched concentration of wealth / power would suffer. The point here is the suffering that will be inflicted on the elites and sacred cows by the collapse of the currency will be far greater than the pain they will suffer in a re-set that actually changes the nation's course from a debt-debasement death-spiral to an economy with market discipline and a dynamic balance of social and financial interests. As I explain in my new book Investing In Revolution, the extreme imbalances generated by the current death-spiral policies will get rebalanced one way or the other, and those influencing policy have a stark choice: leave the status quo as-is and guarantee a non-linear (i.e. uncontrolled, chaotic) collapse, or reverse course now while some control of the re-set is still available. The end-game of debt-debasement is already visible. The only thing that's still up in the air is our response. Don't think it won't happen just because it hasn't happened yet. My new book Investing In Revolution is available at a 10% discount ($18 for the paperback, $24 for the hardcover and $8.95 for the ebook edition). Introduction (free) Check out my updated Books and Films. Become a $3/month patron of my work via patreon.com Subscribe to my Substack for free My recent books: Disclosure: As an Amazon Associate I earn from qualifying purchases originated via links to Amazon products on this site. THE REVOLUTION TRILOGY: Investing In Revolution Ultra-Processed Life The Mythology of Progress Systemic Problems/Solutions Investing In Revolution (2025) Introduction (free) The Mythology of Progress (2024) Introduction (free) Global Crisis, National Renewal (2021) Introduction (free) Money and Work Unchained (2017) Introduction (free) A Radically Beneficial World (2015) Introduction (free) What You Can Do Yourself Ultra-Processed Life (2025) Introduction (free) Self-Reliance in the 21st Century (2022) Introduction (free) When You Can't Go On: Burnout, Reckoning and Renewal (2022) Introduction (free) Get a Job, Build a Real Career and Defy a Bewildering Economy (2014) Intro (free) Novels The Adventures of the Consulting Philosopher Intro (free) The Secret Life of an Asian Heroine First chapters (free) Become a $3/month patron of my work via patreon.com. Subscribe to my Substack for free Investing In Revolution print $18, (Kindle $8.95, Hardcover $24 (145 pages, 2025) 
Only now do we see that we've been investing in revolution for decades--not the revolutions we thought we were investing in, revolutions in technology and finance, but in the social revolution made inevitable by the extremes that we've reached in our single-minded pursuit of private gains.
The pendulum that we've pushed to an extreme will swing to the opposite extreme, and the artifices that have propped up a facade a stability for decades will accelerate the disorder rather than reverse it. We now stand at the point of decision, and this book offers a path to a reformation and renewal that serves the shared interests of us all, not just the few. Introduction (free) Ultra-Processed Life print $16, (Kindle $7.95, audiobook, Hardcover $20 (129 pages, 2025) 
Ultra-Processed Life: the substitution of a synthetic, commoditized, very profitable facsimile for what was once authentic.
Ultra-Processed Life is my term for everything that is analogous to ultra-processed snacks: attractively marketed, instantly alluring, easy to consume, addictive by design, tasty in the moment but harmful over time, its origins a black box of unknown processes, the brightly colored product bearing no resemblance to the real-world ingredients, an idealized form of what is inherently imperfect, untethered from the natural world. As with many others, the catalyst for my exploration was a life-threatening medical crisis that did not have a specific cause. This led me to wonder if our entire way of life is like an ultra-processed snack: tasty but not healthy, edible but stripped of the nutrients we need to be healthy, addictive by design. Introduction (free) The Mythology of Progress, Anti-Progress and a Mythology for the 21st Century print $20, (Kindle $9.95, Hardcover $24 (215 pages, 2024) audiobook, Read the Introduction and first chapter for free (PDF) 
What if the policies to accelerate growth are no longer working because our fix for every problem--growth at any cost--is failing? We're told Progress is inevitable as a result of technology, but everyday life is getting harder, not easier--the opposite of Progress, what I call Anti-Progress.
What if the real source of the unraveling is far deeper than economics or politics? What if the problem is what we see as the inevitable destiny of humanity--Progress--is actually a modern mythology, disconnected from the real-world consequences of growth for growth's sake? We indignantly reject that Progress is a mythology, but our need for mythology hasn't gone away because we've mastered technology; we've created a modern mythology of technology that is heedless of its own consequences. To truly progress, we need a new mythology aligned to 21st century realities. Read the Introduction and first chapter for free
Recent entries: Re-Set: Reversing the Debt-Debasement Death-Spiral February 5, 2026 Owning Your Work in a World That Rents Your Life February 3, 2026 Power and Impunity February 2, 2026 The US Economy in a Nutshell: A Few Winners, Everyone Else Loses Ground January 29, 2026 Why the Next Recession Will Be the Catalyst for Depression January 27, 2026 The Fatal Limits of the Technocrat Class January 26, 2026 The Epic Struggle Just Ahead January 23, 2026 Lessons from China's Cultural Revolution January 21, 2026 Narrative Control Made Easy: Us versus Them January 19, 2026 Why Is Everything Such a Hot Mess? January 12, 2026 The Perverse Incentives Dominating Our Lives January 8, 2026
We Can Discern Cycles and Waves, But Not the Outcomes
January 6, 2026
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Extra-Special Bonus Aphorisms:
"There is no security on this earth; there is only opportunity." (Douglas MacArthur) "We are what we repeatedly do." (Aristotle) "Do the thing and you shall have the power." (Ralph Waldo Emerson) "Any intelligent fool can make things bigger, more complex, and more violent. It takes a touch of genius and a lot of courage to move in the opposite direction." (E.F. Schumacher, via Tom R.) "He who will not risk cannot win." (John Paul Jones) "When we drink coffee, ideas march in like the army." (Honore de Balzac) "Progress is not possible without deviation." (Frank Zappa, via Richard Metzger) "Victory favors those who take pains." (amat victoria curam) "The man who has a garden and a library has everything." (Cicero, via Lee Bentley) "A healthy homecooked family meal and a home garden are revolutionary acts." (CHS) "Do you know what amazes me more than anything else? The impotence of force to organize anything." (Napoleon Bonaparte) "The way of the Tao is reversal" Or "Reversal is the movement of Tao." (Lao Tzu) "Chance favours the prepared mind." (Louis Pasteur) "Success consists of going from failure to failure without loss of enthusiasm." (Winston Churchill) "Where there is ruin, there is hope for treasures." (Rumi) "The realm of gratitude is boundless." (CHS, 11/25/15) "History doesn't have a reverse gear." (CHS, 12/22/15) Smith's Law of Conservation of Risk: Every sustained action has more than one consequence. Some consequences will appear positive for a time before revealing their destructive nature. Some consequences will be intended, some will not. Some will be foreseeable, some will not. Some will be controllable, some will not. Those that are unforeseen and uncontrollable will trigger waves of other unforeseen and uncontrollable consequences. (July 8, 2014)(thanks to Lew G. for retitling the idea.) Smith's Neofeudalism Principle #1: If the citizenry cannot replace a kleptocratic authoritarian government and/or limit the power of the financial Aristocracy at the ballot box, the nation is a democracy in name only. The Smith Corollary to Metcalfe's Law (The Network Effect): the value of the network is created not just by the number of connected devices/users but by the value of the information and knowledge shared by users in sub-networks and in the entire network. (CHS, 4/6/16) My Credo of Liberation: I no longer care if the power centers of our society--the distant, fortified castles of our financial feudal system--are changed by my actions, for I am liberated by the act of resistance. I am no longer complicit in perpetuating fraudulent feudalism and the pathology of concentrated power. I no longer covet signifiers of membership in the Upper Caste that serves the plutocracy. I am liberated from self-destructive consumerist-State financialization and the delusion that debt servitude and obedience to sociopathological Elites serve my self-interests. (Thank you, Klaus-Peter L., for reminding me) "We've become a culture of excuses rather than solutions: solutions always require sustained effort and discipline." (CHS 4/9/16) "Fraud as a way of life caters an extravagant banquet of consequences." (CHS 4/14/16) "Creativity = problem solving = value creation." (CHS 6/4/16) "Truth is powerful because it is the core dynamic of solving problems." (CHS 7/21/17) "We live in a system of human emotions that masquerades as a science (economics)." (CHS 1/1/18) "Always remember, your focus determines your reality." (George Lucas) "Diversity is for poor people. Sameness is for the successful." (GFB) "When power dissipates suddenly, it dissipates completely." (CHS 7/14/19) "Disobedience is the true foundation of liberty. The obedient must be slaves." (Henry David Thoreau) "Markets cannot price in the value of non-monetized natural assets such as diverse ecosystems." (CHS 7/14/19) "Magical thinking isn't optimism, it is folly." CHS 1/3/22) "Tune in (to self-reliance), drop out (of hyper-consumerism and debt-serfdom) and turn on (to relocalizing capital and agency)." (CHS 1/5/22) "The path to everything you desire starts here: like yourself as you are right now." (CHS 11/20/22) "There are only two signals: how many essentials you produce and share and if you're consuming less with better results. Everything else is noise." (CHS 12/17/22) "Liberation is no longer needing any confirmation or feedback from others or the world for one's sense of self. Wealth, fame, recognition, admiration, praise, prestige, approval, sainthood, martyrdom, success: none are needed, none are desired." (CHS 12/26/22) "When fame, wealth, prestige, status and glory are out of reach, you're free to pursue other more valuable things." (CHS 2/6/22) "It is the sacred duty of every activist who seeks to better their community to grow and share as much life-giving food as is humanly possible." (CHS 6/15/23) "Being anonymous, gray and unknown is the ideal state of freedom." (CHS 3/15/24) "We seem to have entered a world of anti-leisure and anti-productivity in which the unpaid shadow work demanded to keep all the complicated digital bits in motion obliterate our leisure and productivity." CHS (5/22/24) "It is axiomatic that failing systems work the best just before they fail catastrophically." Ray W. "Looking younger is mere technique; thinking younger demands creativity." CHS (10/16/24) "Tell me what's taboo and I'll tell you the truths that threaten the status quo." CHS (12/15/24) "This is the core of the Attention Economy: the ultimate addiction is the addiction to ourselves." CHS (1/28/25) "If You Seek the Truth, Look for What's Taboo." CHS (7/18/25) "My definition of self-reliance: the less you need, the easier it is to get what you need." CHS (7/26/25) "Mastery requires reading and doing." CHS (7/28/25) "The replacement of authentic value, quality, agency, choice, trust, legitimacy and experience with self-serving facsimiles is the key dynamic of Ultra-Processed Life, my term for the present-day human condition." CHS (8/12/25) "Ultra-Processed Life replaces an authentic experience with a synthetic, simulated, commoditized, highly profitable version that's superficially attractive but destructive over the long term." CHS (8/12/25) "What we see everywhere is the replacement of authentic things--including democracy--with synthetic facsimiles designed to maintain the illusion of choice and value." CHS (8/12/25) "Sometimes certainty is the enemy we don't even see and uncertainty is our most faithful ally." CHS (9/20/25) |
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