When the 118th Congress commences in January, we will be facing several important issues simultaneously. The United States will be dangerously close to reaching its debt ceiling, and Congress will need to pass legislation raising it. Presumptive House Speaker Kevin McCarthy has said he intends to use the debt limit as a weapon to force cuts to Social Security and Medicare, which Democrats fiercely oppose. Many expect this to play out in typical DC fashion — with a series of threats and attendant compromises.
We see a more menacing scenario forming: the actual possibility of debt default. Given the long-standing conflict over monetary policy, there is a non-zero chance McCarthy will do what he only threatened to do in 2011: actually shoot the hostage. In that last episode, he brought the US close enough to default that the US actually lost its AAA credit rating, costing billions in borrowing fees. A member of the Tea Party Caucus, which was closely aligned with the Ron Paul “End the Fed” movement, McCarthy may finally be ready to have the showdown long-anticipated by goldbugs and their sympathizers. And more extreme members of the right are calling now for “total war”, giving him cover.
The theory goes (as it always does) that too much monetary stimulus leads to inflation, and that efforts by central bankers to rein it in will lead to collapse of the financial markets, which will in turn lead to more stimulus and more inflation — creating a vicious cycle which will ultimately lead to hyperinflation along the lines of what was observed in Weimar Germany in the 1920’s. The only way out of this cycle, according to the monetary moralists, is through a final reckoning, when fiat currency and central banks will be banished forever and replaced with good and upstanding hard currency, backed by gold or other assets.
It is a kind of financial eschatology — a final end-times battle between good and evil — and the last time we immanentized this conflict and its associated anti-Semitic mythology, we ended up with World War II. We seem poised now to repeat this conflict in what is shaping up to be a long and slow-burning World War III.
Far from the unwinnable, avoid-at-all-costs nuclear holocaust envisioned by popular culture, this new war is shaping up to be a grinding metaphysical conflict backed by the constant threat of nuclear force. Witness the bizarre war-on-reality rampages of Kanye West and Elon Musk in recent months. There is a purpose to their actions: to shift (or break permanently) our Overton windows and frame of reference and to usher in their own new frame. The constant drumbeat of anti-Semitism helps drive the anti-bank narratives underlying an incipient fiat vs. gold showdown.
The presumptive incoming House majority whip, Rep. Tom Emmer (R, Minn. 6th), is a major cryptocurrency advocate, and advocates the same “hard currency” policy favored by McCarthy and his “End the Fed” friends, suggesting this will likely be an ongoing focus for the House. Given that Musk is taking Twitter to increasingly dark places daily, it seems likely that McCarthy, Emmer, Musk, and other members of the chorus will be pulling in the same direction in January. The domestic right information environment is likely to become heavily anti-Semitic, anti-bank, pro-crypto, and anti-Ukraine.
The economist Zoltan Pozsar proposed another alarming “black swan” possibility: that Russia may begin requiring the use of gold for settling oil transactions. Such a move would increase the inherent value of gold dramatically, perhaps doubling the price to $3,600 per ounce. This would, of course, increase the value of Russia’s (and other nations’) existing gold reserves and roil the global financial system which has been predicated in recent decades on the idea that gold would never again return as a settlement mechanism. Combined with a deep flirtation with debt default and higher interest rates, this could spark not just a recession but a global epistemological crisis around the nature of money itself.
Putin’s invasion of Ukraine will also be grinding towards a denouement next year as Russia’s supplies dwindle and morale further erodes. Putin is now heavily reliant on proxies such as Musk and Jeffrey Sachs to drive propaganda that might erode Western support for Ukraine, as this is probably the only way his war effort can prevail, or at least salvage material gains.
And of course, Congress will also likely mount investigations of Hunter Biden, of so-called “big tech,” of the President, and anything else that might strike their fancy. With all that as toxic background and the convergence of the final battle over money with Putin’s desperate war, the stage is set for an especially ugly year — even as elections keep demonstrating that the populace doesn’t want what this network has to offer.
With the likely collapse of the Ukraine gambit and a possible war crimes prosecution looming at the Hague, paired with a downward spiral at Twitter and mounting setbacks for Tesla, it is difficult to imagine how Putin and Musk (and their allies) would recover. Certainly after such self-immolation neither man’s place on the world stage would be the same.
Indeed, for them and the Republicans the only way out is through. The central question for 2023 is how much collateral damage they will cause in trying to drag their shared, mortally-wounded cause to victory. Failing some lucky turns and the kind of un-orchestrated external grand scale event that forces a reset, we are likely facing another political interval of uncertainty, chaos, and violence.
Dave Troy is an investigative journalist focused on exposing threats to democracy. Based in Baltimore, his background as a technologist with an interest in studying online extremism affords him a unique perspective. His work has appeared at MoMA in New York, and he is a fellow with New America Foundation’s Future Frontlines. Dave writes regularly about information warfare, history, and politics. He is the host of the podcast Dave Troy Presents, and speaks regularly at conferences on disinformation, extremism, and information warfare. Contact information is available at davetroy.com.