“Adde parvum parvo magnus acervus erit.”
–Ovid
Four Dominant Themes for 2026
Do you like the world around you? Are you eager to take another trip around the sun?
Like it or not. Eager or not. The New Year is here…
We intend to make the best of it. We suppose you do too.
Where to begin?
Silver delivered some excitement to close out the year. After skyrocketing past $80 per ounce, the grey metal (Ag) has been on a volatile ride between liquidity squeezes and midnight margin calls.
Behind the scenes, naked shorting – the fraudulent move where big banks sell silver they haven’t even borrowed – pushed the financial system to the breaking point. When prices spiked, these paper bets got torched. To maintain solvency, it is suspected the banks took to the overnight repo market for instant cash to cover their short positions.
This may have provided a temporary solution. But the Federal Reserve, via the overnight repo market, cannot print silver. It can merely extend credit. We believe the market disorder that hit the day after Christmas will return in the New Year. And it’s only a matter of time before one of the big banks will be caught swimming with its pants down.
As we enter 2026, it’s quite evident that the global landscape stands at a precarious crossroads. From our vantage point in Southern Appalachia, we see the convergence of a bursting technological bubble, a seismic shift in geopolitical aggression, and a radical transformation of the very nature of money and securities.
Through ongoing discussions with our friend Dick, we’ve distilled this down to roughly four themes we expect will dominate in 2026. These four themes are presented herein. And, as a special bonus for reading to the end, we’ve included a practical recommendation for off-grid survival.
So put on your favorite work boots – the older the better – and grab a shovel. It’s time to dig into the New Year’s edition of the Economic Prism.
First off…
Why the $5 Trillion AI Bubble is Set to Burst
There will be a broad realization in 2026 that the rapid buildout of AI has been a giant waste of money. That the trillions of dollars in capital piled into data centers and chips has been set on fire. This realization will appear in the form of a mega, AI driven stock market crash and associated debt crisis and economic contraction.
We’re not predicting the end of AI. We’re merely suggesting that AI is something much different than what’s been advertised.
Without question, AI can and will support many useful applications. When integrated into processes and systems where outcomes are dependent on data and logically defined protocols, AI has demonstrated abilities to quickly complete tasks.
However, returns from the development of AI enabled tools are nowhere near what’s needed to justify the capital being expended. A recent study from MIT, for example, found that 95 percent of enterprise AI pilots fail to deliver a measurable return on investment.
AI tools and applications may ultimately become ubiquitous. But unless something dramatically changes with the technology, above and beyond addressing degradation and hallucinations, AI will never be a form of actual intelligence or a replacement for the human ability to ask questions, innovate, and invent. Robert Gore, at Straight Line Logic, explains:
“At root, the problem is that although AI can answer a seemingly infinite number of questions, it can’t ask a single one. It can be programmed to spot and attempt to resolve conflicts within data, but it doesn’t autonomously ask questions. From birth, the human mind is an autonomous question generator; it’s how we learn. […]. Curiosity and questions are the foundation of learning and intelligence. Reading even a page of something interesting or provocative will generate questions. Generative AI ‘reads’ trillions of pages without an iota of curiosity. No one who either hails or warns of AI surpassing human intelligence (HI) has explained how it will do so while bypassing the foundation of HI.”
This critical defect is why AI will not live up to the expectations placed upon it. Moreover, when the realization hits that AI isn’t the immediate productivity miracle promised, the $5 trillion valuations we’re seeing will evaporate. Since AI-related stocks drove nearly 80 percent of market gains in 2025, a tech correction will trigger a broad market crash. As capital dries up, companies will cut spending and jobs, leading to a sharp recession or depression.
The central planners in government generally respond to economic depressions in three ways. Through printing massive amounts of money, starting or escalating wars, or fabricating a pandemic. The money printing serves to bail out the big banks while a burgeoning war or faux pandemic, with the right propaganda, distracts the population from the problems at home, while also justifying massive money printing. This leads us to our next theme for 2026…
Blockading Beijing
For years, the focus was on the Forever Wars of the Middle East. Then it was the ongoing proxy war with Russia via Ukraine. But as we head into 2026, the Trump administration has executed a massive strategic pivot. The new front line? Venezuela.
White House advisor Stephen Miller recently set the tone for this new focus with intense rhetoric on the history of Venezuelan energy. He stated:
“American sweat, ingenuity and toil created the oil industry in Venezuela. Its tyrannical expropriation was the largest recorded theft of American wealth and property. These pillaged assets were then used to fund terrorism and flood our streets with killers, mercenaries and drugs.”
By highlighting the nationalization of oil as a direct theft from the American people, the White House makes a moral and legal case for more aggressive intervention and gunboat diplomacy. Under Operation Southern Spear, the U.S. has moved a massive naval force into the Caribbean, including the USS Gerald R. Ford carrier strike group.
Over the last few months, the U.S. has conducted dozens of maritime strikes against what it says are narco-terrorist vessels. In reality, this strategic focus on Venezuela has little to do with drugs and has everything to do with Venezuelan oil exports to China.
President Trump has effectively declared a maritime blockade, with the Navy now authorized to seize sanctioned tankers. This is because despite heavy sanctions, China remains the primary buyer of Venezuelan crude, importing roughly 570,000 barrels per day.
By blockading these waters, the U.S. isn’t just targeting the Maduro government of Venezuela. It’s cutting off a critical energy artery for Beijing. The administration’s Trump Corollary to the Monroe Doctrine essentially warns that the Western Hemisphere is closed to Chinese strategic investment.
The New Cold War is about more than semiconductors and TikTok. The waters off the coast of Venezuela are now the location of the global power struggle between Washington and Beijing.
China isn’t just a casual observer in Caracas. It is the country’s greatest financier. Over the last two decades, Beijing has poured over $60 billion into Venezuela, much of it structured as ‘oil-for-loan’ deals.
When Stephen Miller talks about the “tyrannical expropriation” of American assets, he’s also pointing to who moved in after the U.S. left (i.e., China). By keeping the Maduro government afloat with infrastructure projects and debt extensions, China secured a strategic foothold in the Western Hemisphere – in what the U.S. traditionally considers its backyard.
Operation Southern Spear is a direct shot at China’s energy security. The U.S. is now physically seizing tankers like the Centuries, which was intercepted in late December carrying nearly 2 million barrels of oil bound for China. By stopping these shipments, President Trump is forcing Beijing to choose between backing Venezuela and risking a direct naval confrontation or losing billions in invested capital and an important source of oil.
As this escalates in 2026, it will provide cover for the U.S. government to, once again, radically change the form and feel of money, which is our next theme for 2026.
The New Backbone of U.S. Debt
Several weeks ago, we talked about how the GENIUS Act, which was signed into law by President Trump on July 18, 2025, requires stablecoins to be backed one-for-one by U.S. dollars or other low-risk assets, primarily short-term U.S. Treasuries. We noted that this policy commences the next shift in American money.
If you haven’t been keeping up with this development, join the club. The idea of stablecoins becoming a de facto digital dollar, and creating massive new demand for U.S. Treasuries, sounds enigmatic. Perhaps this is why hardly anyone is talking about it.
Quite frankly, we don’t like the idea and would rather ignore it. But, alas, this is happening whether we like it or not. And it will be a major theme in 2026.
Stablecoins, as we understand them, are issued by private entities not by central banks. They are not a Central Bank Digital Currency (CBDC). Their issuance is driven by market demand, not monetary policy.
When stablecoin issuers back their tokens with Treasury securities, they own the Treasury asset. Any interest payments from those Treasuries go to the issuer because the issuer holds the asset. In fact, the GENIUS Act prohibits stablecoin issuers from paying interest or yield directly to stablecoin holders as part of the stablecoin product. The GENIUS Act also requires a stablecoin issuer to publicly disclose reserves each month certified by executives. Larger issuers face additional auditing requirements.
To add confusion, there are stablecoins that operate outside of the jurisdiction of the U.S. and are not compliant with the GENIUS Act. Tether, for example, issues a popular stablecoin called USDT and maintains a stable value pegged 1:1 to the U.S. dollar. Tether, at the same time, has essentially told Uncle Sam and its GENIUS Act to pound sand.
Rather than backing its tokens exclusively with U.S. Treasuries, as required by the Genius Act, Tether keeps a chunk of its reserves in bitcoin and precious metals. In Q3 2025, Tether was the biggest buyer of gold, buying more gold than any central bank. Also, rather than providing audits, per the GENIUS Act, Tether prefers quarterly attestations. And, because it’s headquartered in El Salvador, it doesn’t meet the US-based requirement.
Does that mean that USDT is better or worse than the USDC stablecoin issued by Circle, which is based in the U.S. and fully compliant with the GENIUS Act?
Perhaps Tether’s existence as an offshore international digital dollar that operates outside of the U.S. government’s control, and with some of its reserves in gold, is an advantage. This, too, could be its demise.
Remember, the Trump administration’s objective with the GENIUS Act is to create a new source of Treasury demand funded by private issuers so that America’s massive debt can be financed and an explicit default can be avoided. This is a power preserving adaptation. Tether is out of line with this objective.
We believe the next shock event – economic recession, war escalation, or another pandemic – will serve as a midwife to stablecoin implementation. People rarely change their financial habits when things are going well. It takes a shock to compel them from an old system into a new one.
Stablecoins, for instance, could be the perfect vehicle for sending and receiving government stimulus checks. They could also provide refuge during a banking crisis, where people can hold their cash outside the traditional fractional-reserve banking system.
This will also come with countless hazards. Systemic risks of a run on stablecoin reserves and how this spills over into the Treasury market are still unknown.
In short, as with all financial assets, and especially the new, untested variety, if stablecoin adoption accelerates, diversification across various stablecoins, such as USDT and USDC, is advised.
Lastly, stablecoins factor into another one of our themes for 2026…
The Tokenization Era
Asset tokenization has been in the works for many years. If you recall, during the covid pandemic mania of 2020-21, NFTs (Non-Fungible Tokens) of art or collectibles became all the rage. The use of blockchain technology to record ownership allowed NFTs to be bought, sold, and traded.
This technological application caught the attention of the big financial directors. Not for art and collectibles, but for major financial assets. Larry Fink, the chairman and CEO of BlackRock, said in January 2024:
“We believe the next step going forward will be the tokenization of financial assets, and that means every stock, every bond … will be on one general ledger.”
Asset tokenization, in short, is the process of turning a real-world building, a stock, a bond, or a gold bar into a digital chip. And stablecoins are the money used to play the game.
Before the GENIUS Act, big banks were hesitant to touch tokenization because they didn’t have a legal version of digital cash to use for settlement. The GENIUS Act created Payment Stablecoins (like the compliant version of USDC). Now, a bank like JPMorgan can tokenize a US Treasury bond and feel safe accepting a compliant stablecoin as payment, knowing the coin meets federal reserve and audit standards.
What’s more, a tokenized bond using stablecoins can be issued without a single human accountant being involved. Imagine a corporation wants to borrow money. Instead of a traditional bank loan, they issue a Tokenized Bond on the blockchain.
First, the corporation sets up a Smart Contract for the bond. The contract could say: “I am borrowing 1,000,000 USDC. I will pay 5 percent interest annually. Payments happen every 30 days.”
In the traditional banking world, a bank would have to manually calculate interest for thousands of bondholders and mail checks or process wires. In the tokenized world, at midnight on the payment date, the Smart Contract takes a digital snapshot of every wallet holding the bond tokens. It instantly calculates how much interest each person is owed.
The contract then automatically pulls the interest amount from the corporation’s stablecoin reserve and pushes it into the bondholders’ wallets in USDC.
As we said at the outset, we don’t like the idea of stablecoins becoming a de facto digital dollar. Its advancement via the GENIUS Act is for the purpose of allowing the federal government to keep running up massive deficits. We consider this to be deceitful.
We’d rather ignore it. But we can’t. The legislative framework is in place, and the big banks are moving forward.
At this point we have more questions than answers. Namely, by tokenizing assets, which can then be traded, and can act as collateral, won’t the growth of money explode? What will this do to consumer price inflation, and the value of dollars people hold in their traditional bank accounts?
There are also issues of privacy. The complete digitization of money and tokenization of assets comes with full system surveillance and tracking. How will a person’s spending be tracked? Will spending be tied to a social credit score with preprogrammed allowances and restrictions? Will the loss of financial privacy destroy what’s left of freedom and liberty for American citizens?
What are the systemic risks inherent to building such a complex digital financial world? What happens if there’s a major black sky event where power and communications are disrupted for an extended period of time, whether from a geomagnetic storm, cascading grid failure, or a coordinated cyber-attack?
No doubt, we’ll be monitoring and tracking the greater adoption of stablecoins and development of asset tokenization as they take shape throughout the year. We’ll look to adapt accordingly, while also maintaining diversification across both old money and new money systems.
Certainly, maintaining wealth that is completely off-grid and outside of the banking system, like physical gold and silver, is of critical importance.
Preparing for Chaos
Before we close, we’d like to leave you with one practical action you can take to prepare for war, inflation, or the breakdown of an ever-increasing complex digital world.
Assuming you have food storage, and some basic backup power such as a simple battery storage system that can charge with portable solar panels, there is the critical, and often overlooked need for micronutrients.
After two weeks, no matter how much protein and carbs you have, you need micronutrients for your brain and body, or you start losing mental clarity, strength, and a well-functioning digestive system. The simple solution is sprouting. When the time comes, the ability to be a ‘jar farmer’ to sustain health via sprouts will be essential.
To get started, take a look at Sprout People. There you will find a great education section and a large variety of nutrients you probably never imagined could be sprouted. We have no financial or business arrangement or affiliation with Sprout People. We’re merely passing on information we believe you will find valuable.
Also, if you’re looking to protect your wealth and profit in the chaotic year ahead, take a look at our Wealth Prism Letter. We’re currently putting the finishing touches on the January 2026 issue. It will be published on January 5 and includes a savvy way to profit from a historic anomaly we’ve uncovered in the commodities market.
Here’s to a happy, healthy, and prosperous New Year!
[Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, “Utility Payment Wealth – Profit from Henry Ford’s Dream City Business Model.” If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.]
Sincerely,
MN Gordon
for Economic Prism
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