Two Guys Named Stephen

What Miran is describing is from the ‘free lunch’ school of economics, where the US can receive billions in tariff tax income without taking anything away from the consumers and producers who pay it.

Wednesday, September 24^th, 2025

Bill Bonner, from Normandy, France

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As to what will actually happen, we demure...we hem...we haw...we say ‘on this hand’...then, ‘on the other hand’...and then, when we run out of hands, we admit that we have no idea.

But that is not true. We have ideas about what will come to pass. It’s just that...well...we don’t fully trust them.

No matter, today, we lay out what we think is the most likely financial future for the USA.

In proper nouns, it is two guys named Stephen.

Where do they get people like Stephen Miran? And the other Stephen...Stephen Miller? These are guys for whom political power is a way to prove that they aren’t the dislikable twerps that everyone thinks they are. They get power by bellying up to the Big Man. Then, they use it as he would — bullying rivals with tariffs, sanctions, and worse. Miran proposed, for example, that Trump impose “a two percent monthly increase in tariffs on China, in perpetuity, until the demands are met.”

And in a remarkable speech at Charlie Kirk’s funeral, the other Stephen proposed that there were two kinds of Americans. There are the ones with halos — among whom he counts himself and his boss, Donald Trump. And there are those with devil tails...the ‘they’...whoever they are...responsible for all the evil in the world today.

But don’t worry. The good guys will triumph!

We are the storm. And our enemies cannot comprehend our strength, our determination, our resolve, our passion. Our lineage and our legacy hails back to Athens, to Rome, to Philadelphia, to Monticello. Our ancestors built the cities. They produced the art and architecture. They built the industry.

Who “we” are is as much a mystery as who “they” are. Both groups share the same ancestors. And, on that subject, Miller needs to get in sync with his arch, stormtrooper ally, Benjamin Netanyahu. Miller says ‘our lineage and legacy’ goes all the way back to Athens. But Netanyahu declares Israel to be a ‘super-Sparta.’

Sparta, was of course, the city state that leveled Athens and took its citizens into slavery. And in Sparta itself, there were more slaves, called helots, than free men; the Spartans murdered them from time to time to keep them from getting out of control.

As near as we can figure, one Stephen is in charge of whipping up the masses with absurd rhetoric...the other in charge of hyping up the economy with absurd policies.

But our beat is money. So, we’ll stick with the knucklehead Miran. Realtor.com reports:

Fed Gov. Stephen Miran Calls for Dramatically Lower Interest Rate After Voting for Jumbo Cut

Stephen Miran has spoken publicly for the first time since President Donald Trump appointed him to the Federal Reserve Board of Governors, calling for dramatic cuts to the central bank’s interest rate.

In comments to the Economic Club of New York on Monday, Miran diverged starkly from Fed Chair Jerome Powell and argued that the policy rate should be in the mid-2% range, nearly two percentage points lower than the current range of 4% to 4.25%.

Miran is a relatively young man. The Financial Times named him as the ‘architect’ of Trump’s tariffs. From what we can tell, he believes tariffs won’t cause inflation because he thinks the currency markets will adjust. In other words, Americans won’t really pay a higher price for their new Volvo, for example, because the dollar will go up against the kroner, giving Americans greater purchasing power, and keeping the real price more or less where it was.

But profit margins in the auto industry average about 7%. A 15% base tariff rate — paid by the manufacturer in a decline of the kroner — would leave them with a big loss. Why would they continue?

What Miran is describing comes from the ‘free lunch’ school of economics, where the US can receive billions in tariff tax income without taking anything away from the consumers and producers who pay it.

Miran got onto the Fed board by telling Donald Trump that he could lower interest rates, boost employment, spend more money, and put on his tariffs with no loss to the dollar’s value. The ‘free lunch’ would come about by the magic of ‘growth’...which would goose up GDP and thereby send a flood of new tax revenue into the basement of the Treasury.

But there is no evidence of such growth anywhere in the economic record. Just the opposite. The Fed never, ever had rates as low as they were in the 2008-2023 period. And yet, growth rates declined from the 3 and 4 percents of the 1990s to the 1 and 2 percents of the 2008-2025 period.

In May of next year, Jerome Powell will step aside. Miran is expected to take his place. He will do what he says he will do — lower interest rates. Fearing more inflation, private investors will dump their US bonds, leaving the Fed to buy them and finance federal deficits almost by itself. The result will be inflation. Gold will rise. Stocks may rise too, but probably not as much. In a year or two, the ratio — Dow/Gold — will be near our ‘5’ trigger.

And that will put out DGTS (Dow/Gold Trading Strategy) to the test. Who will want to buy stocks in a declining economy, with gold soaring...

...and the two Stephens in charge?

Regards,

Bill Bonner