The Federal Reserve’s balance sheet went below the $4 trillion mark in 2019.  In September 2019, the “repo” market started blowing up and the Fed intervened.  The Fed’s balance sheet went a little above the $4 trillion mark again.

With the coronavirus and the reactions to the coronavirus – particularly most state and local governments shutting down businesses – the federal government and the Fed have intervened in a major way.  The government has spent trillions of dollars, and it is being financed by the Fed.

The Fed’s balance sheet is now above $7 trillion.  It went up nearly $3 trillion in the matter of less than three months.

Government spending is going parabolic.  Government debt is going parabolic.  The base money supply is going parabolic.

When things can’t go on, they have a tendency to stop.  That is not an original quote by me.

I can’t emphasize enough that this whole thing is going to blow up.  I just don’t know when and in what form.

We think that just because they have gotten away with it in the past, that they will get away with it in the future.  I’m not saying that there were will be major personal consequences to those who have gotten us into this mess.  But I am saying that the current system in its current state cannot go on.

This could end up in a deflationary depression.  It could end up with stagflation where there is massive inflation and shrinking productivity.  It could end up with one and then the other.  It could end up with major defaults.  Actually, I know that it will end with massive defaults.  It is just a question of how those defaults come about.  There will be many broken promises that were previously made by politicians.

I have long been a fan of Atlas Shrugged. However, I was never big on actually adopting a strategy of dropping out of society.  I think liberty is more likely to succeed with commerce going on, even if that commerce has to take place in only a semi-free market.

With that said, I am taking a position that it is likely better to just get the collapse over with. I am talking about the federal government more that state and local government, although the latter two also deserve a major downsizing.

I don’t want to see a collapse of society.  I don’t want to see a collapse of the division of labor.  I want to see a collapse of the federal government as a major presence in our lives.

As long as I have been a libertarian, I have advocated education as being the key.  I don’t mean the school system.  I mean educating others on the benefits of liberty.

I am still advocating liberty education, but it isn’t to directly change the current policies. The current system is on autopilot, and it is heading over a cliff.  It wouldn’t even matter now if you try to slam on the brakes.  It’s still going over a cliff.

The reason that liberty education is so important is because we want to be able to pick up the pieces when everything falls apart, and we want to make sure that we turn towards liberty instead of turning to a new (but not much different) system of statism.

I don’t cheer what is coming in terms of major pain for the large majority of Americans.  I just recognize the reality of what is coming.  It is going to be a difficult time.  This is just the beginning.

We just need to do our best to point out the problems to people now so that they will be more likely to listen to us when things really fall apart.  When the government defaults on its promises – whether through inflation or outright default – then libertarians may find that they have a receptive audience that wasn’t there before.