Gold vs. The US Bubble Economy

Authored by GoldFix ZH Edit

Having fully committed to growth over inflation as a result of a world rebelling against our economic model, and a need to be more protectionist and mercantilistic in our own behavior, we have turned to manufacturing for self sustenance. This is about the next risk, assuming we even get the manufacturing done. Where the puck will be next if you will.

The New Reality

The world is waking up to a new reality. The United States can no longer rely on rolling over its debt indefinitely. To maintain its position, it must grow its way out of the risks now confronting its global dominance. Inflation targets are essentially abandoned, though policymakers will never admit it directly. The priority is growth. America must manufacture, produce, and sell in order to generate the income needed to stabilize its finances.

The End of Pax Americana

This shift is visible in global politics. Since 2021 and 2022, the rise of mercantilism and protectionism has been unmistakable. The seizure of Russian assets, the withdrawal from Afghanistan, and the reduced commitment to allies all signal the same trend. Israel, Europe, and Japan are being told to defend themselves. American spending abroad is shrinking so that resources can be redirected inward. This is the end of Pax Americana.

A War of Perception

At home, the United States must grow in order to compete with a rising China. Headlines make the story clear: India discouraging its citizens from buying American, U.S. gold and silver ETF demand reaching five-year highs, Warren Buffett withdrawing investments from China, and a $600 billion American commitment to AI development against China’s claims of achieving the same for a fraction of the cost. What is unfolding is a war of perception. America has defined what economic success means for decades. Now, it is being challenged by a country that actually manufactures.

Gold and the 1979 Analog
0:00- Topics
2:32- Mkt Recap
8:43 -1979 Analog
10:34- US Bubble Engineering pic.twitter.com/Wo2wPLaofo

— VBL’s Ghost (@Sorenthek) September 23, 2025

Inflation and the Limits of Policy

This leaves policymakers with limited choices. A recession cannot be allowed. In a downturn, job losses would be permanent as AI and automation take hold. Pensions would falter under demographic strain. The danger of stagflation looms large. If inflation is unavoidable, then it must at least be productive. That means tolerating 4 to 5 percent inflation while rebuilding manufacturing capacity, hoping growth outpaces risk.

The Future Challenge: Demand

But here lies the problem. Building factories alone will not restore America’s strength. “If you build it, they will come” no longer applies. Other nations may refuse to buy American goods, even at competitive prices, because of distrust in U.S. policy and behavior. Unless the country produces a revolutionary product—something on the scale of the first iPhone—capacity will outstrip demand. And when that happens, America will be forced to sell primarily to itself, inviting stagflation.

Bottom line

The United States faces a stark choice. It must engineer productive growth, tolerate higher inflation, and rebuild capacity, all while convincing the world to continue buying into its economic model. The alternative is overcapacity, isolation, and stagflation. This is the risk ahead.

Continues  here