Conquest, Loot, and Tribute

US power rests on a pedestal of dollars. As the world’s reserve currency, this funny money made it possible for the US to spend more than it could afford — year after year.

Wednesday, June 10th, 2026

Bill Bonner, from Youghal, Ireland

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Here are a couple, almost contradictory, news stories. MSN:

Gold hits yearly low despite recent reserve asset milestone

And here’s the more important news. The India Times:

‘Gold now ranks as the world’s top reserve asset. According to World Gold Council data, global gold reserves are approaching $4 trillion. Treasury holdings total approximately $3.9 trillion. The last time central bank gold reserves topped Treasury holdings was in 1996.’

As to the first, we have no idea. Short-term trading is an unsolvable riddle to us. Like the Riemann Hypothesis...as far as we know, no one has ever figured it out.

But the long-term Primary Trend may be another thing.

As near as we can tell, there are deep recurring patterns. Stocks rise, for example. And then...lo...they go down. On a daily, weekly, or monthly basis trying to predict these movements in the stock market is — at least in our experience — futile.

Even in the long-term you are often wrong about what is going on. But when a child is born you know the poor infant is already headed to the grave. And when a nation begins ‘printing’ money, it is just a matter of time before the money is worthless.

All we have to go on is history. So, we’ll make the most of it. Historically, there was a sober relationship between output and the value of the companies providing it. To simplify, if a company made a profit of $10...a prudent investor would pay $100 for it.

But in 1971 cometh a new money regime. Money was no longer an impartial and unassailable asset; now it was just another debit on America’s ballooning balance sheet. And since it could be created as easily as a toilet is flushed...and since the people who got it first and foremost were those in Wall Street’s credit industry...the general level of effluent rose as more of this new money washed in.

At first it was a pleasant novelty – rising stock prices with no corresponding increase in output. But then baby boomers — via their 401(k)s, mutual funds, and ETFs — came to depend on it for their retirements.

Thus it was that the capital values on Wall Street, once at 10 times earnings, soared to...now...25. And the ratio of the stock market to GDP has shot up too...from around 0.5 to 2.3, with the stock market now worth 230% of GDP.

Recall our hypothesis...that Donald J. Trump was tapped by History Herself...to help topple the ultra-powerful USA. The pattern is without exception. Empires go up...and come down, too. They have a lifespan, on average, of about 250 years. They were usually based on naked military power. Like Napoleon Bonaparte, the conqueror rose...and then, he fell. In Napoleon’s case, it took less than 20 years to go from nowhere...to the top of Europe...to St. Helena, which was about as close to nowhere as you could get.

In 1898, Commodore Dewey won the Battle of Manila Bay, marking the US as an empire on-the-way-up. By 1999, the it bestrode the world...with one foot in North America and another trampling down foreigners wherever it chose. Its power unchallenged. Its economy unmatched. Its cultural, political and reputational influence beyond reproach.

But beneath the headlines was another story — an oft-told tale — a parable of pride and glory...vanity and ruin. America’s outsized success...combined with its funny money system...had already gnawed at the muscles and sinews needed to keep a great empire on its feet.

It was at this critical stage — when it needed to stitch the critical ligaments together again — that the nation fell under the sway of four especially block-headed leaders. George Bush led off with an expensive, pointless war. Barack Obama followed up, personally blessing the ‘kill lists’ while adding $8 trillion to US debt. Joe Biden went along with everything — stimmies, Israel’s massacre of Gazans, DEI and the goofy pronouns.

And then there is Donald Trump. Was ever a great leader more suited to the task? Full of bombast and bile, the man seemed to instinctively understand his real role — to hasten America’s decline. And while almost every policy played a helpful part — including the inane non sequiturs, the claptrap threats, the ‘crazy’ assertions — one policy stood out as a real empire buster.

US power rests on a pedestal of dollars. As the world’s reserve currency, this funny money made it possible for the US to spend more than it could afford — year after year. The system also aided and abetted the inflation of the dollar supply.

For many years the roaring conflagration of money-printing produced only a flicker of consumer price inflation. Instead, the hot new currency went into foreign coffers, where it sat undisturbed for an entire generation. And as an extra bonus, the dollars were used to buy US Treasury bonds...helping to lower borrowing costs for Americans’ domestic as well as foreign purchases. ScheerPost:

‘For nearly a century, the U.S. dollar has stood at the center of the global economy. Nations traded in dollars, stored dollars, borrowed dollars, and trusted the institutions that backed them. American power rested not only on military dominance but on the belief that the dollar-based financial system was stable, predictable, and indispensable.’

Where was the heel in the American Achilles? Where was its weakest link? What would bring the empire down faster, and more surely than anything else?

An attack on the dollar, of course. After all, the US had what we called in our 2005 book Empire of Debt. It funded itself not in the traditional ways -- conquest, looting, tribute, protection money or the slave trade -- but by borrowing and ‘printing’ ersatz ‘dollars.’

What would the best way to bring such an enterprise down? Make the dollar unreliable. Make it undesirable. Turn it into a weapon. Use sanctions, seizure, tariffs, the banking system to try to force people to do what you want. Result? They look for alternatives to the dollar. ScheerPost:

Washington Weaponized the Dollar. The World Responded by Buying Gold.

Business Standard:

‘According to the European Central Bank (ECB), gold accounted for nearly 27 per cent of global official reserves by the end of 2025, compared with 22 per cent for US Treasuries, the Financial Times reported. Just a year earlier, US Treasuries still held the top spot.’

The dollar is still the world’s go-to currency. But foreign investors and central banks are not going to it with quite as much enthusiasm as they used to have. And that means Americans — including the US government — will pay more to borrow.

The Empire of Debt staggers on; no relief in sight.

Regards,

Bill Bonner

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Source: Social Security Administration

Research Note, by Dan Denning

Our good friends—the trustees at the Social Security Administration—updated the projections I told you about yesterday. The 2026 Annual Report confirms that by 2034, the ‘reserves’ in the trust fund will be gone. Total payroll taxes of $1.9 trillion in 2034 (plus $120 billion from taxing benefits) will deliver just over $2 trillion to cover the expected cost of $2.4 trillion.

Revenues cover 83% of costs by 2034, according to the 2026 report (slightly better than the 81% projected last year). The annual ‘gap’ between benefits and revenues will be $412 billion (also slightly smaller than last year’s projection).

The bad news?

The long-term is even worse. By 2100, payroll taxes will cover just 65% of annual program costs. That means forty five cents of every dollar paid in benefits will have to be borrowed…or worse…printed. Keep that in mind when looking at gold’s recent price action, which puts it in a technical bear market and currently trading at $4,171/oz. More on that later today in Investment Director Tom Dyson’s research note to paying subscribers.