Let's Not Make a Deal

The original United States were not interested in foreign policies. They generally eschewed foreign entanglements, treaties, international organizations, coalitions of the willing, or nation building.

Tuesday, March 18th, 2025

Bill Bonner, writing from Baltimore, Maryland

“To all Houthi terrorists, YOUR TIME IS UP, AND YOUR ATTACKS MUST STOP, STARTING TODAY. IF THEY DON’T, HELL WILL RAIN DOWN UPON YOU LIKE NOTHING YOU HAVE EVER SEEN BEFORE!”

—Donald Trump

The Houthis have seen a lot.

Whether they will be cowed as easily as America’s university students, we don’t know.

But when it comes to foreign policy, the less you know about a place, its history, its people…the easier it is to offer a solution to its problems. In this respect too, Mr. Trump is perhaps uniquely equipped to lead the empire.

Trump has brought ‘Big Man’ government to the US. That might be a good thing…the Big Man can do what more conventional leaders cannot. He could use his remarkable power to clean house, for example.

Or he could just make a mess messier, with more chaos and corruption.

Many are the interpretations of the Trump phenomenon. He is ‘setting things right.’ He is ‘destroying our democracy.’ He’s ‘saving America from the lib-tards.’ He’s creating ‘an oligarchy.’ He’s a ‘Russian asset.’ He’s a ‘populist.’ He’s an ‘authoritarian.’ Etc.

We prefer our own: That Mr. Trump has an historic mission of which he is unaware.

Fish gotta swim. Birds gotta fly. And late, degenerate empires gotta act like late, degenerate empires.

A wise and sensible leader would insist that the budget be balanced…and unnecessary wars brought to a swift close.

But that’s not what a late, degenerate empire does. Typically, it relies more and more on brute force and less on gentle commerce. And it finds a leader who is up the challenge. He has to keep the empire on course…to its own denouement.

The invincible Spanish Armada proved very vincible. Napoleon had to retreat from Moscow. The sun set on the British Empire. The Blitzkrieg bogged down in Stalingrad. Almost all great empires meet their Waterloo in a combination of debt and foreign policy. The Austro-Hungarians invaded Serbia, and set off WWI. By 1918 the Austro-Hungarian army was still in the field, but without ammunition or food…fighting for a starving empire that soon disappeared.

The original United States were famously not interested in foreign policies. They generally eschewed ‘foreign entanglements,’ treaties, international organizations, coalitions of the willing, nation building, defending democracy and all the other claptrap of today’s empire. Besides, they were fully occupied by dispossessing the Indian tribes who stood in their way, from sea to shining sea.

The first major break with the live-and-let-live tradition was the War Between the States in which the North insisted that the South do as it was told. A generation later, by the 1880s, the US had the world’s biggest economy. The temptation to empire was irresistible, led by Teddy Roosevelt, William McKinley and Woodrow Wilson.

And today, the US has more foreign entanglements than you can shake a stick at, with some 800 bases around the world ready to exert ‘full spectrum dominance’ over whatever hapless locals get in the way.

But nothing lasts forever. And already at the edges of the spectrum, the deep reds and violets are beginning to fade. The Financial Times:

Since 2017, Trump’s first year in office, trade has held more or less steady at just under 60 per cent of global GDP. But there’s been a decline in the US share of trade flows offset by an increase in other regions, particularly the nations of Asia, Europe and the Middle East. Trump 2.0 seems likely to bring more of the same: trade without America.

Nations get rich like individuals, by offering goods and services to others. As you’d expect, most developed and developing nations have increased the importance of trade over the last ten years. The one big exception is the US, where trade as a percentage of GDP has dipped to around 25%. The Financial Times:

America may be increasingly dominant as a financial and economic superpower but not so much as a trading power. Its share of global equity indices has exploded to almost 70 per cent. Its share of global GDP has inched up to more than 25 per cent. Yet its share of global trade is under 15 per cent, and has declined significantly in the last eight years.

A timber company executive in British Columbia described the light in his neck of the woods:

“It is impossible to replace the US in the short-term, but in the long-term, we are building up our contacts with China and Japan.”

And what about America’s leading industry — high tech? Fortune:

The U.S. may have the brains in leading AI chip development globally, but China will continue to have the brawn to manufacture applications for those chips, and that won’t change anytime soon, billionaire investor Ray Dalio says. “We do not have manufacturing, and we're not going to go back and be competitive in manufacturing with China in our lifetimes, I don’t believe.”

As a trading partner, the US lost ground over the last ten years. Now it is an aim of US foreign policy — to reduce its trade with the rest of the world, making it less dependent on foreign imports.

The Big Man threatens, bullies, sanctions, tariffs, bombs — whatever it takes to make a deal. Trade slows. And the empire shuffles to its fate.

Regards,

Bill Bonner

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Market Note, by Tom Dyson

Contrarians take note. Here’s a 125-year chart of the oil price (in terms of gold) from Gavekal Research. Oil has fallen more than 90% in gold terms over the last 20 years… to levels that have — in the past — marked a turning point in the price. If oil is about to start outperforming gold…well, it’ll have huge implications across markets. We’ll see.