School for Scoundrels

The US seems to be split into two camps — each viciously opposed to the other. There are those who love the Big Man, almost no matter what he says or does. And there are those who despise him.

Tuesday, January 13^th, 2026

Bill Bonner, from Baltimore, Maryland

ABC brings us the latest news:

The Justice Department investigation into Federal Reserve Chairman Jerome Powell is drawing backlash from former Federal Reserve and Treasury officials as well as current members of Congress, including those in President Donald Trump’s own party.

A bipartisan group of top economic officials released a blistering statement on Monday calling the probe an “unprecedented attempt to use prosecutorial attacks to undermine” the central bank’s independence.

Once again, American observers are staggered. Their knees wobble. Their palms sweat. Alert observers quake and shake. They’ve watched the whole of edifice — habits, rules, laws, customs...some fraudulent, but many useful and even necessary — dissolve like the last bits of a sinking island.

And now, another hallowed tradition, widely believed to be essential to the dollar — the independence of the Fed — is giving way.

Of course, the Fed was never really totally independent of the federal government. But it was never completely subservient either. Ruling parties almost always want lower interest rates; it helps them win re-election. But never has a Fed chairman been threatened with a criminal investigation…based on cost over-runs on a renovation of its headquarters!

It doesn’t take much imagination to see what is likely to happen. Powell will step down when his term as Chairman is up in May. He could stay for another two years at the Fed, acting as a kind of ‘shadow chairman.’ But weakened and distracted by the DOJ investigation, he is likely to leave entirely, making room for Trump to put in his own people. Whoever they are, they are likely to want to juice the markets with more credit in advance of the mid-term elections.

Up until now, Fed chief Powell has been reluctant to engage with the president. But this weekend, he counter-punched:

“This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions, or whether instead, monetary policy will be directed by political pressure or intimidation.”

Donald Trump has long made it clear that he had no truck with international institutions, their courts, or their laws. When the International Court of Justice issued arrest warrants for Trump’s Israeli sidekicks, for example, rather than respect the ruling, Trump sanctioned the justices. Nor did he care that killing alleged drug smugglers in international waters — especially when they cling helplessly to the wreckage of their boat — was a violation of laws and decency, just about everywhere.

But now the lawlessness is coming home. Over the weekend, we heard the Vice President tell the world that POTUS don’t need no stinkin’ War Powers Act. The Hill:

Vice President Vance called the War Powers Act “fundamentally fake” and unconstitutional, ridiculing the law passed in 1973 shortly after senators on Capitol Hill voted to advance a bipartisan measure to block President Trump from using military force against Venezuela.

What, then, is real? What is worth defending? Is there any limit to the president’s power other than those of his own making? A Supreme Court decision? The Constitution itself?

The US seems to be split into two camps — each viciously opposed to the other. There are those who love the Big Man, almost no matter what he says or does. And there are those who despise him, again almost no matter what he says or does.

The MAGA-istas were delighted to see Trump dismantle and annihilate the things they loathed...foreign aid, DEI, the high-culture Kennedy Center, immigrants, foreigners who were ‘stealing our jobs’...and everyone else who got in our way or made us feel small.

The others, suffering from Trump Derangement Syndrome, could find no good in the man. As one of our readers wrote (accusing us!) even if he discovered a cure for cancer, we would still hold him in contempt.

Our dear reader may be right about that. But our problem with Trump is that he doesn’t search for a cure for cancer...or anything else that might be helpful. He is a purely zero-sum kind of guy, a product of Roy Cohn’s school for scoundrels…a throwback to a pre-do unto others world.

Zero sum works in war and pro wraslin’. Someone’s gotta win. Someone’s gotta lose.

But in economics and the rest of life you don’t win by making the other guy lose. You win by helping him to win too. If you steal a car, you now have wheels. But someone doesn’t have the car anymore. Net result = zero.

If you buy a car honestly, the seller makes a profit which feeds back into the economy promoting more consumption or investment. Economic growth is a measure of the win — the trades that work for both buyer and seller. This is so obvious...and fundamental...that a leader who doesn’t ‘get it,’ is a threat to his organization, whatever it may be.

The fight with the Fed will have winners and losers too. A few winners. Lots of losers.

Gold hit $4,647 yesterday.

Stay tuned.

Regards,

Bill Bonner

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The official measure of inflation, the Consumer Price Index, was unchanged in the last month, according to the Bureau of Labor Statistics. The ‘core’ reading (not including food and energy) was up 2.6% year-over-year. Shelter costs were up 3.2.% in the last 12 months and food 3.1%. The Federal Reserve’s inflation target is 2%.