2026: The Final Rigged Game? Peter St-Onge on the "Counterfeiting Cartel."

In this podcast episode, Peter St-Onge, an economist with a deep understanding of Austrian and classical economics, shares his insights on investing, economic cycles, the role of central banks, and the current state of the global economy. He discusses how government interventions have shaped financial markets, the risks and opportunities around artificial intelligence, trade policies, deregulation, and the future of the US dollar as the world's reserve currency. Peter also explores the systemic corruption embedded within the Federal Reserve and offers guidance on navigating today's complex financial landscape.

Simple Investing and AI's Current State

Peter emphasizes a minimalist approach to investing, warning against complex theses with too many assumptions, as these are prone to failure. He situates the current AI boom closer to the late 1990s internet expansion rather than the 2000 dotcom bubble collapse. While AI promises to reshape the economy more profoundly than the internet, he cautions that capital expenditure, especially in data centers, and energy constraints might trigger an AI "winter." Usage of technology tends not to collapse even after crashes—the internet persisted and transformed post-2000. He advises investors to monitor real economic signals like capital spending rather than media hype or sentiment for clues about sustainability.

Classical vs. Keynesian Economics Explained

Peter provides a concise crash course on economics as the study of choice, tracing the lineage of classical economics back to Aristotle. Classical economics focuses on supply and demand, individual incentives, and emergent phenomena such as inflation and growth. Austrian economics, closely aligned with classical thought, stresses predictable cause-and-effect relationships in the economy, particularly regarding interest rates and liquidity. In contrast, Keynesian economics is portrayed as a 20th-century overlay that unrealistically attributes economic cycles to irrational "animal spirits" and justifies pervasive government intervention. Keynesianism dominates mainstream academia despite its lack of historical grounding.

The Federal Reserve's Role in Business Cycles

St-Onge argues that recessions are not random but the consequences of artificial manipulations by the Fed. Governments stimulate the economy by lowering interest rates before elections, inducing inflation, then reverse course to curtail it through rate hikes, triggering recessions. The Fed's monetary policies inflate asset bubbles by making capital artificially cheap, which leads to malinvestments that eventually fail when rates rise. The Fed's quantitative easing (QE) programs, especially post-2008 and during the COVID-19 pandemic, flood markets with liquidity that disproportionately benefits wealthy asset holders, worsening inequality.

The "Fed Put" and Permanent Bailouts

Peter describes the evolution of the Fed from a referee to a permanent bailout machine, a system that encourages reckless risk-taking because Wall Street knows losses will be covered while profits go unchecked. He recounts how the 2008 financial crisis was exacerbated by this "Fed put" environment, where central bankers preemptively intervene to prevent market collapses. Following the crisis, bailouts became automatic and continuous, as seen in 2023 with bank failures. This systemic distortion inflates financial markets, making ordinary investors reliant on central bank largesse while underlying structural problems remain.

Tariffs and Regulations as Economic Forces

He discusses tariffs as sales taxes that generally harm economies but can be tools to compel foreign trade partners to reduce their own barriers. Trump's tariffs aim strategically at reshoring production and penalizing nations with protectionist policies. While some promises from foreign firms are viewed skeptically, there is real movement with major investments underway, particularly in semiconductors and auto manufacturing. Regulations, however, impose far greater hidden costs by consuming enormous amounts of labor and lowering productivity. Peter argues that drastic deregulation, to mid-20th-century levels, could double the U.S. economy and significantly reduce prices, dwarfing the impact of tariffs or tax changes.

The Dollar's Reserve Status and Global Currency Dynamics

Peter explains that a currency's primary value is its function as a store of value rather than just a medium of exchange. While the U.S. dollar remains dominant, its share of global transactions is declining partly due to geopolitical actions like freezing Russian central bank assets, which undermine trust. Although China's push to make the yuan a reserve currency—with potential gold backing—poses theoretical risks, current alternatives (including a BRICS currency basket, the euro, and the yen) lack credibility due to political and economic instability. Gold holds a ceiling as a reserve asset because it is illiquid and inconvenient, meaning the dollar's demise would likely require a serious rival currency backed by tangible assets.

Investing Strategy Amid Structural Inequality

Peter frames the current economic environment as a "rigged game" where government policies favor the wealthy who own assets, creating a K-shaped recovery that rewards those at the top. Despite the moral implications, he advises investors to accept this reality and position accordingly. This includes holding assets like gold and silver as hedges against ongoing inflation driven by irresponsible monetary policy. While bubbles and corrections will continue, the overarching mechanisms of central bank interventions create sustained inflationary pressure that is unlikely to resolve without catastrophic political upheaval.

The Federal Reserve as a Corrupt Counterfeiting Cartel

Describing the Fed as an unconstitutional cartel, Peter traces its origins as a solution to chaotic banking practices in the 1800s. Banks pressured governments to suspend specie redemption (the requirement to back money with gold or silver), leading to rampant unchecked money printing. The Fed formalized this cartel where major banks collectively benefit from creating money out of thin air, facilitating perpetual boom-bust cycles that primarily enrich the financial elite. This system violates constitutional mandates for honest money and exploits the public by monetizing debt without accountability.

Consequences of the Fed's Policies and the Need for Reform

Because the Fed controls monetary policy autonomously, neither the President nor Congress effectively oversee it, creating a power vacuum potentially more influential than elected governments. The Fed's cheap credit disproportionately bolsters large corporations and financial institutions while increasing inequality and systemic risk. Quantitative easing and "bailouts on autopilot" distort markets and misallocate resources. To restore economic sanity, reforming or abolishing the Fed by legally prohibiting it from purchasing assets is a straightforward step. However, entrenched interests ensure the status quo persists.

The Long-Term Outlook and Practical Advice

Peter believes that inflation, once entrenched, rarely resolves without drastic intervention. Past episodes ended only when authorities raised interest rates aggressively, as with Paul Volcker, whose tenure was an anomaly. Because printing money remains profitable for governments, inflation is likely to continue until an eventual breaking point. Investors should monitor liquidity as a key indicator of market direction, recognizing that money will seek shelter from inflation even amid speculative excesses. Individuals are encouraged to engage with big economic trends pragmatically, balancing optimism for asset values with awareness of systemic risks.

Peter St-Onge's Educational Outreach

Peter shares that he produces daily short videos and a weekly newsletter under the name ProfStOnge, focusing on economics and liberty. His work aims to make Austrian economic concepts accessible and to clarify the complex forces shaping today's financial environment. Through these channels, he hopes to help more people understand the mechanics behind inflation, monetary policy, and economic cycles, empowering them to make better financial decisions amid uncertainty.