Tearing Down the Dollar Temple

One of the key ingredients for good money was that it be ‘trustworthy.’ How trustworthy is money that can be taken away, confiscated, barricaded or used to undermine your government.

Samson destroys the Temple, Engraving by Julius Schnorr von Carolsfeld, Source: Getty Images

Tuesday, February 17^th, 2026

Bill Bonner, from Poitou, France

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Last week brought the good news. Federal deficits were shrinking. Employment was picking up. And the economy was booming. Barrons:

Federal deficit shrinks for the fourth straight month

Nobody knows what the future brings. But the Fox News team is comfortably convinced that when they ‘get the word out’ in advance of this year’s mid-term elections, Republicans will remain in control.

Maybe.

Monthly deficits (or surpluses!) vary with receipts. It’s the long-term trend that counts. And the Big, Beautiful Budget Abomination calls for deficits as far as the eye can see...and more debt. Fortune Magazine:

The White House of 2036 will have a mammoth task on its hands: It will need to rustle up more than $2 trillion a year to pay the interest on its national debt burden, approximately 5% of the nation’s entire economy.

According to the latest projections from the Congressional Budget Office (CBO), the U.S. government will continue to run a sizable and growing deficit over the next decade. In 2026, the shortfall will stand at about $1.8 trillion, or 5.8% of GDP. Come 2036, that will have ballooned to $3.1 trillion, or roughly 7% of the American economy.

Financing US debt will likely become harder to do. Like Samson, the US crashed the two pillars of its ‘exorbitant privilege’...and now, the whole dollar temple may be coming down on our heads. Ron Paul focused on the first pillar in a 90th birthday interview with Tucker Carlson last week. Newsweek:

[Paul believes]...the U.S. economic order rests on “fraud” rooted in the 1971 break from gold and warned that the current system is nearing its end...the end of dollar convertibility into gold under President Richard Nixon, [was] the nation’s “first declaration of bankruptcy,” and [he] argued that persistent money printing and deficits have created a brittle order primed for a severe correction.

The second breach was more like a ‘declaration of war.’ The US terminated the neutrality of its money system with sanctions, seizures, tariffs, and de-banking of its targets. Last week came yet another way the US weaponizes its money. Al Jazeera:

US says it caused dollar shortage to trigger Iran protests: What that means

In a stunning admission, US Treasury Secretary Scott Bessent said Washington engineered a dollar shortage to send the Iranian rial into free-fall that culminated with protesters taking to the streets.

One of the key ingredients for good money, according to Aristotle, was that it be ‘trustworthy.’ How trustworthy is money that can be taken away, confiscated, barricaded or used to undermine your government? Foreigners look for alternatives.

Trump fans argue that the foreigners ‘have no choice’...and that it doesn’t matter anyway, because the US economy is booming. Says The Donald:

“GREAT JOBS NUMBERS, FAR GREATER THAN EXPECTED!” Trump wrote shortly after the data was released. “WOW! The Golden Age of America is upon us!!!”

But the figures show more of a Base Metal Age. Newsweek again:

In the last year, the United States created 181,000 net jobs out of a total of 158 million jobs.

“Such a low year-over-year change in jobs is very rare outside of a recession. We are not in a recession, making it even more notable,” economist Claudia Sahm wrote on X.

“We now know that in President Trump’s first year, job growth stalled, adding the fewest jobs since 2020 — a recession year.”

How about inflation? The Trumpistas say they brought inflation down from 9% to 2%. What really happened is that the big wave of inflation, caused by the lockdowns and stimmies of both Trump and Biden administrations, washed over us all.

But by the beginning of 2025, the flood was already receding. And the by the end of the year inflation was about where it began the year, at...three percent. At that rate, holders of dollar credits will lose about a quarter of their money over the next ten years.

And what about the claim that real wages are rising almost three times as fast as inflation? Again, taking a longer look, there’s no sign of it. In fact, there has been zero gain in real wages for the last five years.

Likewise, despite the claim that investment in US manufacturing grew at a 41% rate, actual manufacturing output has been flat for more than twelve years. And it’s lower now than it was twenty years ago.

The federal deficit, too, was $200 billion higher in Trump’s first year than it was in Biden’s last year. And thanks to the trends Trump put in place, the US national debt is headed to $140 trillion by 2054, with an annual interest charge of $11 trillion. If our math is right, that’s $10,000 per family, just on the interest.

Then, of course, there is all that tariff revenue. Bessent says it is helping the feds balance the budget and it ‘proves’ Trump’s risky tariff policy is working.

While it definitely lands on the credit side of the ledger, it might be worth looking at where the tariff revenue comes from. BBC:

Costs from Trump’s tariffs paid almost entirely by US consumers, NY Fed says

How in the world is it a good thing to take money from the voters and transfer it to the chosen few of the governing class?

And if the idea is to reduce the trade deficit, it isn’t working. Last year’s $833 billion merchandise deficit was higher than the last year of the Biden Team...and the second highest in history.

Golden Age? Maybe not.

Regards,

Bill Bonner