# 2026: The Final Rigged Game? Peter St-Onge on the "Counterfeiting Cartel." Source: https://www.youtube.com/watch?v=WC3eM69jn0Y Recap page: https://rapidrecap.app/video/WC3eM69jn0Y Generated: 2026-02-19T14:05:02.639+00:00 --- ## Quick Overview Peter St-Onge argues that the current economic situation resembles 1997-1998 rather than 2000 for the AI boom, predicting continued growth unless capital expenditure collapses due to external factors like energy problems; furthermore, recessions historically stem from the Federal Reserve manipulating interest rates, not from specific sector bubbles popping, and Keynesian economics, which dominates modern macroeconomics, wrongly attributes business cycles to unpredictable **Key Points:** - St-Onge places the current state of the AI boom closer to 1997-1998 levels than the 2000 bubble pop, suggesting more growth remains unless capital expenditure suddenly collapses. - Historically, economy-wide recessions result from the Fed manipulating interest rates to manage inflation, a pattern described as the "500-year-old story," rather than individual asset bubbles bursting, citing uranium or gold/silver as examples of non-recessionary busts. - Keynesian economics, which St-Onge learned at McGill, is a "freak that was bolted on top" of classical/Austrian economics, pushing the narrative that government intervention improves outcomes, which he contrasts with Austrian economics focusing on supply, demand, and the role of interest rates. - The Fed's practice of creating a "Fed put" by injecting massive liquidity (Quantitative Easing) after crises favors asset owners and the rich through Cantillon Effects, leading to the K-shaped economy. - Tariffs, viewed as a sales tax, serve the strategic goals of forcing other countries to lower trade barriers and intentionally making production in places like Germany painful to restore US production, with most tariff costs currently absorbed by China. - Regulations are identified as an immense economic burden; rolling back US regulations to 1950s levels could double the economy and cut prices by 20 to 30%, a factor far more significant than tariffs. - The dollar's value as a store of savings is severely threatened by the Fed's irresponsible inflation (25%+ officially, 40% arguably) and the seizure of Russian central bank dollars under Biden, signaling that even central bank reserves are not safe from US action. **Context:** The discussion features economist Peter St-Onge, who recounts losing his early wealth in the 2000s crash, leading him to pursue a PhD in economics to avoid future catastrophe. The conversation centers on analyzing current economic forces, particularly the AI boom, the role of the Federal Reserve in creating business cycles, and contrasting mainstream Keynesian economics with classical/Austrian economics to understand investment strategy and societal outcomes. ## Detailed Analysis Peter St-Onge assesses the AI sector as currently resembling the 1997-1998 stage of the dot-com boom, expecting continued growth unless capital expenditure suddenly halts due to issues like energy constraints; he stresses that usage, unlike values, did not collapse in 2000. He firmly asserts that widespread economic recessions are caused by the Federal Reserve manipulating interest rates—lowering them to spur growth and then raising them to fight resultant inflation—a process he calls the standard 500-year-old story, directly opposing the Keynesian view that cycles are caused by unpredictable "animal spirits." St-Onge champions Austrian/classical economics, which studies choice via supply and demand models dating back to Aristotle, contrasting it with Keynesianism's core belief that government intervention is inherently beneficial. He notes that this pro-government narrative dominates modern macroeconomics, while microeconomics remains largely accurate based on classical principles. St-Onge highlights the destructive nature of the "Fed put," established under Greenspan, where the Fed pre-emptively bails out markets, leading to massive overleveraging and a K-shaped economy where liquidity injections primarily benefit the wealthy first (Cantillon Effects). Regarding policy, he supports Trump's tariffs as a tool to restore production, noting that China has largely absorbed the cost, but emphasizes that deregulation and tax cuts (rolling back regulations to 1950s levels) are exponentially more powerful levers for economic growth than tariffs. Finally, he expresses deep concern over the dollar's status as a global store of value, pointing to massive inflation and the unprecedented seizure of Russian central bank assets as actions that signal global holders to dump dollars, potentially leading to catastrophic domestic inflation if foreigners stop holding the approximately 20 trillion excess dollars held outside the US. ### Investment Thesis & AI Bubble - St-Onge believes we are near 97-98 levels in AI, not 2000; usage of AI will not crash like dot-com usage, but values could be punctuated; he advises trimming exposure if capex collapses, but not necessarily shifting to hyper-defensive assets unless a national recession hits. ### Austrian vs. Keynesian Economics - Classical/Austrian economics studies choice based on supply/demand models; Keynesianism, dominant in macro, posits that government can fix issues, which St-Onge dismisses as corruptible and prone to the principal-agent problem. ### Business Cycle Causation - Austrian economics identifies the cause of business cycles as the Fed manipulating interest rates, creating malinvestments that collapse when rates rise; Keynesianism explains cycles vaguely as "animal spirits," which St-Onge finds ridiculous. ### The Fed Put and K-Shaped Economy - The Fed acts as a permanent bailout machine, leading Wall Street to become grotesquely overleveraged; QE injects money into financial markets first, benefiting asset owners (the rich) due to Cantillon Effects. ### Tariffs and Reshoring - Tariffs function as a sales tax but are strategically used to compel other countries to lower trade barriers and intentionally make foreign production difficult to incentivize reshoring to the US. ### Regulatory Burden Impact - Regulations are a massive drag, costing one out of five employee minutes in Germany; eliminating regulations to 1950s levels could double the US economy and cut prices by 20-30%, making it a top economic lever alongside income tax. ### Dollar's Reserve Status Threat - The dollar's strength as a store of value is threatened by high inflation and the seizure of Russian central bank funds; while BRICS currency baskets are deemed unlikely threats, the dumping of excess foreign-held dollars could cause 100% inflation domestically.