The 'Big Man' Approach

New money was printed up and added to the money supply. The national debt rose by $8 trillion and the resulting inflation caused a 25% increase in the general price level.

Tuesday, December 3^rd, 2024

Bill Bonner, writing today from Baltimore, Maryland

The strong do what they can; the weak suffer what they must.

—Thucydides

Donald Trump is going to Make America Great Again... in the same way, most likely, he made it great the last time he was president.

Investors are excited. Here’s Markets Insider:

Despite mounting geopolitical and macroeconomic concerns globally, international investors seem to agree on one thing: load up on US assets.

Yet, Ruchir Sharma wrote for the Financial Times that this mentality is inflating an unprecedented bubble and skewing fundamentals in other economies.

According to Sharma, US shares account for almost 70% of the leading global stock index, far above its level of about 30% of the index in the 1980s. Apart from positive earnings outlooks among top US companies, expectations that President-elect Donald Trump will boost the domestic economy has kept the world invested.

Last time, Trump increased spending more than any president in US history... and added more debt than ever before. As in any debt-fueled spending spree, the initial effect was pleasant. Stocks went up. People spent their stimmy checks. It felt like a real boom.

And then, the bills came in. They couldn’t be paid. So, new money was printed up and added to the money supply. The national debt rose by $8 trillion and the resulting inflation caused a 25% increase in the general price level.

Just to clarify... the hopes, dreams and plans of the multitudes cannot be better realized than by their own efforts. They bus. They sweat. They tote and hustle. There is no other source of bounty... no other spring of plenitude... no finer world or more perfect union is possible than the one they build for themselves.

Anything that gets in their way reduces the sum of their satisfaction. It could be a natural disaster, like rain at a picnic. It could be an invasion... from another country... or from outer space. But more than likely, it will be their own bossy-pants elites, in control of their own government.

A president can only really ‘boost’ an economy by keeping them under control.

But elites are elites for a reason. They are smart. Well-connected. Ambitious. And educated. In a stable society they use their smarts to gradually take more and more of the nation’s wealth... and its power. At first, they are helpful... later, they are corrupted by power, and become insufferable parasites.

In the beginning, they are confident, pioneers and innovators, who want free speech, free trade, and a free society. Later they want prisons, sanctions and free lunches; they circle the wagons to try to protect their power and wealth with regulations, tariffs, bombs and bullying.

In the news comes this message from Donald Trump:

"The idea that the BRICS Countries are trying to move away from the Dollar while we stand by and watch is OVER," Donald Trump wrote in a social media post Saturday outlining his plans to reestablish US global economic primacy after stepping into office next month.

"We require a commitment from these Countries that they will neither create a new BRICS Currency, nor back any other Currency to replace the mighty US Dollar, or they will face 100% Tariffs, and should expect to say goodbye to selling into the wonderful US Economy. They can go find another 'sucker!' There is no chance that the BRICS will replace the US Dollar in International Trade, and any Country that tries should wave goodbye to America," Trump warned.

Free trade? Forget it.

Choose your own currency? Not as long as we can stop you!

And we’ve got a crackerjack arsenal, including things that go ‘boom.’ LA Times:

Trump demands immediate release of Oct. 7 hostages, says otherwise there will be 'HELL TO PAY'

It’s either cooperation or confrontation, free trade or managed trade, diplomacy…or brute force. On the downswing of the Primary Political Trend, the rule of law gives way to rules imposed by men. And whether you voted for Kamala or Donald, the style might be different, but the trajectory would be much the same.

In the Eisenhower era, voters might have scoffed at The Donald and scorned his Big Man approach. But in 2024, they chose confrontation. They wanted a fighter. And they’ve got one. A Big, Powerful Government guy.

But then... what are Messrs. Musk and Ramaswamy up to? They’re both ‘cooperation’ guys. They say they want to make government smaller, and more efficient, like one of their efficient companies.

Are they really running low on cynicalism? Or are we?

Tune in tomorrow...

Regards,

Bill Bonner

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Market Note, by Tom Dyson

Gold is an inert metal, used for burying wealth under mattresses. Copper is a super-useful metal used for building. One represents reservation. The other represents ambition. Comparing the two reveals sentiment in the world’s vast capitalist economy.

You may be skeptical about the quality of the signal generated by this ratio, but notice how closely its ups-and-downs track the nominally risk-free US government 10-year interest rate. Why? When entrepreneurs feel reluctant to part with their savings, they also embrace the certain return of Treasuries.

For me, the recent weakness in the copper/gold ratio may be the commodity market’s way of signalling a coming economic slowdown and market-wide decline in long term interest rates. It’s still a very contrarian position, but bears watching closely.