Full Speed Ahead
They argue over the details and often duck real differences. But it didn’t matter what song they played in the bar. When the icy water rushed through the corridors, the Titanic was doomed.
Monday, January 13th, 2025
Bill Bonner writing from Baltimore, Maryland
We came back from snowy Ireland to snow covered Maryland.
And this morning, we sit in front of the fire, and take a break from our customary rigorous analysis and air-tight logic to make some guesses.
As reported last week, the Musk/Ramaswamy DOGE group has already admitted that it can’t really eliminate the deficit. Not even half of it.
But it only took just a little math to see that coming, not a lot of guesswork. They would have to cut into the muscle of the Pentagon and into the guts of the transfer payments (Social Security, Medicare, Medicaid) to really make much of a difference.
They aren’t going to do that because the politicians are in control, not the ‘efficiency’ guys. Politicos get power for themselves by spending money, not saving it. So, it was inevitable that Musk would fall out with the MAGA crowd.
Steve Bannon was on the case over the weekend. New York Post:
Days after fawning over what tech magnate Elon Musk’s deep pockets could do for the MAGA movement, Steve Bannon went berserk on the world’s richest man and vowed to limit his White House influence. Bannon, 71, who hosts the “War Room” podcast and has a penchant for plotting all-out brass-knuckled political warfare, suggested Musk “should go back to South Africa” and decried his stance on H1-B visas.
A bit more guessy is our hypothesis that the Trump phenomenon doesn’t mark a real break with the past... but merely an acceleration in the rate of degeneration. More spending. More debt. More blatant corruption. More foreign adventures. More inflation... and so forth.
The press confuses the issue. It says Trump represents the ‘extreme right’ as opposed to the mainstream ‘enlightened liberals.’ In the minds of many, the Trump win represents a whole new thing... a new era in US politics.
And in some ways it does. But not the important ones.
Perhaps less in practice than in theory, traditional party politics pitted the ‘progressives’ against the ‘conservatives.’ The improvers — a role played by the democrats — wanted to use the strong arm of the feds to build a better world. Spend, spend, spend... for better schools, welfare for the poor, make the world safe for democracy, save the planet — you name it.
The role played by conservative republicans was avuncular... dragging their feet to slow them down... and using the Constitution to impose restraints.
But over time, the wily old Republican uncles realized that they could use the government’s ‘free’ money to buy votes and gain power too. And now, is there a dime’s worth of difference between the two parties?
Both spend trillions they don’t have, knowing that it will lead to higher prices for their own voters... Both approved the invasion of Iraq... and the attack on Libya... and the bombs and cash that get sent to the Ukraine and Israel (much of which comes back to the US firepower industry... where a portion of it is then spent to guarantee more spending).
Where they disagree is not on the direction of the ship, but the color of carpet and the wine served at the captain’s table. Like married couples, they argue over the details...and often duck real differences. But it didn’t matter what song they played in the bar...when the icy water rushed through the corridors, the Titanic was doomed.
Bush, Obama, Trump I, Biden — none departed from the Big Empire course. And now Trump II is promising even more glorious expansion — to Greenland, Mexico, Canada... and perhaps teaming up with Mr. Musk... to the stars!
We’re all passengers on this ship, whether we like it or not. Where will we end up? East, West, South or North? The best guess is that it will go down.
More to come...
Regards,
Bill Bonner
Research Note, by Dan Denning
In Friday’s note top paying subscribers (Greater America), we looked at what the bond market is saying. Rising bond yields may trigger selling in liquid assets (mega caps, gold, Bitcoin) to cover falling bond prices held in portfolios. But as the chart below from Ron Griess at thechartstore.com shows, current long-term US government bond yields are still below their historical average of 5.27% (the 20-year bond opened at 5.03% this morning, the 30-year at 4.95%). What’s next: Even higher bond yields (with a stronger dollar/DXY), or central bank intervention? Stay tuned!
Government is going to wear out the chairs rearranging them on the deficit deck, but they will just go ahead and “buy” new ones (with your money).
Well, it's nice to know that Bonner has a sense of humor as he writes in his second sentence, in part: "...we sit in front of the fire, and take a break from our customary rigorous analysis and air-tight logic to make some guesses." LOL!!! Then his column takes a downward turn as he tells us what Steve Bannon thinks. Now, if you are going to present someone's ideas, you would think the quote would be something significant - it wasn't.
Bonner does strike gold to some extent, when he describes "conservatives" as mostly dragging their feet to slow the progressives down (implying that they don't offer anything different). This is partly true or at least has been true for the preceding decades. This is something Ayn Rand railed against 60 years ago as she pointed out that the shared morality of altruism (sacrifice for others) on the left and right prevented the conservatives from being a true alternative to the progressives and true advocates of individual rights. But now it seems at least some of these conservative republicans are waking up and are ready to fight for fiscal sanity and shrinking government. Maybe many of them don't fully understand or support the concept of individual rights, but at least they are in the general vicinity; whereas the Progressives embrace Collectivism, an idea that posits the collective (society, state, common good, etc.) above the individual. Hence, why they so readily sacrifice the individual for the promotion of the common good. Look at Russia and China (and even Cambodia, etc.) where millions have died to create their ideal society. But also look at California where people's lives and welfare have been sacrificed to the almighty environmental god which is so much more important than any individual's measly life. They, of course, say that their policy is for the common good and based on science. It is not. It is based on an ideology of progressive nihilism - destruction of human achievement for anything else they seem to value more - whether it is a fish, insect, plant, etc.