“Adde parvum parvo magnus acervus erit.”
–Ovid
Four Key Themes for 2026
Are you satisfied with the world around you? Are you ready for another journey around the sun?
Whether you are or not, the New Year has arrived…
We aim to make the most of it, and we trust you will too.
Where to start?
As the year wrapped up, silver added a thrilling twist, soaring past $80 per ounce. This precious metal has navigated a tumultuous path defined by liquidity squeezes and sudden margin calls.
Behind the scenes, the unsettling practice of naked shorting—where major banks sell silver they haven’t borrowed—has pushed the financial system toward a crisis point. When prices surged, these speculative bets suffered severe losses. To stay afloat, it is believed that these banks resorted to the overnight repo market for quick cash to mitigate their short positions.
This may have been a temporary fix, but the Federal Reserve cannot create silver; it can only extend credit. It’s likely that the market chaos witnessed on the day after Christmas will resurface in the New Year. Sooner or later, one of the major banks will find itself caught unprepared.
As we step into 2026, it’s clear that the global environment is at a critical juncture. From our perspective in Southern Appalachia, we observe the collision of a collapsing technological bubble, an escalating geopolitical climate, and a dramatic shift in the essence of currency and securities.
Through ongoing conversations with our colleague Dick, we’ve identified four primary themes that we anticipate will dominate 2026. These themes are elaborated upon below, and as a bonus for getting to the end, we’ve included a useful tip for off-grid living.
So, lace up your rugged boots—preferably well-worn—and grab a shovel. Let’s delve into this New Year’s edition of the Economic Prism.
First off…
The Imminent Collapse of the $5 Trillion AI Bubble
By 2026, a widespread understanding will emerge that the rapid expansion of AI has amounted to a considerable financial blunder. The trillions invested in data centers and chips will be recognized as a squandered endeavor. This awareness will manifest as a massive AI-induced stock market crash, accompanied by economic contraction and a debt crisis.
We’re not suggesting that AI will disappear. Instead, we contend that AI is fundamentally different from its advertised promises.
Undoubtedly, AI has the potential to support various beneficial applications. When harnessed in areas reliant on data and clearly defined processes, AI can execute tasks with remarkable speed.
However, the returns generated from AI innovations fall far short of justifying the enormous capital invested. For instance, a recent MIT study found that 95% of enterprise AI pilots fail to yield measurable returns.
AI tools may become commonplace, but unless there is substantial advancement in technology—beyond merely fixing errors and hallucinations—AI will never replicate human intelligence or our innate ability to inquire, create, and innovate. Robert Gore from Straight Line Logic articulates this well:
“At its core, the issue is that while AI can respond to countless questions, it cannot pose a single one. Programmed to identify and attempt to rectify discrepancies within data, it still doesn’t autonomously inquire. From an early age, the human mind is a natural question creator; it’s the essence of our learning. Curiosity and questioning are foundational to intelligence. Reading even a single page of interesting material will raise questions. Generative AI ‘reads’ trillions of pages devoid of curiosity. No one discussing the potential for AI to surpass human intelligence (HI) has clarified how it will achieve that while ignoring the core of HI.”
This fundamental flaw explains why AI won’t meet the lofty expectations set for it. Moreover, when the collective realization hits that AI is not the immediate productivity miracle it was touted to be, the current $5 trillion valuations will diminish. Given that AI-related stocks accounted for nearly 80% of market gains in 2025, a correction in tech will lead to an extensive market downfall. As capital flows dwindle, companies will implement spending cuts and layoffs, possibly resulting in a significant recession or even depression.
Governments generally respond to economic downturns in three distinct manners: by printing vast amounts of money, initiating or escalating conflicts, or engineering a public health crisis. Money printing is often aimed at bailing out large financial institutions, while a burgeoning conflict or a fabricated pandemic, aided by propaganda, distracts the public from domestic issues and justifies substantial monetary expansion. This leads us to our next theme for 2026…
Blockading Beijing
For years, global focus has been drawn to perpetual warfare in the Middle East, then to the ongoing proxy conflict with Russia via Ukraine. However, as we approach 2026, the Trump administration has pivoted strategically. The new point of interest? Venezuela.
White House advisor Stephen Miller has set the tone with charged language on Venezuela’s energy history. He asserted:
“American labor, ingenuity, and tenacity established the oil industry in Venezuela. Its tyrannical appropriation stands as the largest recorded theft of American wealth and assets. These seized resources have been utilized to finance terrorism and inundate our streets with killers, mercenaries, and drugs.”
By framing the nationalization of oil as a blatant theft from the American populace, the White House builds a moral and legal argument for more aggressive intervention. Under Operation Southern Spear, the U.S. has deployed a formidable naval presence in the Caribbean, featuring the USS Gerald R. Ford carrier strike group.
In recent months, the U.S. has conducted numerous maritime operations targeting what it claims are narco-terrorist vessels. However, this renewed focus on Venezuela is less about narcotics and more closely linked to Venezuelan oil exports to China.
President Trump has effectively announced a maritime blockade, empowering the Navy to capture sanctioned tankers. Despite stringent sanctions, China continues to be the primary consumer of Venezuelan crude, importing around 570,000 barrels daily.
With this blockade, the U.S. aims not only to pressure the Maduro administration in Venezuela but also to cripple a vital energy supply for Beijing. The administration’s Trump Corollary to the Monroe Doctrine effectively communicates that the Western Hemisphere is inaccessible for Chinese strategic investments.
This New Cold War transcends semiconductors and TikTok. The waters off Venezuela are now the battleground for power between Washington and Beijing.
China is not merely a spectator in Caracas; it is Venezuela’s largest financier. Over the past twenty years, Beijing has invested more than $60 billion in Venezuela, often via ‘oil-for-loan’ arrangements.
When Stephen Miller refers to the “tyrannical expropriation” of American resources, he inadvertently highlights the influx of China into the void left by the U.S. After the U.S. stepped back, China sustained the Maduro regime with infrastructure investments and debt rollovers, securing a strategic foothold in an area long regarded as America’s backyard.
Operation Southern Spear squarely targets China’s energy security. The U.S. is now actively intercepting tankers like the Centuries, which was apprehended in late December while carrying nearly 2 million barrels of oil intended for China. By halting these shipments, President Trump is forcing Beijing into a difficult decision: support Venezuela and risk direct naval conflict or relinquish billions in investments and a crucial oil source.
As this tension escalates throughout 2026, it will create a pretext for the U.S. government to fundamentally reshape the nature of currency, which leads us to our next theme for 2026.
The New Foundation of U.S. Debt
Recently, we discussed the GENIUS Act, enacted by President Trump on July 18, 2025, which mandates that stablecoins be backed one-for-one by U.S. dollars or other secure assets, primarily short-term U.S. Treasuries. This measure signals the commencement of a pivotal change in American currency.
If you haven’t been following this development, you’re not alone. The notion that stablecoins could become a de facto digital dollar and create substantial new demand for U.S. Treasuries might seem perplexing. Perhaps this is why it’s a topic of limited discussion.
To be frank, we are not fans of this concept and would prefer to overlook it. Yet, it’s unfolding irrespective of our preferences, and it’s poised to become a significant theme in 2026.
Stablecoins, as we interpret them, are issued by private entities rather than central banks. They do not constitute Central Bank Digital Currencies (CBDCs). Their issuance is driven by market forces, not direct monetary policy.
When issuers of stablecoins tie their tokens to Treasury securities, they effectively own the underlying asset. Any interest payments from these Treasuries benefit the issuer, not the stablecoin holders. The GENIUS Act additionally forbids stablecoin issuers from delivering interest or yield directly to stablecoin users as part of the stablecoin offering. Moreover, it mandates that stablecoin issuers disclose their reserves monthly, certified by executives, with larger players subject to enhanced auditing standards.
To complicate matters further, some stablecoins operate outside U.S. jurisdiction and do not comply with the GENIUS Act. Tether, for example, issues a popular stablecoin called USDT, maintaining a stable valuation pegged at 1:1 with the U.S. dollar, yet chooses to bypass U.S. regulations.
Instead of exclusively backing its tokens with U.S. Treasuries as dictated by the GENIUS Act, Tether holds a portion of its reserves in bitcoin and precious metals. Remarkably, in Q3 2025, Tether emerged as the largest gold purchaser, acquiring more gold than many central banks. Additionally, rather than providing audits in accordance with the GENIUS Act, Tether prefers quarterly attestations and, since it operates from El Salvador, does not meet U.S.-based requirements.
The question then arises: is USDT superior or inferior to the USDC stablecoin produced by Circle, which complies fully with the GENIUS Act?
Perhaps Tether’s status as an offshore international digital dollar, operating beyond U.S. government reach and holding some reserves in gold, offers unique advantages—even as it carries potential risks.
Bear in mind that the Trump administration’s goal with the GENIUS Act is to establish a new source of Treasury demand funded by private issuers to manage America’s enormous debt and avoid an explicit default. This serves to preserve power, and Tether seems misaligned with this goal.
We predict that the next major event—be it an economic downturn, escalating conflict, or another pandemic—will act as a catalyst for stablecoin implementation. People rarely modify their financial habits during stable times; it often takes a crisis to drive them from traditional systems to new ones.
Stablecoins could serve as effective tools for distributing government stimulus payments or providing a haven during a banking crisis, allowing users to retain cash outside the traditional fractional-reserve banking model.
Yet, this transition is fraught with risks. Systemic threats to stablecoin reserves and their potential impact on the Treasury market are still unknown.
In summary, as with all financial instruments—especially the untested varieties—if the adoption of stablecoins accelerates, diversifying across multiple stablecoins like USDT and USDC is advisable.
Lastly, these stablecoins play a role in another significant theme for 2026…
The Era of Tokenization
Asset tokenization has been gaining traction for years. During the COVID pandemic frenzy of 2020-21, NFTs (Non-Fungible Tokens) associated with art or collectibles became particularly fashionable. This application of blockchain to document ownership enabled the buying, selling, and trading of NFTs.
This technological advancement caught the eye of major financial executives. Not for art and collectibles, but for significant financial assets. Larry Fink, the chairman and CEO of BlackRock, stated in January 2024:
“We believe the next progression will be the tokenization of financial assets, meaning every stock and bond will appear on one universal ledger.”
In essence, asset tokenization converts a tangible asset—a building, a stock, a bond, or a gold bar—into a digital token. Stablecoins will serve as the currency for these transactions.
Prior to the GENIUS Act, large banks hesitated to engage with tokenization due to the lack of a legally accepted digital currency for settlements. The GENIUS Act established Payment Stablecoins (like the compliant version of USDC), giving banks like JPMorgan the confidence to tokenize a U.S. Treasury bond and accept a regulatory-compliant stablecoin as payment.
Furthermore, a tokenized bond using stablecoins can be issued entirely without human accountants. Imagine if a corporation wishes to borrow funds. Instead of a traditional bank loan, they issue a Tokenized Bond on the blockchain.
The company establishes a Smart Contract for the bond, stipulating: “I am borrowing 1,000,000 USDC. I will pay 5% interest annually, with payments occurring every 30 days.”
In the conventional banking system, a bank would need to manually compute interest for thousands of bondholders and process payments. In the tokenized framework, the Smart Contract automatically takes a digital snapshot of every wallet holding bond tokens at midnight on payment day. It instantly determines how much interest each holder is owed.
The contract then autonomously deducts the total interest from the corporation’s stablecoin reserves and distributes it directly into bondholders’ USDC wallets.
As previously noted, the prospect of stablecoins becoming a de facto digital dollar leaves us uneasy. Its development through the GENIUS Act aims to enable the federal government to keep accumulating massive deficits, which we view as misleading.
While we wish we could ignore it, the legislative framework is now established, and major banks are pushing ahead.
At this juncture, we have more questions than answers, particularly regarding the potential inflationary effects of tokenizing assets that can be traded and serve as collateral. What could this mean for consumer price inflation and the value of dollars held in traditional bank accounts?
Moreover, privacy concerns loom large. The complete digitization of currency and asset tokenization will likely entail thorough system surveillance and monitoring. How will individual spending be tracked? Will transactions be linked to a social credit score, imposing pre-set restrictions and allowances? Could the erosion of financial privacy undermine the remaining freedoms and liberties of American citizens?
We must also consider the systemic risks associated with building such a complex digital financial landscape. What happens if a major disaster disrupts power and communications for an extended period, be it due to a geomagnetic event, a cascading grid failure, or a coordinated cyber-attack?
Without a doubt, we will continue to observe the growing adoption of stablecoins and the evolution of asset tokenization throughout the year. We aim to adapt accordingly while ensuring a diversified portfolio across both traditional and emerging financial systems.
Remains crucial is the preservation of wealth entirely off-grid and external to the banking system—such as with physical gold and silver.
Preparing for Uncertainty
Before concluding, we want to share a practical suggestion for preparing for potential conflict, inflation, or the breakdown of our increasingly complex digital systems.
Assuming you have a food storage plan and basic backup power solutions like a simple battery system that can be charged with portable solar panels, there exists a crucial and often overlooked need for micronutrients.
After two weeks, irrespective of how much protein and carbohydrates you possess, your body needs essential micronutrients for proper mental and physical function; otherwise, you risk diminishing mental clarity, strength, and digestive health. The straightforward solution lies in sprouting. When the time comes, your ability to become a ‘jar farmer’ and nourish yourself with sprouts will be vital.
To get started, explore Sprout People. You’ll find an excellent educational resource along with an extensive range of sprout nutrients you might never have considered. We hold no financial ties to Sprout People; we’re simply sharing information we believe to be beneficial.
Additionally, if you seek to safeguard your wealth and thrive in the tumultuous year ahead, consider subscribing to our Wealth Prism Letter. We are finalizing the January 2026 issue, which will be published on January 5 and includes insights to profit from a unique anomaly we’ve identified in the commodities market.
Here’s to a remarkable, healthy, and thriving New Year!
[Editor’s note: Join the Economic Prism mailing list for a complimentary copy of an important special report titled, “Utility Payment Wealth – Profit from Henry Ford’s Dream City Business Model.” If you are interested in a special trial offer for MN Gordon’s Wealth Prism Letter, you can acquire it here.]
Sincerely,
MN Gordon
for Economic Prism
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