Part 1: The Boom-Bust Lie — How Financial Collapses Are Engineered

Jiang Xueqin is a geopolitics lecturer whose Game Theory series breaks down how the world actually works — power, money, history, and the systems most people are never taught to question.

This is lecture #17: The Great Reset. The central argument: financial collapses do not happen by accident. They are engineered. Understanding why requires understanding how money, banks, and global power actually work — not how textbooks say they do.

The Boom-Bust Cycle — And the Question Nobody Can Answer

ExpandNew York Stock Exchange trading floor — where fortunes are made and lost in the boom-bust cycle

What Economics Textbooks Tell You

Every economics student learns about the boom-bust cycle: the idea that capitalism naturally moves in waves of growth and collapse.

The official story: in good times, people get overconfident, spend recklessly, take bad risks. Eventually the bubble pops, the economy contracts, people tighten up, become efficient, and the cycle starts again. Think of it like gaining weight — you eat too much, feel bad, then go on a diet.

In the lecture, Jiang references The Great Crash 1929 — buy on Amazon ↗ — and quotes Andrew Ross Sorkin, author of Too Big to Fail — buy on Amazon ↗. Sorkin describes the psychology behind the 1920s boom:

"Lengthy, uninterrupted booms like the one in the 1920s produce a collective delusion. Optimism becomes a drug or a religion, or some combination of both. People lose their ability to calculate risk and distinguish between good ideas and bad ones."

The metaphor is gravity: you fly too high, you fall. It's natural. Nobody's fault.

The Problem With This Explanation

Here's what the textbook never tells you: nobody can explain what actually triggers the collapse.

What is the specific mechanism? Why does the bubble pop at that exact moment rather than six months earlier or later? And why do certain people always seem to profit enormously from the collapse — as if they knew it was coming?

Mainstream economics has no clean answer. That, Jiang argues, is because the trigger isn't random. Someone pulls it.

How Banks Actually Create Money

Before we get to who controls the system, you need to understand something deeply counterintuitive about how money works.

The $1 Million Question

You deposit $1M into a bank. The bank lends that money to an entrepreneur opening a restaurant.

How much money does the bank now have?

Your instinct: zero. Take in a million, lend out a million — basic math.

The actual answer: $2M.

When a bank makes a loan, it doesn't physically transfer your cash. It creates a new deposit in the borrower's account. Your million is still recorded in your account. The entrepreneur now has a million in theirs. The bank just created $1M out of nothing — through the act of lending.

This is called fractional reserve banking, and it's how every modern bank operates.

The implication is enormous: money is not a fixed resource. It is created by the act of lending. When banks lend aggressively, the money supply expands. When they tighten, it contracts. This gives banks enormous, largely invisible power over whether economies grow or shrink.

Interest Rates — What They're Really For

What You're Taught

The interest rate guides consumer behavior:

• Low rates (1–2%) → borrowing is cheap → people buy homes, invest, spend
• High rates (6–7%) → borrowing is expensive → people save instead

This is partly true. But it's not the primary purpose.

The Coordination Problem

With tens of thousands of banks each capable of creating money through lending, how do they coordinate? Without coordination, some banks would flood the economy while others restrict — creating chaos.

The coordinator is the central bank (the Federal Reserve in the US, the Bank of England in the UK). Its main tool is the interest rate — but as a signal to banks, not consumers:

If a small group controls the central bank, they control whether the entire economy booms or busts — and when.

Plato's Cave — How Reality Is Manufactured

To understand who controls the system, Jiang uses an ancient philosophical framework.

The Allegory

ExpandShadows on a cave wall — the classic metaphor for manufactured reality

Plato's Cave (from The Republic, ~375 BC): prisoners are chained in a cave, facing a wall. Behind them, puppets are moved in front of a fire, casting shadows on the wall. The prisoners can only see the shadows — they have no access to the real objects, only their projections. They mistake the shadows for reality.

See the Plato's Cave illustration on Wikipedia for the classical visual.

Jiang's application: we are those prisoners. Our reality — what we believe about money, freedom, fairness, success — is a projection created by those who control the system. The mechanism that coordinates our collective hallucination is money.

Money is not just currency. It's a belief system. A $100 bill is paper. It works because everyone agrees it works. Like a religion, money coordinates how billions of people think, behave, and organize society.

"Think of money as God. What money is doing is focusing our minds in a certain way that creates our reality." — Jiang Xueqin

The Power Structure — Who Really Runs the Game

Layer 1: The Game Masters

These institutions control how US dollars move through the global system:

• Bank of International Settlements (BIS) — Basel, Switzerland. The central bank of central banks. Coordinates all national central banks globally.
• World Bank — Funds development projects, typically with economic conditions attached
• International Monetary Fund (IMF) — Emergency loans to struggling countries, with structural reform conditions
• Wall Street — JPMorgan, Goldman Sachs, BlackRock, and similar US private financial institutions
• City of London — A unique self-governing financial district inside London with its own separate legal jurisdiction

Together, these control where US dollars flow — and since the dollar is the world's reserve currency, that means they effectively control the global economy.

Layer 2: The Cover — The Rules-Based Order

Because openly admitting that private financial institutions control the global economy would cause revolt, a second layer creates the appearance of fairness:

• WTO — Governs international trade rules
• UN — Maintains international peace and security
• G7 / G20 — Forums for major economies to coordinate policy

These multilateral organizations make the system look neutral and democratically accountable. In practice, they operate within the framework set by the financial layer above them.

Layer 3: Reinforcement — Media, Education, Culture

Media, education, and popular culture reinforce the belief that the system is fair — that success comes from merit, that collapses are natural, and that people questioning this are conspiracy theorists.

Countervailing Forces — And How They're Suppressed

Forces that threaten to break the system:

• Nationalism — Prioritizing the nation over global capital flows
• Ethnic and religious identity — Communities organizing around values other than money
• Social democracy — Demands for wealth redistribution and public accountability

The system's response:

• Intelligence agencies — Monitor and neutralize organized opposition
• Organized crime — Used for destabilization and off-the-books operations
• Science and technology — Creates dependence, surveillance infrastructure, and narrative control

Behind all three: transnational capital, secret societies, and powerful elite families — whose power ultimately rests on control of the occult (a topic covered in a separate lecture).

Next in this series → Part 2: Origins of the System — 1688 to the Federal Reserve