Guardians of Empire
It’s not likely to get better before it gets worse. Treasury bond yields bottomed in 2020. They’ve been going up since then and are now at levels last seen just before the GFC.
Monday, June 1st, 2026
Bill Bonner, from Gualfin, Argentina
Our problem, and here we speak for the human race, is that we can’t understand things that are complicated and we can’t remember things that are simple.
How the Funny Money system works, exactly, we don’t know. It’s too complicated to understand it fully. Few people try. And those that do, generally lose their money, their friends, and their marriages — in that order.
But it’s too easy to forget the basic dynamic of it: as the feds ‘print’ more and more money, each dollar is worth less than the last one. That’s why the patient math of an inflationary bubble dooms late arrivals. And it’s why the boomers are more likely to appreciate the status quo than their children and grandchildren — the geezers got there first.
Last week, we saw that the feds’ spending and their attempts to lower it were both fraudulent. The spending rarely achieves anything close to what was advertised. The latest evidence, the New York Times:
Blowing Up Boats Hasn’t Slowed Cocaine Traffic to U.S., Experts Say
Almost nine months into the operation, epidemiologists, addiction scientists and public health experts say cocaine, by far the top drug smuggled out of South America, is as easy to get in much of the United States as it was before the strikes began.
And efforts to bring some measure of sanity to federal spending are usually fraudulent and fruitless, too. How much did DOGE cut out of US deficits? Not a penny.
The result is bipartisan rip-off...in which the empire goes broke while Democrats and Republicans blame each other.
Richard Cantillon noticed that the insiders who got John Law’s new money — based on shares in the (mostly mythical) Mississippi Company — did well. They could pass along the money at par value. Then, the supply of ‘money’ increased and the value of it decreased, leaving later recipients holding an empty bag.
The boomers defenestrated Thomas Massie for the cardinal sin of actually being a ‘conservative.’ They did so to preserve the status quo, not to upset it. Their houses paid for...their Soc. Security checks in the mail...they’ve become the guardians of the rot...the Imperial Guard of a dying empire.
But how many more elections will they control? They are disappearing...dropping from the electoral rolls into quilted silk-lined caskets. Meanwhile, the younger generations peer at the corpses with mixed emotions; it was those old SOBs who fouled the economy.
Tom cued us in to what could be an important warning. Walmart has dropped 14% in the last two weeks. And Costco is down 13% since May 19th.
These are where people buy stuff. The fall in the stock could be telling us that consumers are buying less stuff. Which wouldn’t be at all surprising.
Grosso modo, the Cantillon Effect...put in motion a long time ago...moves towards its conclusion. And Donald Trump gives it a push. It seems almost impossible, but when Donald Trump was elected in 2016, US government debt was around $20 trillion. Now it’s almost $40 trillion.
And here’s where simplicity comes back into the picture. As debt rises, interest payments are harder to make. Here’s Mishtalk:
Consumer Credit Stress Is Comparable to the Great Recession
Auto delinquencies are at a new record and credit cards are near record high.
In nominal dollars Autos, credit card, student loans and other are higher now than in the Great Financial Crisis (GFC).
Excluding housing there is about $621 billion in 60-day or longer delinquencies.
People are paying their mortgages but struggling mightily everywhere else. Somehow the DOW isn’t helping.
And it’s not likely to get better before it gets worse. Treasury bond yields bottomed in 2020. They’ve been going up since then and are now at levels last seen just before the GFC.
But rising interest rates and higher debt levels aren’t the only things bending the bottom leg of the K-shaped economy downward. Morningstar:
Consumer and wholesale prices are rising at the fastest rate in three years due to the Iran war. The surge in gasoline prices tied to the Iran war is set to drive U.S. inflation to a three-year high — and it might get worse before it gets better.
Tariffs are also driving up prices. WarontheRocks:
The reduced quality and shrinkflation effects are self-evident from bags of chips on grocery store shelves to shirts whose materials feel cheaper.
The latest Consumer Price Index report indicated prices had risen 3.8 percent year over year for April 2026. If you isolate tariff-hit industries, you can clearly see higher prices due to the goods on shelves having tariffs added months ago. Footwear prices, for example, rose 4.2 percent in April — the fastest in 43 months — driven by tariff costs. Previously, prices were slowly rising as retailers worked through tranches of inventory at various tariff rates, but now footwear prices are rising faster than overall inflation directly because all shoes at retail have the full weight of tariff costs.
Higher interest rates. More debt. Higher consumer prices.
Simple analysis: not good. But as expected.
Regards,
Bill Bonner
RTH is a retail exchange traded fund that includes Costco (8.2% of holdings) and Wal-Mart (11.6% of holdings). Amazon makes up 24% of total holdings. Recent weakness has driven the ETF down to its 50-day Moving Average. Has a double top formed in retailers? Recession ahead?
Rhett to Scarlett at the stairs: "it's not that easy, Scarlett..."
I remember being incensed when debt doubled on Obama's 8-year fundamental-transformation watch. Now? I can't work up the outrage. How many times have I seen this movie? Being a hard-money man since 1965, when the government made coinage into slugs, where the coinage was formerly real, I knew something was "rotten in Denmark". Mr. Bonner wants to lay it at the feet of the Boomers. Sorry, Bill. When the government started its dollar-destruction perfidy in 1965, six years before Nixon closed the gold-redemption window, I was only 13. I well recall my Mom and Grandmother complaining then about the price of hamburger and bacon, and my getting less of both. Best always. PM
Lets lay the blame on America's financial and cultural crises where it belongs. Not on a generation,i.e. Boomers, not on a so called privileged race, Caucasians, not on the wealthy amongst us. Let's lay the blame where it belongs. The Politicians. They veered us off our original capitalistic foundation incrementally one law, one regulation, one injustice and one abuse of power at a time. The consequences being our crises infested America of today.