Executive Summary

• The Deep State, and its dawning realization that Wall Street is a foe vs an ally
• Why Wall Street's threat to the dollar hegemony is of such concern
• History gives us many examples to predict a 'war of elites' (e.g. Wall Street vs the Deep State) is highly likely
• Who will lose? And what implications will it have for the rest of us?

If you have not yet read Have We Reached Peak Wall Street?, available free to all readers, please click here to read it first.

In Part 1, I sketched out why the financial sector—the Fed, Wall Street and “too big to fail” banks—pose a strategic threat to the nation, as their policies threaten one key foundation of American pre-eminence, the U.S. dollar.   Should money and credit creation cause the dollar to lose its reserve status, the nation would lose the fundamental advantages that go with being able to print a reserve currency.

I then suggested that the Deep State might eventually wake up to the strategic threat posed by a self-serving financial sector, and this would lead to a showdown between the financial Elites and the Deep State.

The Systems-Level view: the S-Curve works on Wall Street, too

Long-time readers know that I often refer to systems-level dynamics, one of which is the S-Curve, which traces the rise, maturation and decline/crash of systems both natural and human-designed. An astonishing array of systems has been found to follow an s-curve, from the spread of infectious diseases to financial bubbles.

Why would Wall Street be uniquely immune to these systemic forces? I submit that Wall Street’s power has topped out and is about to decline precipitously, just like any other system which has over-reached by sucking its habitat dry.

I think we can chart Wall Street’s S-Curve thusly:

While the decline and fall of an over-reaching power can be linked to many causal factors, if we use history as a guide, we conclude that the rise of competing power centers—roughly speaking, blowback—is generally one precipitating factor.

What is the Deep State?

Former congressional staff member Mike Lofgren described the Deep State in his recent essay Anatomy of the Deep State:

I use the term to mean a hybrid association of elements of government and parts of top-level finance and industry that is effectively able to govern the United States without reference to the consent of the governed as expressed through the formal political process.