Something Wicked This Way Comes

In France, the voters turned against Macron’s ruling coalition. In Germany, they turned against the centrist Social Democrats and Christian Democrats in favor of more extreme alternatives.

Anatol Lieven: Europe’s center is not holding

The collapse of the government in France and the ruling coalition in Germany spells continued crises

In America, too, voters selected the ‘insurgent’ Donald Trump over the media-approved Kamala Harris.

Something wicked this way comes?

Executive Summary:

All the world’s major nations — China, Japan, the US, France, Britain and Germany — are facing a debt crisis. Too much spending. Not enough revenue. And now, there’s about $330 trillion of debt worldwide… much of which will never be paid.

Responsible governments try to cut back. But they can’t. The primary beneficiaries — the rich — undermine them. And then, the victims — who have come to depend on handouts — abandon them.

The trend — towards more debt, bigger government, and more inflation — continues until a ‘bad thing’happens, effectively cutting off the money.

In France, the voters turned away from the center and moved towards the right and left, each one offering more radical solutions.

In Germany, too, the ‘right-wing’ Alternative for Deutschland and the ‘left-wing’ Sahra Wagenknecht Alliance have greatly weakened the more mainstream parties.

And, of course, Donald Trump’s Republican Party is not at all like the old conservative, centrist Republican Party of Robert Taft and Ronald Reagan. It is now a ‘populist’ party combining elements of dollar-store nationalism with old-fashioned sticky-fingered socialism.

The ‘bad thing’ we think these election results foretell is that post-WWII mainstream models — welfare states in Europe/a welfare-warfare state in the US — are running out of juice.

There was something fraudulent about them from the very beginning. In the welfare states, the promise was that by supporting the ruling elites, the voter would get more out of the system than he could by his own honest, cooperative efforts. This seemed to be true as long as populations were growing and technology and trade increased productivity. Richer, younger generations could afford to support their parents in grand style. Pensions, real estate values, medical coverage — all went up. But it was fake. Government was just redistributing wealth, not creating it.

And then, birth rates declined. And the benefits of the Industrial Revolution — which converted heat energy into useful kinetic energy — reached declining marginal utility (meaning… you get a big bump in productivity with your first tractor… not so much with the 10th).

Young people now struggle to match their parents’ wealth, not to surpass it. And though the internet, Facebook, Google and AI promised more wealth, in terms of useful bill-paying GDP, they delivered little. This left voters with a big gap between what they had come to expect from their governments and what they will actually get. Austerity was not what they had bargained for.

The American warfare state, meanwhile, had its own scams. It pretended that the US was in imminent danger from foreign and domestic enemies… and that it could only protect itself by transferring huge amounts of money to the firepower industry. Rather than a modest ‘defense’ budget, it insisted on ‘full spectrum dominance,’ that would allow it to meddle in whatever conflicts, wherever and whenever it wanted.

In addition to the costs of projecting armed force worldwide, the US too has an extensive welfare state at home to support. As in Europe, at current levels of expenditure, it is unsustainable.

In order to avoid financial catastrophe, the feds need to cut about $2 trillion from the annual budget. That is the goal of the new DOGE headed by Musk and Ramaswamy. But to get there, they need to cut back on both the warfare state and the welfare state — on military muscle as well as civilian fat.

It is certainly possible to do so; Milei shows us that. For the warfare state, it would mean only redirecting military spending towards protecting the homeland rather than romping all over the globe. And for the welfare state, the feds could simply subject beneficiaries to means testing, reducing support for people who don’t really need it.

Theoretically, it wouldn’t be difficult to bring the budget into balance and avoid a fiscal disaster. But can it be done without a ‘bad thing’ –war, depression, hyperinflation, revolution or a natural disaster -happening first? Can it be done before the people become desperate?

We’ll see.

Regards,

Bill Bonner

In France, the voters turned against Macron’s ruling coalition. In Germany, they turned against the centrist Social Democrats and Christian Democrats in favor of more extreme alternatives.

Anatol Lieven: Europe’s center is not holding

The collapse of the government in France and the ruling coalition in Germany spells continued crises

In America, too, voters selected the ‘insurgent’ Donald Trump over the media-approved Kamala Harris.

Something wicked this way comes?

Executive Summary:

All the world’s major nations — China, Japan, the US, France, Britain and Germany — are facing a debt crisis. Too much spending. Not enough revenue. And now, there’s about $330 trillion of debt worldwide… much of which will never be paid.

Responsible governments try to cut back. But they can’t. The primary beneficiaries — the rich — undermine them. And then, the victims — who have come to depend on handouts — abandon them.

The trend — towards more debt, bigger government, and more inflation — continues until a ‘bad thing’happens, effectively cutting off the money.

In France, the voters turned away from the center and moved towards the right and left, each one offering more radical solutions.

In Germany, too, the ‘right-wing’ Alternative for Deutschland and the ‘left-wing’ Sahra Wagenknecht Alliance have greatly weakened the more mainstream parties.

The ‘bad thing’ we think these election results foretell is that post-WWII mainstream models — welfare states in Europe/a welfare-warfare state in the US — are running out of juice.

In addition to the costs of projecting armed force worldwide, the US too has an extensive welfare state at home to support. As in Europe, at current levels of expenditure, it is unsustainable.

We’ll see.

Regards,

Bill Bonner

America has consistently reinvented itself in times of crisis. The founders survived monarchy. Lincoln survived disunion. We’ve survived bank panics, oil shocks, stagflation, and disco. We’ll survive deplatforming, too.

The Second American Revolution won’t be fought with muskets or manifestos. It won’t be fought with petty violence and street demonstrations. It will be written into code. And available to those who wish to take advantage of it.

Russell Kirk called the first American Revolution “a revolution not made, but prevented.” The second will be the same. We’re not tearing down the house — we’re going to rewire it in code.

The result may not be utopia. But it will be freedom you can bank on.

Treasury Secretary Scott Bessent has called stablecoins, including USDC, “a pillar of dollar strength,” estimating a $2 trillion market within five years. U.S. Treasuries back every coin.

Bessent’s formula even suggests that a broader, more efficient market for US dollars will help retain its best use case as the reserve currency of global finance… and, perhaps, help the current administration address the nation’s $37 trillion mountain of debt.

In trying to cancel a man, the establishment accidentally reinforced the dollar, and may add decades to its life as a useful currency.

As we approach the 250th anniversary of the United States, it’s worth recalling that our first Revolution wasn’t waged to destroy an order — it was fought to preserve one.

Political philosopher Russell Kirk called it “a revolution not made but prevented.” The colonists sought not chaos but continuity — the defense of their “chartered rights as Englishmen,” not the birth of an entirely new world. Kirk wrote:

“The American Revolution was a preventive movement, intended to preserve an old constitutional structure. The French Revolution meant the destruction of the fabric of society.”

The difference, Kirk argued, was moral. The American Revolution was rooted in ordered liberty; the French in ideological frenzy. The first produced a Constitution; the second, a guillotine.

Two and a half centuries later, the argument continues — only now, the battlefield is financial. Who controls access to money? Who defines legitimacy? Can a citizen’s ability to transact depend on their politics?

Trump and Powell are no buddies. They’ve been fighting over rate cuts all year—Trump demanding more, Powell holding back. Even after cutting twice, Trump called him “grossly incompetent” and said he’d “love to fire” him. The tension has been building for months.

And Trump now seems ready to install someone who shares his appetite for lower rates and easier money.

Trump has been dropping hints for weeks—saying on November 18, “I think I already know my choice,” and then doubling down last Sunday aboard Air Force One with, “I know who I am going to pick… we’ll be announcing it.”

He was referring to one Kevin Hassett, who—according to a recent Bloomberg report—has emerged as the overwhelming favorite to become the next Fed chair.