Sunday, January 11th, 2026
Laramie, Wyoming
By Dan Denning
Did you know that the office of the President—indeed the entire Executive Branch—are completely absent from the Articles of Confederation? All the Executive and Judicial powers we associate with two separate and equal branches of government today were vested in the Congress in America’s original founding. Congress could select an officer to ‘preside’ over it. But he wasn’t a President.
The Articles only lasted about eight years, from 1781 to 1789. The weak central government couldn’t tax, couldn’t regulate commerce, couldn’t field a standing army, and couldn’t easily declare war.
The good old days!
Alas, the forces of collectivism and centralization are powerful and have deep pockets. The US Constitution as we know it was drafted and signed in 1787. It was ratified in 1788 and became the law of the land. Though specifically defining and limiting the powers of the Federal government, it amounted to vast expansion of Federal power and an assault on the States and individual liberty.
Still, try as you might, you can read all of Article II (dealing with the powers of the Executive branch and the President) and you’ll find no mention of capping interest rates on credit cards, limiting stock buy backs, or forbidding the corporate ownership of single family homes. Those were all things the current President proposed doing this week.
It would take an act of Congress to do any of those things. And even then, they might be un-Constitutional (violating the due process language in the 5th amendment). Individual states actually CAN cap credit card rates under ‘usury’ laws. This is why so many national credit card companies (Citibank, Chase, Capital One) are based in Delaware and South Dakota—because those states have no maximum interest rate limit on credit cards (general usury cap, in legal terms).
Of course I haven’t spoken to anyone who hates the President’s idea of lowering credit card interest rates to 10% for a year. Americans have about $1.3 trillion in credit card debt. The average APR on that debt is over 20%. That adds up to roughly $260 billion in interest payments each year. That does seem a bit usurious, but the again those companies are effectively taking the risk of lending money to debtors who might not pay it back. You take what you can get.
What does this Presidential over-reach/populism/outreach mean for investors?
The President wants to run the economy ‘hot’ headed into this year’s mid-term elections. You dole out some tariff money as a ‘stimulus,’ you eliminate taxes on tips, you buy $200 billion in mortgage backed securities to lower interest rates and stimulate the housing market, you replace your Fed chair with someone willing to do your bidding and lower interest rates, and you save debtors money on interest payments they can now spend.
It all adds up…but to what?
Keep an eye on GDP figures and the velocity of money. If the intention of the Executive branch is to do everything in its power—and some things clearly NOT in its power—to boost economic activity, it will show up in a higher velocity of money (higher inflation). That, plus the inability of the Congress to restrain, much less cut, spending, should be a tail wind for precious metals in 2026.
By the way, sometime in the early hours of January 11th, 49 BC, Julius Caesar crossed the actual Rubicon. ‘Alea iacta est,’ Caesar said. The die is cast. Caesar was governor of Cisapline Gaul, or what is now northern Italy. But under Roman law, he could not legally cross into the Roman homeland with his army, as a General. It was an offence punishable by death.
He did it anyway and the Roman civil war began. All the institutions of power were up for grabs. The sword was more important than the vote.
You could argue this was the real end of the Republic, although as I pointed out Friday, historians generally point the rule of Octavian (Augustus) as the point at which Rome ceased to be a Republic and became an Empire. It doesn’t really matter exactly when, especially since the process took place over more than century. For ordinary people, life went on.
And America today?
Well, who knows. This summer will mark the 250th anniversary of the signing of the Declaration of Independence in 1776. It’s been a good run. Let’s hope we make it another 250 years!
Life goes on either way. And we must all do something with our money, to protect it, and our families. That work continues this week.
Until tomorrow,
Dan
P.S. Just a reminder that our friends at International Living are hosting a live event on Wednesday, January 14th. It’s about how to retire overseas. You can sign up for free here. If you’ve been thinking about a second home overseas, now is the time to make it happen.
Well, Dan, while I don't disagree with much of what you wrote, the Constitution replaced the Articles of Confederation because the latter was unworkable. It is not quite so simple as "the Federal government bad, States good". Many of the States are now run by Democrat despots who would regulate businesses and tax people to the max while limiting our access to energy (the lifeblood of human flourishing). So, they try to get away with as much as they can including allowing massive fraud of tax dollars to exist in order to buy votes. The fraud in Minnesota will turn out to be the tip of the iceberg. Also, allowing everyone to come across our borders was just another ploy by the Democrats to give out more free stuff to these "immigrants" in order to buy votes. It is not a coincidence that the whole climate change/global warming ideology promotes unreliable solar and wind power while demonizing hydrocarbons and nuclear power. It is just a power grab over our lives since if you control energy, you control people.
While the Constitution is not perfect, we are in this situation because it is being largely ignored.
The velocity of money is not a de facto measure of inflation. It depends on GDP and the money supply. But certainly printing money is not helpful…. There was lots of printing during COVID but people weren’t spending so the velocity was low… but post lockdown…..