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.

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