Gold Rules
Over the centuries, humans learned to deal with uncertainty by following rules. They follow the rules of Moses, the Constitution, habeas corpus, the First Amendment, due process and so forth.
Thursday, January 22nd, 2026
Bill Bonner, from Rancho Santana, Nicaragua
Yesterday, we watched as the news and commentaries came in.
‘Trump said this... Trump said that...Macron...Lutnick...Lagarde...’
We listened to some of Trump’s speech. After the plane was fixed, and he arrived in Davos, Mr. Trump lumbered up to the podium...and rambled on, making a number of provocative points, including the most dangerous mistake in modern economics, He confused the source of wealth with the consumption of it. Some economists (and many politicians) do so intentionally. They promise to make us richer by printing money and thus increasing ‘demand.’
Thus, did Trump claim that the US was the real source of Swiss wealth. Rolex may make the watches in Switzerland, but Americans buy them! Deep in this confusion, he thought it was unfair that the Swiss did not pay for the privilege of selling their watches in America...and that this injustice could be righted by imposing a 39% tariff (a tax on American watch buyers!)
Let’s see, with the average price of a fine Rolex at about $10,000, that would mean a tariff surcharge of $3,900 — per watch!
Then came the most amazing part. He said he raised the tariff on Swiss exports not for any economic or ‘America first’ reason...but because then-Swiss President Karin Keller-Sutter, “just rubbed me the wrong way…”
Yes, there is madness to the method. Despite such strange policy-making, Trump nevertheless undermined the empire. Associated Press:
President Donald Trump insisted he wants to “get Greenland, including right, title and ownership,” but said “we probably won’t get anything unless I decide to use excessive strength and force where we would be frankly unstoppable. But, I won’t do that. OK?”
No, he won’t use force. Instead, before changing his mind, he proposed to use his tariff duct tape to tax US consumers! He said the tariffs would start at 10% next month and climb to 25% in June.
Later in the day came news that the proposals were mostly just bluff and bluster. Trump backed off from both military action and tariffs.
But the damage was done. The threats further alienated America’s allies. And they only make sense from our out-of-favor ‘historical fatalism’ point of view.
‘Civilization is restraint’ said Freud, practically quoting us long before we were born.
In other words, civilization is a ‘rules-based order.’ You may feel that you would be happier...and the world would be a better place...if you shot the man next door, took his parking place and moved in with his fetching wife. But you don’t know for sure. And over the centuries, humans learned to deal with uncertainty by following rules. They follow the rules of Moses, the Constitution, habeas corpus, the First Amendment, due process and so forth. They say ‘please’ and ‘thank you.’ They don’t cut in line. And they don’t murder people.
Yes, it might be convenient for you to drive on the wrong side of the road and steal the cash from the church’s poor box. But it is rarely a good idea.
Civilization is also the foundation for trade and modern prosperity. People follow rules — thou shalt not steal, thou shalt pay thy bills, thou shalt respect each other’s property rights — thus allowing the formation of capital which can be invested to increase more and better products.
That is how the Trump administration policies are so effective; they set back civilization...and speed the decline of the dollar and the bubble empire.
Gold — the anti-dollar — hit $4,831 yesterday.
Stay tuned.
Regards,
Bill Bonner
"Power corrupts. Absolute power corrupts absolutely."
It is the rare individual that once granted power can restrain from abusing it.
It is a common trait of human nature.
That is why the Founders of America endeavored to create a system that inhibited power.
However, once you open the door to power, even on a limited scale, it metastasis like a cancer
until it kills the host.
The year long rise in gold proves the world (at least the central banks) understand history. I really expect Au at $5000.00 before year end. It's good for me but NOT GOOD for the country. I wish he had been a little less "the pit bull" in his comments. We may have a good financial year ahead in the markets, but the coming downside is going to be a killer!
Jim Marshall