The U.S. Monetary Fiat Swirl (1913–2025)
Theme: Each crisis tightens the swirl. Liquidity becomes the solution. But each solution fuels the next problem.
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1913: The Calm Before the Swirl
• Money = Gold. The U.S. dollar is backed by gold; banks can’t print more than they have.
• Federal Reserve is created to act as a lender of last resort.
• Goal: prevent bank panics, not manipulate markets.
System is stable. No swirl yet. Currency is anchored.
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1929: The Great Depression (Swirl Begins)
• Stock market crashes.
• Banks fail en masse. Credit evaporates.
• Fed fails to provide enough liquidity.
• Result: deflation, mass unemployment.
First lesson: lack of liquidity = disaster.
Response:
• 1933: Gold confiscated. Dollar devalued.
• 1934: Gold Reserve Act: gives Fed more power to control money supply.
The swirl begins: the state, not gold, becomes the center of monetary control.
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1944–1971: Bretton Woods + Dollar Hegemony
• Post-WWII: The dollar is still tied to gold, but only foreign nations can redeem.
• U.S. prints more than it can cover in gold (to fund wars + programs).
• 1971: Nixon closes the gold window. No more gold redemption.
The last anchor breaks. Fiat currency is now completely untethered. The swirl deepens.
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1980s–1990s: Easy Credit Era
• Fed under Volcker raises rates to stop 1970s inflation.
• Then comes Greenspan: low rates, market support.
• Savings & Loan crisis, stock market crash (1987) → Fed cuts rates.
• Easy credit fuels dot-com boom.
Swirl gets faster: every downturn → more liquidity. Markets now depend on Fed easing.
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2000–2001: Dot-Com Bubble
• Tech stocks collapse.
• Fed slashes rates aggressively.
• Result: money flows into housing and speculation instead of innovation.
The swirl pulls new sectors in: housing, mortgages, derivatives.
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2008: Global Financial Crisis (Mortgage Collapse)
• Subprime mortgage market collapses.
• Lehman Brothers fails. Global contagion.
• Fed launches QE (Quantitative Easing): prints trillions to save banks.
• Congress passes TARP: billions in bailouts.
Massive liquidity injection. Trust shifts to Fed policy, not bank solvency or fiscal discipline. The swirl is institutionalized.
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2020: COVID-19 Pandemic
• Entire economy shuts down.
• Fed slashes rates to zero.
• Unlimited QE: buys corporate bonds, even junk-rated ones.
• Congress passes multi-trillion dollar stimulus.
• PPP, stimulus checks, unemployment top-ups.
Liquidity becomes a drug. Velocity falls, but the monetary base explodes. The swirl now pulls in the whole government and population.
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2022–2023: Inflation Returns
• After years of QE, supply shocks reveal the hidden inflation.
• Prices rise fast. Fed raises rates aggressively.
• Treasury debt becomes expensive to service.
• Banks start failing again (Silicon Valley Bank, 2023).
The swirl turns inward: debt now threatens the system itself. Fed must choose: save dollar or save banks?
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2024–2025: Tariffs, Debt Ceiling, and Fiscal Gridlock
• President Trump returns. New tariffs on China, Mexico, Europe.
• Global supply chains strain. Inflation pressure returns.
• Congress gridlocked: fights over spending, but keeps raising the debt ceiling.
• Federal Reserve trapped: Can’t cut rates without fueling inflation. Can’t raise rates without crashing the system.
The center of the swirl now holds: banks, Fed, Congress, Treasury — all locked in a vortex. The cost of servicing debt grows faster than GDP.
