Wednesday, September 16th, 2026
Bill Bonner, from Poitou, France
‘America lost its way after 9/11,’ says Gerald Baker in the London Times.
The wars in Afghanistan and Iraq cost more than 7,000 American lives, hundreds of thousands of civilian ones and trillions of dollars, turning that surplus into a debt now above $40trn. Seeing the world’s sole superpower flounder for a decade against roadside bombs and Soviet-era rifles wrecked American self-esteem and drained Washington’s international authority. But the deeper damage was to Americans’ faith in their government and in themselves.
All over the media, commentators strove to make sense of recent developments...to explain the dramatic change in America’s place in the firmament of great nations. Typical of these assessments is the idea that the US ‘took the wrong path’...or was ‘blinded’ by the need for revenge...or that the emotional shock led to ‘chaos and insanity’ among Americans and their leaders. Daniel Larison:
The ‘War on Terror’ was a Failure
The U.S. has spent the last two and a half decades dealing out death and destruction across two continents with remarkably little to show for the effort.
All true. All beside the point.
All assume the US was headed somewhere else. It got on a train, bound for glory and ended up in Gary, Indiana. What a disappointment!
But what if it had been aiming for dereliction all along? And what if neither grief, nor insanity, nor the stupidity of any particular administration led it thither?
America did not lose its way. It found it. It was already doomed by its fake money system.
Nor is Donald Trump totally responsible for the latest reversals. He is just another in a procession of lunkheads — from Bush, to Obama, to Biden...and Trump. The latest one didn’t change direction; he just pushed down on the accelerator and enjoyed his reflection in the window as the train sped by.
But watch out, Casey Jones; there’s trouble on the tracks ahead. Reuters:
Oil rises above $108 as attacks, pipeline outage deepen Saudi supply concerns
On the evidence, the War on Terror seems to be going worse than ever. Iran controls the Strait of Hormuz. The Houthis seem to be gaining control of the Red Sea. And Iraqi militias are taking aim at the Saudi Pipeline. They seem to be cornering the world oil market in ways not covered by the finance textbooks. They do not ‘take delivery.’ They just make sure no one else can.
AP:
Houthis seize two Red Sea strategic islands
AP, AFP, Reuters:
Baghdad confirms attack on Saudi pipeline came from Iraq
Saudi Arabia has said it will not retaliate and wants Iraq to “take the necessary measures.” Baghdad is under pressure from the United States to rein in Iran-backed militias.
Meanwhile, WLOS:
Diesel prices hit historic high at over $6 a gallon on average nationwide: GasBuddy
While ‘terrorists’ drive up oil prices, speculators do the job on interest rates. MarketWatch:
10-year Treasury yield hits 5% as oil prices jump and Fed meeting looms
Traders are betting against the ‘house,’ and winning. The Pentagon cannot control ‘terrorists.’ Scott Bessent can’t control the bond market. Even with the largest economy in the world at their fingertips, neither can control the price of diesel fuel.
Diesel is what delivers the stuff. The highways are full of trucks. And the trucks burn diesel fuel. Raise the cost of diesel and the price of the stuff the trucks deliver also goes up.
Likewise, the cost of capital is the diesel fuel of finance. Everything depends on it. Raise the price and all the stuff capital buys becomes more expensive too.
But there is nothing surprising about this...except perhaps in the details from the oilfields. Stuff becomes more expensive as the feds lose their grip. Gamblers switch from buying the empire’s paper (primarily US Treasury bonds)...to selling it.
Which brings us to the real heart of the ‘decline of the Empire’ story. America’s 21st century blunders were not quirky detours. They were the logical, and probably inevitable, coaling stations along the way.
The Bubble Empire is, after all, essentially a massive inflation story. New money enters the economy when it is borrowed. So, each new dollar of debt is equal to an extra dollar of ‘money supply.’ Debt is the empire’s real fuel…its real currency.
Total US public and private debt in 1971 was about $2 trillion...and GDP was about half that much. So, for every dollar of debt there was 50 cents of output supporting it. Now, debt is as much as 4.5 times GDP. That difference — 2.5 times GDP or as much as $75 trillion — is a measure of the Bubble Empire. It is also a measure of how much fake ‘wealth’ could disappear when the bubble pops.
But remember, real wealth doesn’t evaporate. The house is still there...so is the factory...and the sausage. The ‘stuff’ survives; the ‘paper’ burns.
Regards,
Bill Bonner
Research Note, by Dan Denning
Higher inflation and higher interest rates. That’s the verdict from the Congressional Budget Office (CBO) on the costs of the Iran war. You can read the report here.
The CBO report focuses on the fact that Brent Crude oil prices have almost doubled since the start of the war. Brent Crude prices pulled back a bit this morning after the American Petroleum Institute (API) reported that US crude oil inventories were up 7.1 million barrels last week. But the worry now is about the ongoing impact of oil on US inflation.
According to CBO the ‘peak impact’ of the war was in second quarter of 2026. It says increased energy prices added 2.3% points to the annual rate of Personal Consumption Exepnditures (PCE) for an overall rate of 5.3%. Higher inflation leads to higher interest rates on US Treasury debt and increased interest expense. The Fed meets on interest rates later today. Paying subscribers should look for BPR Investment Director Tom Dyson’s Market Note afterwards.
America lost its way after 9/11? I thought America lost its way in 1971, when Nixon closed the infamous Gold Window? Some say America lost its way in 1950 when Truman fired MacArthur for coming within a whisker of winning the War of Unification in Korea. Some say America lost its way when it instituted the essentially unconstitutional Civil Rights Act in 1964. But as a longtime Bonnerite, I'm bought into the "when the money goes, everything goes" argument. Therefore, America lost its way when it ditched redeemable currency (last issuance: 1957 C. Douglas Dillon silver certificate) and silver coinage (1964 being the last issuance). Does it really matter? America lost its way; that's the bottom line. Still, the fact that its taken 55 years to get where we are now shows just how much substance there was at one time.
And the idea that made America "America" will never die. It may lie dormant, seemingly dead, seemingly buried, seemingly discredited, but it will never die. We've seen to that. Best always. PM
The US debased the dollar in 1971, went off the gold standard.
There was a reason for it.
Eisenhower, the illustrious general and departing president warned about it… The Military, Industrial, Congressional Complex.
They killed Kennedy and perverted the American economy. The war machine ramped up debt and destruction and propagated lies that the American people swallowed. It killed any necessary industry; more and more capital funneled into anything subsidized by the government. Remember the Lockheed fiasco? Government controlled markets, government controlled all things, government was omnipotent, the talking heads and experts had ushered in a new Age of Aquarius, reality took a backseat and serendipity reined. Few got rich, most got destroyed.