Economic Prism

The Brutal Truth About the Upcoming Stagflationary Simmer

MN Gordon — Fri, 05 Jun 2026 08:05:38 +0000

Major U.S. stock market indexes continue to float along at or near all-time highs. The ride’s been both fun and exhilarating. But stocks aren’t the only things floating at such incredibly lofty levels. Gas station signs and grocery store receipts show that everyday essentials are similarly expensive. These sky-high prices are less enjoyable. For the wealthy, those who hold an abundance of stocks, real estate, and other appreciating assets, the economy has never been better. They get richer while they sleep. However, for the average wage earner, the story is entirely different. For those having to make the difficult choice between filling up their gas tank just to get to work or filling up their family's bellies, this economy absolutely blows. The Consumer Price Index (CPI), which is fabricated to understate inflation, is even signaling that price increases continue unabated. The latest official CPI Report revealed that consumer prices increased at an annual rate of 3.8 percent in April. This rate of inflation is certainly lower than the devastating 9.1 percent CPI peak hit back in June 2022. But make no mistake, prices are still going up every single month. What’s more, these relentless price increases are compounding on top of previous price increases, making them feel even heavier. For example, the CPI in April 2020, right before the faux pandemic money-printing machine went into overdrive, stood at 256.389. As of April 2026, that number has climbed to 333.020. This massive jump amounts to roughly a 30 percent total increase in the cost of living over just six years. Are you making at least 30 percent more money today than you were back in 2020? If not, this means your valuable time, talents, and labor have effectively been devalued by deliberate policies of extreme dollar debasement. Again, this is according to the government’s fabricated statistics. We all know, based on real world experience, that prices are rising much faster than what’s officially reported. But it’s not just consumers that are sensing higher prices. The bond market is sensing them too…

Bond Market Barometer

If inflation is the daily weather, then the global bond market is the ultimate, highly sensitive barometer. Right now, long-term bond yields are signaling that institutional investors believe the inflation monster has returned. The yield on the benchmark 10-year Treasury note, for example, is currently sitting at about 4.5 percent. Meanwhile, further out on the risk spectrum, the 30-year Treasury bond is yielding about 5 percent. With yields on the 10-year Treasury note holding firm in the mid-4 percent range, the market is demanding extra compensation for rising consumer prices. Investors realize that, without it, their fixed interest coupon would be fully consumed and eroded by inflation over time. Remember, bond yields move inversely to bond prices. When investors dump bonds and demand higher yields, it’s because they see major risks on the horizon. Those looming risks include increasing structural inflation and massive, unchecked government deficits that require endless new debt issuances. Over on the long end of the maturity curve, the 30-year Treasury bond tells an even deeper story about our collective financial future. Holding a yield that’s about 50 basis points above the 10-year Treasury note is technically normal. A healthy, upward-sloping yield curve simply means you should get paid more to lock your capital up for three full decades. However, the fact that both critical benchmarks are firmly anchored well above 4 percent means the golden era of dirt-cheap, 3 percent 30-year rate fixed mortgages is dead and gone. It won’t be coming back either. The market is pricing in a massive structural shift. A world where borrowing money simply costs more for everyone. With this rising inflation and rising interest rate environment, what’s a noob Federal Reserve Chair to do…

Kevin Warsh’s Ultimate Test

This brings us to the latest uncertainty in economic policy. The transition of leadership at the Fed to incoming Chairman Kevin Warsh. Taking over the Fed always comes with unique challenges. But Warsh is stepping into an absolute minefield. He doesn’t just have to set interest rate policy. He must manage expectations, market psychology, and immense political pressure from President Donald J. Trump. If you recall, the Fed operates under a dual mandate. It must keep prices stable (inflation at 2 percent) and maximize employment. Right now, per the headline numbers, the labor market appears relatively healthy – though the labor participation rate is in the toilet. At the same time, inflation is running hot. If Warsh cuts interest rates too quickly to appease Trump or juice the economy prior to the midterm elections, he risks inflation igniting from a controlled burn to a roaring wildfire. If consumer demand spikes or if supply chains are disrupted while the CPI is still above target, we could see a 1970s-style second wave of inflation. That would destroy the Fed's credibility entirely. Conversely, if Warsh keeps rates too high for too long, something in the financial system will eventually snap. Regional banks, commercial real estate, and heavily indebted corporations are already feeling the squeeze of these interest rates. Waiting too long to ease policy could push the economy into recession. And there’s also the massive pile of government debt that would need to be rolled over at higher rates. Warsh has historically been viewed as an inflation hawk. Someone who isn’t afraid to use tight policy to defend the dollar. As Chairman, however, it could be a different story. When push comes to shove, he’ll likely follow the path of every other Fed Chair starting with Alan Greenspan in 1987. That is, he’ll sacrifice the dollar to ease the debt burden of an overloaded financial system. Regardless of what Warsh does, there’s an absolute mess coming down the turnpike…

Stagflationary Simmer

By the time we are unwrapping holiday gifts and looking toward 2027, the economic landscape will likely be mired in a stagflationary simmer. Inflation isn’t going away. In fact, it’s currently heating up. This is in defiance of the optimistic forecasts from Wall Street analysts who pinned their enthusiasm on a permanent cooldown. Instead, a harsh winter looms for the average consumer's purchasing power. As far as we can tell, there’s not a snowball’s chance in hell that there will be a smooth drift down to 2 percent. The brief reprieve we felt is over, and the trajectory for the next six months is pointed firmly upward, threatening to erode whatever financial breathing room families managed to claw back. The burgeoning energy and food shock, compounded by supply chain bottlenecks and misguided tariff policies, are propelling prices higher. The CPI could easily grind higher through the end of the year. And if Warsh acquiesces to Trump, it could make another run at 10 percent in 2027. This is a catastrophic scenario that would utterly decimate the middle class. When it comes down to it, Warsh and the FOMC are completely cornered. Any lingering fantasies of rate cuts will be thoroughly dismantled as inflation wreaks havoc through the economy. Instead of a recalibration downward, the Fed will be forced to hike rates just to keep expectations anchored, even if it means triggering a severe recessionary correction. In short, we aren’t transitioning into a smooth, disinflationary goldilocks economy as everyone hoped. We are entering a grueling uphill climb. The dollar’s eroding value is ironically fueling the fire, keeping consumer demand just strong enough to allow companies to keep raising prices. Thus, we’re trapped in a vicious, self-reinforcing cycle of financial pain. [Editor’s note: Get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield," when you join the Economic Prism mailing list today. If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from The Brutal Truth About the Upcoming Stagflationary Simmer to Economic Prism

How Washington is Silently Tokenizing Your Bank Account

MN Gordon — Fri, 29 May 2026 08:05:20 +0000

“Most Americans don’t realize they live under an expansive surveillance regime that likely violates their constitutional rights. Every purchase, deposit, and transaction, from the smallest Venmo payment for a coffee to a large hospital bill, creates a data point in a system that watches you—even if you’ve done nothing wrong.” – Katie Haun, MIT Review

Have You Heard of the CLARITY Act?

If you missed it, you’re one among many. Reporting on the subject has been slim. No one wants to talk about it. Certainly, we don’t. But we will. Because it’s important. We’re referring to the Digital Asset Market Clarity Act, or the CLARITY Act for short, which recently advanced out of the Senate Banking Committee via a 15 to 9 vote. The bill has already passed the House of Representatives and is getting queued up for a Senate vote. Currently, Senate committee staff are merging the CLARITY Act framework with the companion Digital Commodity Intermediaries Act. The combined bill requires a full Senate floor vote and must survive conference reconciliation before heading to the President's desk. Congress has about two months of session time left before the August recess to get the bill to President Trump’s desk for signature. After August, very little gets done through the midterm elections in November. With a little luck, the Act will stall out. One of the points of contention leading up to the Senate Banking Committee vote had to do with the stablecoin yield provisions. What you need to know, as you’re herded into stablecoins, is that you, as a stablecoin holder will receive no interest from the underlying Treasuries the stablecoins are backed by. The interest, as stated in the GENIUS Act, goes to stablecoin issuers. You, as a holder of stablecoins, get absolutely diddly-squat. This is the new money regime that’s being put in place. If successful, you’ll have to live with it. Your kids will too. We are currently 55 years into America’s grand experiment with pure fiat money. If you recall, this cycle that kicked off in 1971 when President Nixon slammed the Bretton Woods gold window shut. Today, U.S. government finances are buckling under the weight of unprecedented debt. But instead of letting the system face its inevitable economic reckoning, central planners are working overtime to pull off another historic monetary switcheroo.

Genesis

Nixon’s action in 1971 wasn’t the first time the terms and conditions of the dollar were changed. Other instances include the issuance of Greenbacks during the Civil War or FDR’s gold confiscation in 1933. Once again, the state is radically re-engineering the form and feel of the U.S. dollar. The goal is to mask an outright sovereign debt crisis by forcing the global economy onto a digitally native, stablecoin-anchored dollar. This isn’t some far-fetched proposal for the distant future. In fact, the legal trap doors are already shutting. It began with the GENIUS Act in 2025, and now, the forthcoming CLARITY Act is arriving to finish the job. Will it work? Your guess is as good as ours. But if you’re trying to build and preserve wealth, you cannot afford to ignore this. The architecture of this new financial order was codified when the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act was signed into law on July 18, 2025. For the uninitiated, stablecoins are cryptocurrencies pegged to a steady asset, usually the U.S. dollar. Their primary purpose had been for parking funds or moving liquidity across digital assets. For example, if you were speculating on the price of bitcoin and thought it was due for a price correction, you would sell bitcoin and hold stablecoins with the hope of buying back bitcoin at a lower price in the future. The GENIUS Act changed the game by legally mandating that any Permitted Payment Stablecoin Issuer (PPSI) must back their tokens 100 percent, one-for-one, with high-quality, liquid assets – specifically cash and short-term U.S. Treasuries. This framework ties the burgeoning global digital asset economy directly to Uncle Sam’s liabilities. Every single time an issuer mints a digital dollar, they are legally compelled to buy a piece of U.S. debt. As global trade, tokenized assets, and instant 24/7 settlements scale up, the structural demand for these regulated stablecoins will become massive. If successful in its intent, this would translate to a virtually bottomless, non-taxpayer-funded credit pool for the U.S. Treasury. It would also artificially preserve the dollar’s status as the world reserve currency while keeping the government’s deficit machine running at full tilt. In other words, the mega U.S. government debt bubble could blow out orders of magnitude greater from its already lofty level. Make no mistake, this is the birth of the new digital dollar. It is not a Central Bank Digital Currency (CBDC) issued directly by the Federal Reserve. Instead, the government outsourced the infrastructure to private-sector issuers. Over time, legacy paper cash will be systematically relegated to a niche, ceremonial relic.

Closing the Loophole

While the GENIUS Act established the foundational plumbing for stablecoins, it left open a major capital battlefield. Enter the CLARITY Act, which serves as the second half of this legislative dollar switcheroo. Its primary purpose is to draw definitive lines between the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC), build a maturity framework for decentralized networks (from early, centralized stage to true decentralization), and fully optimize the flow of capital running through the stablecoins. The most critical, heavily lobbied aspect of the CLARITY Act centered on Section 404: the strict prohibition of interest and passive rewards on stablecoin holdings. The GENIUS Act explicitly banned stablecoin issuers (like Circle) from paying interest or yield directly to token holders. However, a major regulatory loophole quickly emerged. Massive crypto exchanges and brokerages set up business-to-business revenue-sharing deals with issuers. The exchange would take a cut of the Treasury yields generated by the reserves and pass them down to retail users as a marketing incentive – calling them holding rewards or passive yields. Users could park their stablecoins on an exchange and passively collect a 4 to 5 percent yield without taking on active trading risks. The CLARITY Act’s Section 404 closes this yield sharing loophole. It outlaws any third-party program that offers consideration or rewards that are “economically or functionally equivalent” to interest on a bank deposit just for holding the token. If passive rewards are banned, the multi-billion-dollar question is: Who gets to keep the interest generated by those trillions of dollars in Treasury reserves? The answer tells you everything you need to know about who this legislation was truly written to protect. Namely, stablecoin issuers and traditional commercial banks. When you exchange your hard-earned cash for a compliant digital dollar like USDC, you hand over your capital for free. The issuer takes your fiat, buys yield-bearing U.S. Treasuries, and pockets the interest as pure corporate profit. Under the GNEIUS Act and further reinforced by the CLARITY Act, you don’t get a cut of the action. This is the core of the legislative design. During the drafting of these bills, traditional banking lobbies, like the American Bankers Association, were on edge. Commercial banks historically pay rock-bottom interest rates on traditional checking accounts. If everyday citizens could seamlessly shift their cash deposits out of traditional banks and into digital stablecoins to passively clip a 5 percent yield, it would trigger a catastrophic flight of capital. By legally banning passive rewards, the CLARITY Act eliminates the economic incentive for the masses to drain their traditional bank accounts. It ensures stablecoins behave exactly like physical cash in a wallet. This artificial restriction protects the lifeblood of commercial banks, ensuring they retain the cheap deposit capital necessary to fuel their fractional-reserve lending practices, mortgages, and consumer loans.

Death of Financial Privacy

The transition to this tokenized regime is being actively fast-tracked under the guise of national security. On April 8, 2026, the U.S. Treasury, alongside the Financial Crimes Enforcement Network (FinCEN), and the Office of Foreign Assets Control (OFAC), issued a joint proposed rule to formally integrate stablecoins into the Bank Secrecy Act (BSA). At the time, Treasury Secretary Scott Bessent framed this as a way to “protect the financial system from national security threats.” In the realm of central planning, integration is merely a polite code word for total, unmitigated surveillance. By legally defining stablecoin issuers as financial institutions under the BSA, the government has transformed every compliant digital dollar into a binding tracking device. Issuers are now required to enforce Know Your Customer (KYC) protocols on every single wallet holder. They must file Suspicious Activity Reports (SARs) on atypical peer-to-peer transfers and maintain direct, real-time data feeds straight to federal regulators. Furthermore, a trap has been laid at the state level. Over 15 states, led by Florida’s SB 314, have set up tiered oversight models. If an issuer stays under $10 billion in circulation, they operate under relaxed state rules. But the moment they scale past that threshold, they are automatically handed over to the federal Office of the Comptroller of the Currency (OCC). The states lure the capital in with a hands-off approach, and the federal government shuts the corral gate once the herd is inside. When money shifts from paper ledgers into blockchain-native tokens governed by smart contracts, it ceases to be a passive asset. It becomes programmable software. While the elite market this as the pinnacle of financial efficiency – enabling instant, cross-border payments and 24/7 trading – it hands extreme control to centralized authorities. Because these tokens operate on code, rules, conditions, and restrictions can be attached directly to the money in your pocket. As assets are tokenized, and fall under the surveillance of the Bank Secrecy Act and the GENIUS / CLARITY framework, personal autonomy disappears. For example, central planners could program your digital dollars to expire or lose value if they aren’t spent within 30 days, forcing artificial velocity into a failing economy. So, too, your digital wallet could be directly integrated with your carbon footprint or health metrics. Should you exceed your monthly carbon allowance, the smart contract will automatically reject your transaction at the gas pump. Your digital tokens could also be programmed to only function within a 15-minute radius of your registered residence, effectively controlling your ability to move about freely. And should you express dissent online or refuse a mandated vaccine, a single line of code updated on a centralized ledger could instantly freeze your entire net worth or restrict your purchases exclusively to essential items.

Automated Tyranny

In the legacy financial world, freezing someone out required manual coordination across fragmented banking networks. In the GENIUS and CLARITY Act era, tyranny is entirely automated. To be clear, this legislative framework is no longer a fringe theory or a future proposal. It is rapidly becoming the law of the land. But getting the legislation in place is just the beginning. There also needs to be a way to force a wary public into adoption. Thus, a trigger will be needed. This will likely be in the form of a shock event such as a banking crisis, a severe economic recession, or a geopolitical event, which will compel full stablecoin implementation. Perhaps the forthcoming energy shock and food crisis prompted by the Strait of Hormuz closure will do the trick. The transition to tokenized bank accounts will be heavily marketed as a necessary upgrade for your safety, speed, and convenience. We don’t like it. But we can’t deny it. The era of anonymous fiat money is drawing to a close. As an investor looking to preserve your financial freedom, you must learn to navigate this digital transition without becoming enslaved by it. This will take some planning and an understanding of what’s possible and practical. As far as we can tell, this means using the digital compliant systems for day-to-day commerce, while simultaneously maintaining a subset of wealth entirely off grid. Now, more than ever, physical gold and silver, held in private, which requires no power outlet, no internet connection, and no government-approved ledger, is essential. [Editor’s note: Get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield," when you join the Economic Prism mailing list today. If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from How Washington is Silently Tokenizing Your Bank Account to Economic Prism

The Rapper and the Rolling Stone

MN Gordon — Mon, 25 May 2026 08:05:59 +0000

Politicians and governments today generally rule from a government-knows-best model. They believe they can calibrate, modulate, and manage an entire economy from a comfy government desk. From the price of eggs at your local grocery store to exactly how much the cashier gets paid, they want a finger in every pie. They raise a red pen against the private sector, convinced that with enough rules, regulations, and tax dollars, they can engineer a perfect society. Quite frankly, we find it exhausting – and destructive too. If the people are lucky, and after the micromanagers have made a big enough mess of things, a rare leader may come to power who believes in allowing the natural and self-correcting forces of the free market to order society. They cut the sprawling state down to size. They don’t pretend to know what's best for you. Instead, they step back, outline the government’s boundaries in chalk, and let the private sector do its thing. They trust that everyday people, guided by self-interest and the ever-changing signals of supply and demand, are way better at running the world than any politician. One side wants more control and higher spending. The other wants less government and more freedom. It’s a tale as old as time, but it shapes everything from your tax bill to the price of your morning coffee. What’s more, these diverging experiments in political economy offer remarkable instruction. In today’s guest article, our old friend Joel Bowman, of Notes From the End of the World fame, juxtaposes these differing approaches – and their resulting pain and pleasure. Enjoy! MN Gordon P.S. If you’d like more of Mr. Bowman’s erudite insights, do yourself a favor and head over to his website and subscribe to his newsletter. This will ensure you receive all his latest musings on freedom, liberty, and the culture of the west. We have no financial arrangement with Bowman and do not profit from publishing his work. We simply find his observations and writing to be valuable and believe you will too. --

The Rapper and the Rolling Stone

Mamdani and Milei, a tale of two leaders…

“But what can a poor boy do Except to sing in a rock ‘n’ roll band?”

~ The Rolling Stones, Street Fighting Man (1968)

Joel Bowman with today’s Note From the End of the World: Buenos Aires, Argentina...

Today, a few words on a subject about which your editor knows a great deal: ignorance. Ah, the pages we could fill with all that we do not know! The trick to not knowing, as the Father of Philosophy reminds us, is in not pretending you do. And it is here, at the very first hurdle, that most do-gooder politicians and government-knows-best meddlers come unstuck. Let us choose, as our exemplars of knowledge and ignorance, two members of the popular political cast hailing from opposite Ends of the Americas, both filed under the letter M: First up, the Mayor of New York City, Ayatollah Zohran Mamdani And second, the President of Argentina, Señor Javier Milei The former, a political activist, campaign organizer and one-time hip hop rapper, believes he knows what voters need... and how to give it to ‘em, good and hard. The latter, a professional economist, vocal proponent of the Austrian School of Economics and former singer in a Rolling Stones cover band, is not so sure... On matters of substance, the two men could not be more different.

Class Warfare

On the one hand, Mamdani descends from a long line of prominent intellectual and cultural elites – his father is a fêted political theorist and anthropology professor; his mother is an acclaimed director and producer of “international art-house and crossover films.” (Claude says: “In the west, she is probably more recognizable within elite film and cultural circles.“ Yeah, we didn’t know either...) Milei, on the other hand, traces his roots back to tierra áspera – his father was a bus driver, who later became a transport businessman; his mother was a homemaker. (Milei describes a strained or distant relationship with them both... at best.) Aside from their differences in musical taste and class background, and more germane to the beat of these Notes, the fast talker and the rock crooner diverge on matters of political preference, too. When it comes to their respective approaches to government, Milei’s tool of choice is a giant motosierra, which he uses to cut the sprawling State down to size... while Mamdani arrives on the scene with a gym teacher’s whistle, ready to coordinate, calibrate, modulate and otherwise manage the economy into shape. Against the private sector, Mamdani raises his red pen... around the public sector, Milei traces a chalk outline.

More and Less

From the price of eggs at the local grocery store... to who owns and runs the store... who should be allowed to work there and what their hourly wage should be... where the eggs are to be farmed... under what conditions and with which chickens... and so on and so forth, down to the tiniest detail... … there is scarcely an aspect of daily life over which our leading men would agree. On the face of it, their political domains are different, too. Argentina is a country of 48 million people scattered across a vast and varied terrain of just over a million square miles. New York is a city of 8.5 million people, crammed into a land space of just over 300 square miles, meaning you could drop ~3,500 Big Apples into this fin del mundo and barely crack the crate. And yet, with a nominal GDP of roughly $1.3 trillion, New York’s economy is almost double the size of Argentina’s, which weighs in at around about $700 billion (projected, 2026). That works out as a per capita difference of roughly fivefold. NYC’s GDP per capita is around $70k per person; Argentina is closer to $14k. (As readers can see, we’re using back of the envelope numbers here, assuming from the outset that statisticians are perhaps best qualified to challenge politicians in a contest of compulsive fibbers.) But even allowing for the difference in their respective economies, it may come as a shock to some readers (and a painful one at that) to learn that government spending in New York City is more than six times per person what it is in Argentina... And that’s without having to pony up for a military… national defense… navy… Social Security…Medicare… Medicaid… interstate infrastructure… federal courts… diplomacy… embassies… foreign consulates… border control… a space program…nuclear program… national debt servicing… federal disaster relief… the FBI, CIA, DEA, TSA… and all the other gaudy baubles and shiny trinkets typically shouldered by federal governments. So while the Argentine government spends $2,100 per person (adjusted) annually... spending in MamdaniLand comes in at $13,500 per person. What do New Yorkers get for their tax dollars?

Big Apples and Little Apples

Violent crime is roughly the same between the two locales, with the Big Apple experiencing slightly more homicides than Argentina, at 4- and 5- per 100k population, respectively. Shockingly, poverty is comparable, too, with official data from the city’s own NYCgov Poverty Measure showing between 23-26% of residents living in poverty, compared to 28% of the population here in Argentina, per the latest INDEC data. And that’s despite NYC residents having access to welfare, SNAP, subsidized housing, cash vouchers, Earned Income Tax Credit, school meals, shelters, etc. Homelessness, meanwhile, is difficult to compare, although official data suggests NYC has a higher rate of unsheltered residents per capita, with official stats showing 0.06% of the population sleeping rough compared to 0.02% here in Argentina, even as NYC’s “right to shelter” laws ensure some 90,000-110,000 people find temporary shelter every night (and are therefore not counted in the above figure). That’s a situation made all the more painful given that, at $81,000 each, NYC spends about six times more per homeless resident than Argentina’s entire annual GDP per capita... and almost 40 times Argentina’s total spending per resident each year. That’s up from “just” $28,000 per person in 2019... and roughly double what the city’s Department of Education spends each year per student, $42,000. And yet, the problem only seems to grow... No surprises for guessing Mamdani’s solutions for the city’s Big 3 problems… On homelessness: more public housing... more housing vouchers... more rental assistance... and a $1.8 billion government contract with the city’s hotels to serve as an emergency homeless housing system… On crime: a new Department of Community Safety, expanded mental-health response teams, and a public safety plan estimated to cost the city $1.1 billion... (from a man who actively supported Defund the Police during the BLM riots)… On poverty: universal childcare, free buses, city-owned grocery stores, rent freezes, higher minimum wages... ... and an endless catalogue of collectivist gimcrackery that Argentina just spent the past 75 years proving does not work. How, exactly, Mamdani proposes to pay for all these trinkets and freebies is up for debate, especially as the billionaire exodus (we mentioned in this Note) gathers pace. And what about Sr. Milei? How have his free market policies been working down this End of the Americas? Is there any place left for a street fighting man? Stay tuned for more Notes From the End of the World... Cheers, Joel Bowman founder of Notes from the End of the World P.S. As we were going to print, Bowman let us know that The Rapper and the Rolling Stone is Part I in what will be an ongoing series in which he will compare and contrast the leadership stylings and philosophical underpinnings of Argentine President Javier Milei and New York City Ayatollah Zohran Mamdani. Be sure to head over to his website and subscribe to his newsletter so you can tune into these reveries in real time.

State Sponsored Suicide

MN Gordon — Fri, 22 May 2026 08:05:26 +0000

“A great civilization is not conquered from without until it has destroyed itself from within.” – Will and Ariel Durant, The Story of Civilization

Enemy Within

How does a superpower die? Does it come from the blinding kill shot of a hypersonic missile streaking through the sky? Or, perhaps, a rogue cyberattack that mortally destroys the national power grid? Will the end of America come with foreign tanks rolling through New York or a massive, coordinated amphibious attack on Los Angeles? These dramatic scenarios make for captivating conjecture. But they’re highly unlikely. If you look at the autopsy reports of the world’s greatest empires, the ultimate cause of death is rarely a sudden, overwhelming external blow. Long before the barbarians breached the gates of Rome, the Roman denarius had been systematically devalued into a glorified copper token to fund a bloated bureaucracy. This was characterized by widespread domestic corruption and endless military expansion. So, too, long before the British Empire reluctantly packed up its global flags, it realized the staggering cost of multiple wars had left it financially bankrupt, structurally hollowed out, and entirely dependent on American loans. Great civilizations don’t usually get slaughtered by their rivals. They commit slow, sophisticated, economically optimized suicide. As we move through 2026, the United States is following a well-worn, dangerous path. But it’s traversing it at a speed and scale that would leave ancient Rome in the dust. The reality that no politician will publicly admit is that America’s out-of-control federal spending and its monstrous, multi-trillion-dollar financial system are doing far more structural damage to the country's long-term survival than any foreign adversary ever could. By burying the nation in unpayable debt, Congress is willingly destroying America from the inside. Hence, the greatest threat to our future lies not across the ocean, but directly within our own borders.

Act of War

Let’s talk about the ghastly numbers. They’re often ignored by the general population because our brains are hardwired to glaze over when we start talking about trillions. Here we’ll break them down for you. Right now, the official U.S. national debt has blown past $39 trillion. To put that into perspective, if you spent one dollar every single second, it would take you about 32,000 years to spend $1 trillion. America owes 39 of those. But the real issue isn’t just the total balance on Washington’s credit card. It’s the cost of keeping the account active. The yield on a 30-year Treasury bond recently climbed above 5 percent for the first time in nearly 20 years. Yet today’s balance is much larger than it was 20 years ago. When you owe $39 trillion, even a tiny uptick in interest rates transforms your budget into an insurmountable nightmare. America is currently burning through roughly $3 billion every single day just to pay the interest on its existing debt. Think about that for a second. Before a single pothole is filled, before a single soldier is paid, before a single school lunch is funded, or a Medicare claim is processed, $3 billion dollars vanishes into thin air every 24 hours. It doesn’t buy new equipment, it doesn’t rebuild infrastructure, and it doesn’t help struggling families. It’s purely the cost of treading water. Instead of investing in the future, we’re paying for the profligacy of the past. If a foreign nation managed to sabotage the U.S. economy so severely that it drained $3 billion a day out of the federal Treasury, it would be viewed as an act of war. We would mobilize the military. Yet, because this bleeding is caused by our own fiscal policy, we pretend it isn’t happening and go back to scrolling on our phones.

Vicious Doom Loop

The entire American lifestyle – and by extension, the global economy – is built on the singular, fragile assumption that the rest of the world will always want to buy American debt. For decades, this was a safe bet. Treasuries were considered risk free in terms of default. The U.S. dollar, while under threat of the U.S. government’s making, remains king of the global financial system – for now. When global chaos hits, investors run to U.S. Treasuries like a safe harbor in a storm. This exorbitant privilege allowed Washington to spend money it didn't have without facing immediate consequences. But that privilege resulted in a dangerous lack of discipline and created a catastrophic level of arrogance. Politicians on both sides of the aisle began treating the national debt like a meaningless artifact. To Congress, and as elaborated by the late Dick Cheney, “deficits don’t matter.” Unfortunately, the mathematics of debt do matter. And right now, the system is locked into a vicious, mechanical doom loop. Here’s how it works… Every month, while you pay your bills, live within your means, and balance your personal finance books, the Treasury issues mountains of new debt just to pay off the old debt that’s maturing. All the while, it’s borrowing more to cover current overspending. Yet, because the market is getting flooded with U.S. bonds, investors are demanding higher yields. Higher yields mean refinancing becomes more expensive. More expensive refinancing creates even larger deficits. Larger deficits require issuing even more bonds. The financial system is, in effect, cannibalizing itself to stay alive. No enemy army could design a more effective trap to paralyze the American financial system. When an enemy attacks, the damage is obvious. Buildings fall, smoke rises, and the country rallies together. But when financial decay sets in the destruction is deceptive. For many people, the cause is unclear.

Inside Job

Over the decades, American leaders assumed the world had no choice but to use the dollar. Where else were they going to go? But our adversaries and allies alike have watched this fiscal train wreck unfold and are methodically diversifying their reserves. They realize that a superpower running a $39 trillion deficit is a precarious foundation for the global economy. Central banks around the world have accelerated their gold purchases to historic levels. Countries like China have been systematically reducing their holdings of long-term U.S. Treasuries. It’s not a sudden boycott of the dollar. Rather, it’s a slow calculated diversification. As the rest of the world lightens up on their purchases of U.S. debt, the Federal Reserve becomes the buyer of last resort. That means creating credit out of thin air to buy U.S. Treasuries. This is a formula for runaway inflation. The type that has destroyed countless currencies throughout history. To be clear, Fed asset purchases have been occurring for much of the 21st century. So, too, have U.S. government policies of dollar debasement. This sophisticated state-sponsored suicide takes place in ongoing Congressional hearings, mundane Treasury auctions, continuous debt ceiling increases, pretend government shutdowns, and carefully scripted statements by the Fed using concocted syntaxes that are designed to keep people from panicking. As America closes in on its 250-year anniversary it’s being drained of its capital. The government continues to borrow tomorrow’s prosperity to pay for today’s political promises. All the while, the people watch the infrastructure of the nation’s cities crumble as $3 billion a day is directed to service interest payments. The currency buys less and less every year, forcing citizens onto an endless economic hamster wheel. Alas, it hasn’t taken an enemy to destroy America. Our politicians have already done the job for them. [Editor’s note: Get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield," when you join the Economic Prism mailing list today. If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from State Sponsored Suicide to Economic Prism

The Great American Squeeze of 2026

MN Gordon — Fri, 15 May 2026 08:05:02 +0000

Does your American dream feel like it’s being put through a hydraulic press? If so, you’re not alone. Between rising rent and gas prices, escalating grocery bills, and sky-high health insurance premiums, Americans are feeling a relentless squeeze from all directions. That’s the painful reality. Recent economic numbers point to a weary consumer. In fact, consumer sentiment is at a 74-year low. To put that in perspective, Americans feel more pessimistic about the economy today than they did during the 2008 financial crisis, the stagflation of the 1970s, or the height of the 2020 lockdowns. What’s going on? Why does it feel like your paycheck is evaporating before it even hits your bank account, while the S&P 500 is hitting record highs over 7,400? The answer has to do with the K-shaped reality of 2026. For years, economists have tried to gaslight American workers and consumers. They blamed social media and partisanship. They reasoned that if your preferred politician isn’t occupying the White House, you complain a bit more to a pollster. Several years ago, Kyla Scanton coined the term “vibecession” to describe a situation where the data looks fine on paper, but people feel bad in their souls. But what about when the data looks bad on paper? Heather Long, chief economist at Navy Federal Credit Union, recently pointed out today’s reality. The vibes have officially been replaced by cold, hard financial pain. When the University of Michigan sentiment reading drops to 49.8, it’s not just because people are grumpy on Twitter. It’s because the cost of basic survival has outpaced the ability to pay for it. What’s more, as middleclass families drown in debt, the wealthy flourish. This creates a highly visible divide that presages social instability.

A Tale of Two Americas

The fact is you likely took a pay cut last month. Even if your boss gave you a 3 percent raise this year, you’re still losing ground. With inflation rising at an annual rate of 3.8 percent, per this week’s CPI report for April, your real wages are in the red. Thanks to the U.S.-Israeli war in Iran the energy component of the CPI is increasing at an annual rate of 17.9 percent. When consumer prices rise faster than your income, that’s not a vibe. That’s the real time erosion of your income. And this is just the beginning… Joseph Brusuelas, chief economist at RSM, warns that as the supply shocks from the Middle East filter through the system, May is going to be even worse. We are essentially footing the bill for global conflicts through higher prices. Yet the effects of inflation are felt differently throughout the economy. Those in the higher income brackets are benefiting from an inflating stock market. Retail sales are up 4 percent year over year. So, too, Disney recently confirmed that its domestic park bookings and cruise reservations remain strong through the second half of 2026. Then there are those in the middle- and lower-income brackets who can’t keep up. They don’t own stocks. They don’t own a house with a 3 percent mortgage. For this group, personal loan applications are spiking. Credit card debt is at an all-time high. They’re also being forced out of their cars and onto the bus because they literally can’t afford the commute. These diverging stories are both true. This is the tale of the K-shaped economy. The top line of the K is heading toward the moon. These are the households earning $150,000 or more. For them, the squeeze is a gentle love pat. Their homes have skyrocketed in value, and their stock portfolios are thriving as the S&P 500 bubbles up. The bottom line of the K, however, is a steep slide downward. This represents the bottom 50 percent of the income distribution. For these families, the resilience everyone has talked about for the last few years has finally hit a wall.

Quiet Desperation

When wages don’t cover the bills, people don’t stop eating. They reach for the plastic. Hence, there’s been a massive increase in people turning to personal loans and credit cards just to make it from one Friday to the next. This is the latent phase of a recession. It doesn’t show up in the unemployment numbers (which are still a steady 4.3 percent) or the payroll data (115,000 jobs added in April). It shows up in the quiet desperation of an ascending balance on a 24 percent interest credit card. When people finally get to the end of their credit card rope, we enter the demand destruction phase. This is when people are too broke to buy stuff. Lower-income households are forced to cut back on gasoline and non-essential spending. There’s also a big picture issue coming into focus that Mohamed El-Erian, chief economic advisor at Allianz, has zoomed in on. Specifically, labor’s share of GDP has hit its lowest level in BLS history. What that means is that of all the wealth being generated in the USA, a smaller and smaller piece of the pie is going to the people who actually do the work. In other words, more and more of the economy’s capital is being directed to the people who own the stocks, land, and the companies. This is why the stock market is hitting record highs while the average worker feels like they’re drowning. The market likes muted wage growth because it means companies keep more profit. But for the person trying to pay rent, muted wage growth is a disaster.

Beyond the Siren

Regardless of whether the economy enters a full-blown recession, a large segment of workers and consumers are suffering a painful squeeze. For those being squeezed it adds insult to see people booking luxury cruises when they’re having to choose between buying gas or buying groceries. As households max out their credit cards, we can expect to see a wave of defaults. If this persists, the banks may get nervous and tighten credit. This will make it even harder for the bottom half to get the loans they need to survive. Also, with the cost of living so high, middle-class families are raiding their 401(k)s or stopping contributions altogether. People are trading their future security for today’s gas and bread. The American worker and consumer have proved to be resilient over many years. They persevered through pandemic lockdowns, supply chain meltdowns, and years of inflation. But even the strongest rubber band snaps if you stretch it far enough. The current sentiment data isn’t a vibe. It’s a warning siren. While the top earners continue to power the retail numbers and fill up the Disney parks, the foundation of the economy – the working and middle class – is being hollowed out by a combination of geopolitical shocks and a declining share of the nation’s wealth. Until wages outpace the cost of a gallon of gas and a bag of groceries, the American consumer will continue to get squeezed. Alas, there appears to be no relief on the horizon. With the Strait of Hormuz effectively shuttered, this squeeze will only intensify. As global energy flows cease, surging crude prices will inevitably bleed into your grocery bill. From the diesel powering delivery trucks to the fertilizers growing our crops, the cost of survival is headed for a painful, sustained peak. [Editor’s note: Get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield," when you join the Economic Prism mailing list today. If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from The Great American Squeeze of 2026 to Economic Prism

Big Discounts Await

MN Gordon — Fri, 08 May 2026 08:05:18 +0000

If you’ve consumed any financial commentary over the years, you’ve likely heard of Gary Shilling. His legendary, against the herd, call on interest rates in 1980 set him up for a 40-year run that made him exceptionally wealthy. If you recall, many investment gurus in the early 1980s were predicting the future while projecting the past. After a decade of raging price inflation, the popular dogma was to pack one’s portfolio with gold coins, fine art, and antiques. This was the proven, surefire way to preserve one’s hard-earned wealth from the ravages of inflation. The recent past and simple logic pointed to higher consumer prices ad infinitum. Nixon had closed the gold window in 1971. Prices had quickly spiraled out of control. America, it seemed, was about to go full Weimar. Howard Ruff, in his investment newsletter The Ruff Times, was predicting the dollar would soon turn to hyperinflationary ash, like conifer trees in a California wildfire. It was inevitable. And imminent! But then something unexpected happened. Ultra-high interest rates courtesy of Fed Chair Paul Volcker brought on a recession. An inflection point was hit. Consumer price inflation stabilized. And a new trend of asset price inflation – including stock, bond, and house price inflation – was born…though it wasn’t immediately clear what was going on. In September of 1981, the yield on the 10-year Treasury Note peaked at 15.32 percent. Many investors thought yields would go higher. Franz Pick declared “bonds are certificates of guaranteed confiscation.” Yet Ruff and Pick and many others got it wrong. Yields commenced a 39-year decline that ended in June 2020 with the 10-Year Treasury note yielding just 0.62 percent. To be fair, there were a few true contrarians in the late 1970s who foresaw what was coming. Gary Shilling was one of them.

Riding the Long Bond

Rather than the consensus view that inflation would persist forever, Shilling suspected the U.S. was entering a long-term era of lower and lower interest rates and low consumer price inflation. Under this backdrop, traditional inflation hedges would be dreadful... …and debt based financial assets would be highly prosperous. Shilling, having a deep conviction and wanting to warn investors, wrote a book about his important insight. The book was first published in the early 1980s, and its title asked two significant questions: Is Inflation Ending? Are You Ready? The book’s sales were an utter flop. Almost no one wanted to hear Shilling’s case. There were only a handful of shrewd individuals who could actually fathom that consumer price inflation was dissipating. The book’s forecast proved to be right on the money. What’s more, Shilling put his money behind his convictions. By the mid-1980s he achieved financial independence through aggressive investment in the long bond. Shilling’s astute call and capital deployment into the long-term decline in interest rates starting in the early 1980s is remarkable. But what’s also remarkable is Shilling’s ability to successfully ride out this trend long after other big bond investors – like Bill Gross – bailed out. Many investors thought interest rates had bottomed out in late-2008 at the depths of the great financial crisis. Fed purchases of mortgage-backed securities and Treasuries, made possible by $8 trillion in credit created out of thin air, extended the trend until July 2020. Cheap consumer products imported from China and cheap oil and gas from innovative hydraulic fracturing extraction techniques, also kept a lid on consumer prices. But these sensations can no longer contain consumer prices like they did a decade ago.

Very Thin Ice

Shilling, for his part, is still in the investment game. And for about four years now, Shilling has been warning us about an imminent bear market. Yet for four years, the market has responded by repeatedly hitting new all-time highs. Still, Shilling isn’t just a permabear looking for attention. He’s an economist who looks for the big flaws the larger investment community ignores. His insights, and track record, merit attention. In a recent sit-down with Business Insider, Shilling laid out his bearish forecast. He believes that a recession is “almost inevitable” and that the S&P 500 could crater by 30 percent by the end of 2026. His rationale is based on the unfavorable position of consumers, sky-high stock market valuations, and interest rates. For the last two years, the U.S. consumer has been the driver of the global economy. Despite rising interest rates and the everything bubble, Americans kept spending. Shilling points out that this ballast is starting to take on water. The growth of real disposable income, for example, slowed to a measly 0.4 percent yearly pace in March 2026. That’s the lowest we’ve seen in three years. At the same time the personal savings rate has dropped to 3.6 percent. People aren’t just spending what they earn. They’re dipping into the rainy-day fund just to keep the lights on. There’s also the war tax of the ongoing conflict between the U.S.-Israel and Iran. This hasn’t just disrupted geopolitics. It’s hitting people in the wallet. The U.S. national average price for gasoline has increased by 50 percent since the war started in late February. When the price of gas goes up, discretionary spending – the spending that drives growth – goes down. As Shilling puts it, the consumer is on “very thin ice.” If they stop spending, the whole economy stops with them.

Disconnected from Reality

With respect to the stock market, Shilling referenced three metrics that suggest we are living in a fantasy land of valuations. The first is the Shiller CAPE Ratio. It’s currently hovering above 41. That’s a level we haven’t seen since the lead-up to the dot-com crash. When you pay this much for a slice of future earnings, you’re basically betting on a miracle. Second, Shilling noted the Price-to-Sales (P/S) Ratio. Like the CAPE Ratio, it’s also off the charts. This week it hit 3.63, which is an all-time high. Investors are paying more for a dollar of company revenue than ever before in history. Last is Price-to-Book (P/B) Value, which is also at an all-time high. What this means is that the market value of companies is completely disconnected from the actual value of their assets. Shilling believes a 20 percent to 30 percent correction wouldn’t be an anomaly. It would merely be a return to historical sanity. He’s eyeing the end of 2026 as the date for this reckoning. While he admits he can’t see the exact “trigger” yet, he reminds that market drops usually stem from “excesses.” And right now, the market is full of excess. But it’s not just about stocks and consumers. Shilling is looking at the structural pipes of the economy – housing and business investment – and he sees some major clogs. Specifically, he sees a housing market that is effectively frozen. Sellers don’t want to give up their low pandemic era rates, and buyers can’t afford current rates. A frozen housing market means less mobility, less construction, and a massive drag on GDP. Shilling also points to a collapse in capital expenditure (Capex) – the money businesses spend on new equipment, buildings, and hiring – across the private sector. While the AI sector is spending like there’s no tomorrow, the broader Capex grew only 3.9 percent at the end of last year. Compare that to the 24 percent peak several years ago. Businesses are hunkering down, not expanding. That’s not what you want to see in a healthy economy. Shilling, no doubt, has been early in his recent forecasts. But that doesn’t mean he’s wrong. The US economy in 2026 is riddled with contradictions. The Fed is trying to grease the gears with $40 billion a month in liquidity, while inflation-adjusted incomes are stalling and the national debt is ballooning. Is a 30 percent drop coming? Shilling believes it could happen this year. And whether it happens by December 2026 or not, his message is clear: The era of easy growth is over. The ice is thin, stock valuations are off the charts, and a bear market is inevitable. All the reasons to keep a little extra cash on the sidelines. If Shilling is right, everything is about to go on sale. [Editor’s note: Get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield," when you join the Economic Prism mailing list today. If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Big Discounts Await to Economic Prism

Liquidity At Any Cost

MN Gordon — Fri, 01 May 2026 08:05:12 +0000

Over the last few years, it appeared that the Federal Reserve was finally attempting to get its house in order. After the insane pandemic-era peaks, where its balance sheet ballooned to over $8.9 trillion, the central bank spent years on a steady program of balance sheet reduction. Through a process called Quantitative Tightening (QT), the Fed allowed bonds to roll off the books without replacing them. It successfully shrank its balance sheet to about $6.5 trillion by December 2025. But if you’ve been watching the Fed’s balance sheet lately, the trend has pulled a U-turn. As of April 2026, that number has crept back up to over $6.7 trillion. The great contraction is over. The era of balance sheet expansion has returned. So, why is the Fed’s balance sheet growing again? What does this mean for the value of the dollar in your pocket? And how does billionaire Treasury Secretary Scott Bessent – and his defense of swap lines to the Middle East – fit into this puzzle? To understand why the Fed is expanding its balance sheet again, you must understand the mechanics of the financial system. Banks, as you know, no longer keep cash in a vault. Instead, they hold reserves at the Fed to ensure they can handle daily transactions and meet regulatory requirements. By late 2025, the Fed realized it had sucked too much liquidity out of the system. Interest rates in the repo market, where banks and hedge funds borrow cash overnight, started getting jumpy. This indicated that the Fed’s desire to provide ample reserves had overshot and become scarce reserves.

Greasing the Gears

In December 2025, the FOMC officially ended QT. To keep the gears of the financial system greased, the Fed began purchasing roughly $40 billion in short-term Treasury bills per month. Unlike the massive Quantitative Easing (QE) of the past, which was designed to lower long-term interest rates, this new expansion is framed as technical. The Fed argues they aren’t trying to stimulate the economy, but that they are simply providing the necessary reserves to prevent a systemic crisis. The Fed can say whatever it wants. However, from our perspective, nearly $200 billion in growth in just a few months looks a lot like the money printer is back in business. Moreover, there will be plenty of unintended consequences. This new liquidity isn’t just money sitting on the digital accounting books. It’s supplying active grease for a very heavy financial machine. For example, this year nearly $9.6 trillion in U.S. government debt is maturing. That’s over 25 percent of the total national debt. To prevent a spike in interest rates when the government tries to roll over this debt, the Fed needs to ensure the market has enough liquidity to absorb the new bond issuances. There’s also the need to support the standing repo facility. By expanding the balance sheet, the Fed makes sure that large banks can instantly swap their Treasuries for cash. The intent is to prevent the kind of liquidity shock that nearly collapsed markets in late 2019, in the months before the faux coronavirus pandemic. Yet the Fed doesn’t have the money to supply this liquidity. Rather, it makes digital notations to its books and creates the credit out of this air. This new credit is then used to buy assets, distorting prices throughout the economy. This is where it gets personal. When the Fed expands its balance sheet, and buys assets with the fabricated credit, it’s effectively debasing the dollar.

Sacrificing the Dollar

In a healthy economy, the supply of money should roughly track the supply of goods and services. When the Fed expands the money supply faster than the economy grows, each individual dollar represents a smaller slice of the total economic pie. Debasement isn’t a sudden crash. It’s a slow leak. It shows up in the form of inflation where the price of assets – stocks, real estate, and gold – rise, along with consumer prices, even as the economy stalls. By April 2026, with the national debt at $39.1 trillion, the Fed has a limited ability to protect the dollar. It wants to keep inflation low. But it also must keep the government’s borrowing costs down and the banking system stable. Choosing the latter two often means sacrificing the dollar’s purchasing power. This week, like a deer in the headlights, the FOMC elected to hold the federal funds rate steady at 3.5 to 3.75 percent while reinvesting all principal payments from the Federal Reserve’s holdings of agency securities into Treasury bills While the Fed is busy expanding its balance sheet, and debasing the dollar, U.S. Treasury Secretary Scott Bessent is busy managing international money flows. Recently, the U.S. has reaped a geopolitical whirlwind. The U.S. - Israeli attack on Iran has disrupted oil flows in the Middle East. This has put immense pressure on countries that peg their currency to the U.S. dollar, including the United Arab Emirates (UAE). The proposed solution involved something called swap lines. A currency swap line is essentially a “you scratch my back, I’ll scratch yours” agreement between central banks. The Fed, working hand in glove with the Treasury, provides dollars to a foreign central bank in exchange for their local currency. This ensures that the foreign country has enough dollars to keep its economy running without having to dump its holdings of U.S. Treasuries on the open market.

The Dubai Ultimatum

By considering swap lines to the UAE and other Gulf allies, Bessent is opening the door to additional money supply expansion. He’s essentially extending the reach of the Fed’s liquidity to the entire world. Bessent’s objective is to prevent a fire sale of U.S. Treasuries and stocks. The UAE holds hundreds of billions in U.S. assets. If they run out of liquid dollars to defend their currency peg, they would be forced to sell those Treasuries and stocks. A massive sell-off from the Gulf would crash the U.S. bond market and send interest rates skyrocketing. At the same time, the UAE isn’t patiently sitting around waiting for a handout from Bessent. It’s taking matters into its own hands. In a surprise move, the UAE announced this week that it is officially exiting OPEC, effective May 1. By bailing on the oil cartel, Abu Dhabi has signaled it’s had enough of the production caps that limit its own growth while balancing someone else’s books. This dramatic decision to leave OPEC also ties back to what currency will be used to settle oil trade. Will it remain the petrodollar, or will it shift to the petroyuan? Jim Rowland, of Barchart Insights, provides the following analysis: “Notably, global oil sales are priced in dollars under the petrodollar system, which is the primary reason that most of the Gulf states have defaulted to a US dollar peg for decades. With the UAE exiting the world’s foremost oil price-setting cartel at the same time that it’s threatening to settle oil transactions in Chinese yuan, the Treasury has significant diplomatic and economic impetus to provide its longtime Gulf ally with whatever currency swap line it might request.” In other words, the Treasury must give the UAE what it demands to help ensure the U.S. dollar remains the dominant currency for oil transactions. Once again, as the Fed cranks up the printing press, whether it’s to save a bank in New York or a currency peg in Dubai, the solution remains the same. More dollars, more debt, and less purchasing power for everyone else – including you. [Editor’s note: Get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield," when you join the Economic Prism mailing list today. If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Liquidity At Any Cost to Economic Prism

Barbarians Inside the Gate

MN Gordon — Tue, 28 Apr 2026 08:05:11 +0000

Have you noticed the curious stage of history we’ve reached where freedom has become a dirty word? The preferred spirit of the age is a contrived, top-down collective hug that feels increasingly like a chokehold. From the ivory towers to the local coffee shop, a new generation of thinkers is dusting off the failed scripts of the 20th century, adding a fresh coat of anti-human paint, and wondering why the engine is smoking. Whether it’s the cult of the State or the new-age prophets who view human life as a planetary glitch, the target is always the same: The Individual. What’s up, really, with the grand, tragic human tradition of trading our birthright of liberty for a bowl of government-subsidized thin gruel? It’s as if we’ve collectively forgotten that every utopian shortcut in history eventually leads to a dead end, usually guarded by men in uniforms. So goes the ongoing collision between high-minded idealism and the cold, hard pavement of reality, where common sense is treated like a contraband luxury. Today, for insights and perspective on these matters, we return with another guest article from our old friend Joel Bowman and his Notes From the End of the World. Inside Bowman navigates the “isms,” the idiocies, and the slow-motion swan dive of the West. Here’s Mr. Bowman, on the case, from Buenos Aires, Argentina... Enjoy! MN Gordon P.S. After giving Mr. Bowman’s article a read, please head over to his website and subscribe to his newsletter for all his latest musings on freedom, liberty, ruin in a nation, and the future of the west. We have no financial arrangement with Bowman and do not profit from publishing his work. We simply find his observations and writing to be valuable and believe you will too. --

Barbarians Inside the Gate

Collectivist claptrap, blue-haired baristas and the road to serfdom…

“The more the state ‘plans’ the more difficult planning becomes for the individual.”

~ Friedrich Hayek from The Road to Serfdom (1944)

Joel Bowman with today’s Note From the End of the World: Buenos Aires, Argentina...

Welfare at home and warfare abroad... fiscal insanity and monetary madness... collectivist “thinking” and the “warm glow of socialism”... Many and varied are the means by which a civilization tears itself asunder, dear reader, embarking on what Friedrich Hayek called, in his work of the same name, published during the depths of WWII, “the road to serfdom.” And always at the centerpiece of man’s self-destructive impulses is the negation of the individual in favor of an “all-knowing” state. The only problem is that, far from the picture of omniscient benevolence, the naked State is merely ignorance multiplied. Wrote Hayek: “The case for individual freedom rests chiefly on the recognition of the inevitable ignorance of all of us.” And yet, down the road Homo credulus goose-steps headlong, convinced by his intellectuals and browbeaten by his elites, made to believe that top-down organization is the way to go... that if he only places more trust in his political overlords, surrenders more of his liberties to the State, and votes harder in the next election, his safe passage will be guaranteed. Anything, anything but the freedom of individuals to choose their own paths for themselves! Naturally, such radical self-determination presupposes cooperation and collaboration... only – critically – without the compulsion of the State... and the State is nothing if not a monopoly on force. Hayek, again: “The argument for liberty is not an argument against organization… but against all exclusive, privileged, monopolistic organization—the use of coercion to prevent others from doing better.” See rent controls... price caps... labor laws... forced, or “closed shop,” unionization... income, corporate, wealth, sales etc. taxes... sanctions, duties and trade tariffs... permits and licensing, in which the State forbids you a right, then charges you for the very same privilege... to say nothing of central banking, interest rate manipulation, capital controls and the entire Mamdanization of the free market.

Hollowed Institutions

In these and many ways besides, like a dipsomaniac at an open bar, it seems man cannot resist helping himself to death. And so the road to serfdom remains the path most traveled. Of course, not all roads diverging in the woods are of equal length and terrain. Sometimes the way is long and winding. Other times, the path is short... and the cliff steep. Consider, for example, the abrupt rise and fall of the formidable Third Reich. A centralized command system built to reign for a thousand years, Hitler’s deranged experiment in National Socialism survived barely a dozen. Though scarcely acknowledged in the hallowed halls of our long-since hollowed academic institutions, Hitler himself was neither a partisan of the so-called right nor the so-called left, those mistakenly depicted opposites, but instead drew from the “pure” (that is, totalitarian) elements of both quarters. In his own words: “From the camp of bourgeois tradition, [nazism] takes national resolve, and from the materialism of the Marxist dogma, living, creative Socialism.” The Führer distrusted capitalism as being susceptible to flourishes of self-expression, preferring instead a socialist-style, state-directed economy designed to subordinate any and all individualistic inclinations to the collective will of the Volk. All told, his ambitious militaristic expansion probably peaked in the fall of 1942, when most of continental Europe was either under Nazi occupation... or complicit in its crimes. But for all its far-reaching designs, it was not even three years later when, enjoying the view from his Berlin bunker in the spring of 1945, the Führer sat down to savor his final meal... generally believed to be a cyanide entrée followed by a main course of copper-jacketed lead, delivered by his trusty Walther PPK.

The Political Pyre

Yet another collectivist ideology tossed on the flaming heap of history’s failed experiments, though by no means the last. Marxism-Leninism in the USSR... Maoism in China... Castroism in Cuba... Peronism in Argentina... Chavismo for the poor and blighted Venezuela... The names of the Dear Leaders change, just as their personality cults come and go, but the central conceit remains the same: The State knows best what individuals need... and stands at the ready to give it to ‘em, good and hard. That such command-driven programs always and everywhere end in misery, privation, and bloodshed is hardly worth mentioning (mostly because those who advocate for them are, to borrow David Bowie’s phrase, “immune to your consultations”). Thumbing through the dusty pages of history, one might think man already had ample means by which to impoverish his people, ruin his nation and generally make an ass of himself. And yet, like a wide-eyed gambler discovering a fail-proof system, there is always a new ‘ism to tempt the do-gooder class into action, quick, sharp...and stupid. Not content with simply relying on “old school” instruments of civilizational self-immolation, a cocksure generation of “thinkers” has lately risen to the challenges of the 21st Century, armed with a gruel-like hodgepodge of reheated, reconfigured ideologies to derail progress, stymie development and generally retard the pursuit of human flourishing. Many of these ideas do away with the nettlesome rationale proffered by such passé ‘isms as the aforementioned lot which, as calamitous as they were, at least pretended to some utopian, human-centric aim – the New Soviet Man of Russia, for example, or the Volksgemeinschaft (“people’s community”) of Nazi Germany, free of social conflict and internal class struggle. Today’s Great Causes are, meanwhile, of another ilk entirely in that they are overtly anti-human in nature.

Gaia Complex

There’s climate alarmism, for example, a dreary Neo-Malthusianism which posits human life as the gravest threat to a benignant Mother Earth, anthropomorphized as the pure and gentle Gaia, that autochthonous Greek goddess who arose from Chaos at the dawn of time. Glimpsed through this cracked lens, humans are nothing more than a cancer from which the planet must be cured, the very carbon that ought to be destroyed in order that the earth may finally heal. Naturally, the treatment requires starving billions of parasitic humans by denying them access to cheap, reliable, abundant energy, such that nature – pink in tooth and rainbow in claw – can “rewild.” Consider green queen and famed chimp whisperer, Jane Goodall, pining ever so glibly for the good ol’ days, before ~7.5 billion living, breathing human beings fouled everything up with their... existence: “All these things we talk about wouldn’t be a problem if there was the size of population that there was 500 years ago.” Then there’s beloved BBC blowhard, the double-knighted Sir David Attenborough who, despite his solutions to what ails us, nevertheless remains stubbornly among the living… at age 99: “All our environmental problems become easier to solve with fewer people, and harder—and ultimately impossible to solve—with ever more people.” And who can forget eco-mentalist and doom peddler, Paul R. Ehrlich, to whom the greatest threat to the abstract idea of “humanity” is... actual human beings. “The population explosion is the most serious crisis facing humanity.”

Blue-Haired Barista Brigade (BBB)

Closely associated with this masochistic death wish is the cult of antinatalism, which holds that bringing children into this world—rife as it is with anthropogenic disasters—is so immoral an act that it must be averted at all costs, up to and including the future of the species. We speak here of the septum-led, intersectionalized martyrs/baristas who look upon the struggles of their ancestors – generation after generation scratching in the mud, desperately eking out a meagre existence, only to be ravaged by plague and famine or slaughtered in trenches, their kin perishing for want of medicine or basic hygiene, braving superstition and natural disaster alike for millennia upon miserable millennia, yet driven by the fire of life to survive, to raise and nurture their offspring, standing guard against the dying of the light, yearning to pass along the genetic torch, flickering in the harsh winds of history – all so the ze/zer cipher serving your morning coffee can rage quit the future of life on earth in a righteous eye roll of imagined indignation because, “Uh, I can’t even...” And somehow, even this selfie-stick brand of existential narcissism blanches beside other dark forces welling up across the west, where the craven lust for total cultural annihilation has risen to the status of supreme and suicidal virtue. For more about the future of the west... and what’s really at stake... Stay tuned for more Notes From the End of the World... Cheers, Joel Bowman founder of Notes from the End of the World P.S. For all of Bowman’s latest musings head over to his website. While you’re there, subscribe to his newsletter for all his latest analysis and insights as they’re reported in real time.

Priced for Perfection in an Imperfect World

MN Gordon — Fri, 24 Apr 2026 08:05:32 +0000

Investors, having seen the light, race towards it with great expectations. The S&P 500 and the NASDAQ are, once again, near all-time highs. By the look of the lofty stock market indexes, the American economy must be operating at full tilt. But what if the light investors are racing towards is not the promise of riches they’re expecting? What if it’s the headlight of a freight train locomotive that’s headed right towards them? The Cyclically Adjusted Price-to-Earnings (CAPE) ratio, which was developed by Nobel laureate Robert Shiller, looks at real per-share earnings over a 10-year period to measure valuation. Right now, the S&P 500’s CAPE ratio is above 40. To give you some perspective, the historical mean is around 17. There is only one other time in the history of the United States stock market that the CAPE ratio has been higher than it is today. That was December 1999 – at the peak of the dot-com bubble. When that bubble burst, it destroyed trillions of dollars in wealth. Today, we are approaching those same manic levels of overvaluation. Yet investors don’t seem to be appreciating the risks they are taking. They’re assuming a quick peace in the Middle East, low inflation, falling interest rates, and rising earnings decades into the future. This dangerous optimism ignores the structural weakness of a global economy propped up by record debt, cheap energy, and free flowing trade. If inflation continues to rise or if corporate margins finally buckle under persistent cost pressures, this speculative fever will break, leaving overexposed portfolios devastated by a sudden, violent reversion to the mean. Here’s one part of the reality that’s being ignored…

Hormuz Headache

While Wall Street is celebrating its AI-driven gains, something much more primitive is happening in the Strait of Hormuz. The world’s most important oil chokepoint, where about a fifth of the world’s total oil consumption passes, remains severely limited. The two-week ceasefire came and went without a deal. Bomb dropping has yet to resume, for now. For decades, the possibility of an oil shock has been a menace to the global economy. When energy costs spike, the price of everything else follows. The dollars needed to fill up your SUV, the price of plastic goods, the cost of the fertilizer needed to feed the world, and the fuel for the ships that bring products across the Pacific. An oil shock is an instant tax on every single human being on the planet. Yet, looking at the market indexes, you’d think crude oil was no longer the essential cornerstone of the global economy. What will happen when consumer prices spike above a double-digit annual rate? Remember the word transitory? In August of 2021, after consumer prices had become uncorked, Fed Chair Powell assured us that the post-pandemic price spikes were just a temporary glitch. Yet this supposed temporary anomaly has had a long-term impact. Once again, consumer price inflation is on the move. In March, per the consumer price index (CPI), prices are rising at an annual rate of 3.3 percent. This is well above the Federal Reserve’s inflation target of 2 percent. Of course, when inflation rises, the Fed’s hands are tied. The central bank can't cut rates to save a sagging market or boost the economy without risking a 1970s-style inflationary spiral. Investors are betting the Fed will pivot to lower rates later this year. But with inflation returning, the Fed may have to hold or even raise rates to keep things under control.

Younger, Smarter, Better Looking

Those decisions will likely fall on likely incoming Fed Chair Kevin Warsh, who went before the Senate Banking Committee confirmation hearing this week. Warsh is younger, smarter, and better looking than outgoing Fed Chair Powell. He’s also much richer. His net worth is well over $100 million. Does he have bigger stones than Powell? Does he have the wisdom that Powell lacks? The answers to these questions will be revealed in due time. Regardless, Warsh will have his hands full. He’ll start his new job at a time when investor expectations are completely disconnected from reality. How can rational people look at a CAPE ratio of 40, a crippled global shipping lane, and rising energy and inflation, and decide that now is the perfect time to buy more stocks? As Warren Buffett elaborated, “In the short run, the market is a voting machine but in the long run, it is a weighing machine.” And right now, the vote is to chase prices higher for fear of missing out (FOMO). We are seeing a generation of investors who have been conditioned by fifteen years of buy the dip. Every time the market faltered since 2008, central banks have stepped in with an abundance of liquidity. This has created a twisted response, where bad news for the economy is good news for the stock market. Because bad news means more stimulus. But the rules of the game have changed, and many investors don’t realize it. You can’t print your way out of a supply-chain collapse in the Middle East, and you certainly can’t print your way out of high inflation. In fact, spraying liquidity into inflation adds fuel to the fire.

From Euphoria to Despair

History is a cruel instructor. For she gives the test before teaching the lesson. The disconnect we are seeing today has all the hallmarks of an epic bubble. High valuations, little appreciation of risk, extreme confidence, and ignorance of reality. All the while, the smart money is looking for the exit. We are facing a convergence of risks that are not being priced in. An extended closure of the Strait of Hormuz, for example. This could send oil to $150 a barrel. Rising inflation that sends bond yields higher, making that 40x earnings multiple look absolutely insane. The margin for error is zero. When you are priced for perfection, even a pretty good reality feels like a disaster. Does this mean the crash happens tomorrow? Maybe. But probably not just yet. Bubbles tend to last longer and inflate much more than any honest person could possibly fathom. Those operating with a healthy measure of humility are wise to take some chips off the table. The fundamentals haven’t been abolished. They’ve just been ignored. Still, gravity is a law. Not a suggestion. Eventually, the market will have to reconcile with the reality of energy costs, the reality of inflation, and the reality that you cannot pay sky-high prices for earnings indefinitely. Markets always revert to their mean. Moreover, to do so, they must overshoot to the downside too. The pendulum of excess never stops at the center. It swings from manic euphoria to paralyzing despair. When the correction finally arrives, the same crowd currently blinded by greed will be consumed by panic. Protecting capital now isn’t just a strategy. It’s an act of survival before the inevitable, face-ripping descent begins. [Editor’s note: Get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield," when you join the Economic Prism mailing list today. If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Priced for Perfection in an Imperfect World to Economic Prism

The Digital Noose Tightens

MN Gordon — Fri, 17 Apr 2026 08:05:37 +0000

“They who can give up essential liberty to obtain a little temporary safety deserve neither liberty nor safety.”

– Benjamin Franklin

“Ultimately, arguing that you don’t care about the right to privacy because you have nothing to hide is no different than saying you don’t care about free speech because you have nothing to say.”

– Edward Snowden

GENIUS Act Update

In January, as part of our 2026 outlook, we detailed how the GENIUS Act, which was signed into law by President Trump on July 18, 2025, would bring about the next shift in American money. The GENIUS Act, if you recall, requires stablecoins to be backed one-for-one by U.S. dollars or short-term U.S. Treasuries. This is a topic we don’t like writing about. In fact, we’d rather ignore it. But by doing so we’d be in dereliction of duty. So, today, begrudgingly, we offer an update on the latest efforts to tokenize the U.S. dollar – including the dollars in your bank account. On April 8, 2026, less than 10 days ago, while most people were distracted with bomb dropping on Iran, the U.S. Treasury, its Financial Crimes Enforcement Network (FinCEN), and the Office of Foreign Assets Control (OFAC) issued a joint proposed rule to implement provisions of the GENIUS Act. This rule formally integrates stablecoins into the Bank Secrecy Act (BSA). According to Treasury Secretary, Scott Bessent, “This proposal will protect the U.S. financial system from national security threats without hindering American companies’ ability to forge ahead in the payment stablecoin ecosystem.” What you must understand about this proposal is that integration is code for surveillance. By forcing every digital dollar into a rigid, trackable framework under the cover of “national security,” the government is effectively eliminating financial privacy. This, in essence, establishes a permanent digital leash that can be used to control your behavior. As these regulations tighten, the wall between your private wealth and federal oversight disappears. Every transaction you make will be visible to a centralized authority.

Death of Financial Privacy

As a refresher, a stablecoin is a digital token designed to stay pegged one-for-one to the U.S. dollar. Unlike Bitcoin, which can be volatile, a stablecoin is supposed to be boring. Under the GENIUS Act, a legal stablecoin must be backed 100 percent by cash or short-term U.S. Treasuries. In practice, the issuer (like Circle or a big bank) holds the Treasuries and pockets the interest. The user (you) gets the convenience of digital speed but receives no interest. Most importantly, the Government gets a brand-new buyer for its never-ending debt. The headline from the April 8 joint rule proposal was simple enough: Permitted Payment Stablecoin Issuers (PPSIs) are now legally defined as financial institutions under the BSA. On the surface, it sounds like common sense. A way to make sure terrorists and drug cartels aren’t using digital dollars to finance illicit business operations. But in practice, this integration means that every compliant stablecoin, like USDC, is now a tracking device. Under the new FinCEN rules, issuers must perform full Know Your Customer (KYC) on every wallet holder. Issuers must also file Suspicious Activity Reports (SARs) on any peer-to-peer transfer that looks atypical. They must also maintain a direct data feed to federal regulators for real-time reserve monitoring. At the same time, a series of state-level regulations, led by Florida’s SB 314 and similar bills in 14 other states, have created a tiered oversight model. If a stablecoin issuer stays small – under $10 billion in circulation – they can hide under state rules. But the moment they exceed that threshold, they are handed over to the Office of the Comptroller of the Currency (OCC) of the U.S. Treasury Department. This arrangement functions as a trap. The states lure people in with a hands-off oversight approach. All the while, the federal government’s standing by, ready to close the corral gate after the sheep have unknowingly wandered in.

Programmable Money

By moving the dollar onto blockchains, money becomes programmable. You can set conditions for payments (smart contracts) that traditional banks can’t handle. While this makes payments faster and 24/7, it shifts the dollar away from being a physical or purely ledger-based asset into a digital software-based asset. Once the infrastructure exists for all dollars to be tokens, there is little reason for the old physical dollar to exist in its current form. This is where we move from financial efficiency to dystopian control. Because these tokens operate via smart contracts, the money itself can have rules attached to it. If all assets are tokenized and integrated into the Bank Secrecy Act / GENIUS Act framework, personal autonomy becomes a relic of the 20th century. Imagine a world where your paycheck expires if you don’t spend it within 30 days to stimulate the economy. Or where carbon caps are enforced by your wallet. Try to buy gas after hitting your limit, and the smart contract simply rejects the transaction. There’s also the prospect of your ability to go where you want, when you want being taken away. If the central authority wants you to always remain within 15 minutes of your residence, it will merely have your car shut off automatically if you traverse outside of its digital fence. You’ll also need to always remain silent, even in the face of imposed wrongs. Programmable money allows for social credit integration. If you refuse to take a faux vaccine or wear a facial mask, your civic score drops. As a result, your tokenized assets could be frozen or restricted to essential purchases only. In the old world of physical cash and fragmented bank ledgers, the government had to work hard to freeze you out. In the GENIUS Act era, they just have to update a line of code on the centralized general ledger.

The Digital Noose Tightens

The GENIUS Act doesn’t just regulate stablecoins. It integrates them into the U.S. monetary plumbing. By mandating Treasury backing and providing a federal charter for issuers, it effectively converts the U.S. dollar into a token-first currency, where the physical dollar is merely a reserve asset for the digital tokens we actually spend. Yet the April guidelines don’t stop at stablecoins. They opened the door for the tokenization era. The FDIC’s new proposal specifically addresses tokenized deposits. Far more than just establishing a digital dollar, the goal is to turn your personal bank account into a series of tokens on a blockchain. When Larry Fink said every stock and bond would eventually be on one general ledger, he forgot to mention your checking account. In this new world, your cash becomes a tokenized deposit, your home becomes a Non-Fungible Token (NFT) on a county-run ledger, and your car, stocks, and gold are all converted into digital chips. Why? Because when an asset is tokenized, it can be moved instantly. It can be used as collateral in the blink of an eye. But more importantly for the powers that be, it can be programmed. We don't like this. We don’t like the deceitful way the government is using stablecoins to hide a debt crisis, and we certainly don’t like the loss of privacy and personal autonomy. But as we said in January, you can't ignore it. The legislative framework is no longer a proposal. It’s not some farfetched idea. It is becoming the law of the land. Through the midwife of a shock event, be it a recession or a war in the Middle East, the transition to tokenized bank accounts will be marketed as being for your safety and convenience. By all accounts, the GENIUS Act is the most significant financial overhaul in 50 years. But most people are asleep at the wheel. Nonetheless, the digital noose is tightening. The era of anonymous money is ending. The era of the programmable citizen is beginning. As a little guy investor and wealth builder there are some things you can do to prepare. You can maintain a subset of wealth – like confidentially held physical gold and silver – that doesn’t require a power outlet or a government-approved ledger. Preparing for this shift requires a proactive strategy that balances modern digital utility with the timeless security of off-ledger wealth. Straddling both sides of the ledger is imperative. [Editor’s note: Get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield," when you join the Economic Prism mailing list today. If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from The Digital Noose Tightens to Economic Prism

The Big Money Mirage

MN Gordon — Fri, 10 Apr 2026 08:05:00 +0000

“Big money will be made.” The remark was made by President Donald J. Trump on Truth Social following the ceasefire deal with Iran. Who will make the big money is unclear. But it sounds good, nonetheless. With the announcement of the two-week reprieve in bomb dropping and missile strikes, and the supposed resumption of shipping through the Strait of Hormuz, the price of oil promptly dropped over 16 percent. By Wednesday morning both WTI and Brent crude were below $95 per barrel. Perhaps two weeks will turn into a permanent ceasefire with Iran. As far as the greater Middle East is concerned, it’s unlikely. Israel was quick to clarify that the ceasefire with Iran does not include Lebanon. The war campaign in Beirut continues. Back home in the USA, we’re witnessing a slow-motion economic train wreck. The promise of a low inflation strong growth economy remains elusive. Consumer prices are rising at an accelerated pace, while the jobs market is much weaker than advertised. To fill the gap between rising prices and stagnating wages, consumers have loaded themselves up with massive amounts of credit card debt. According to the latest consumer debt data from the Federal Reserve Bank of New York, Americans’ total credit card balance, as of the fourth quarter of 2025, is $1.28 trillion. That’s up from $1.23 trillion in Q3 2025 and is the highest balance since the New York Fed began tracking in 1999. Real gross domestic product (GDP) increased at an annual rate of 0.7 percent in Q4 2025. This, for all practical purposes, is a flatlining economy. And this was before the U.S. and Israel attacked Iran.

Living on Borrowed Time

The Strait of Hormuz may have been partially reopened – for now. But significant damage has already been done. Surging costs of energy and transport are trickling down into every household essential, further eroding the middle class’s remaining purchasing power. High debt levels in the face of rising prices can only persist for so long before the economy breaks down. The prospect of a recession, both in the USA and globally, is appearing to be highly likely. In fact, we may already be in one. If you want to know how the economy is really doing, don't look at the stock market. Look at the credit card statements of consumers across the country. For years, the American consumer has been the undisputed growth engine of the global economy. Even when prices started skyrocketing in 2021 and 2022, they kept spending. But the dirty little secret – the one that everyone knows about, but no one talks about – is that consumers weren’t spending money they actually had. They were spending on credit, which must be paid back to the bank with interest. As noted above, total credit card balances have hit $1.28 trillion. While the top 10 percent of income earners are doing fine, the average worker is increasingly leaning on credit cards just to cover the gap between their paycheck and the price of eggs. Yet credit card interest rates are at all-time highs, nearly 21 percent. That’s about double the rate that was charged 10 years ago. These loan shark interest rates have a dramatic impact on consumer budgets. Borrowing to cover the cost of an unexpected $500 car repair can quickly turn into a $1,000 expense by the time it’s all paid off. And what about the consumer debt that goes unreported?

Phantom Debt

What’s important to recognize is that the $1.28 trillion in credit card balances reported by the New York Fed understates consumer debt levels. That’s because of the phantom debt of buy now, pay later (BNPL) debt. These short-term, point-of-sale financing options allow consumers to purchase goods immediately and pay for them in interest-free installments, typically over a few weeks or months. Often referred to as pay-in-four plans, split payments, or interest-free installment loans, BNPL services like Klarna, Affirm, and Afterpay require only a small down payment, usually 25 percent, with the remainder paid in automatic installments. Since these short-term loans often bypass traditional credit reporting until they go into default, no one knows the full picture of how underwater the average shopper is. When people need four installments to pay for a pair of sneakers or a bag of groceries, something is going seriously wrong. The lack of reporting masks a burgeoning instability in the American middle class. Because these micro-loans are easily accessible and deceptively interest-free, they encourage a lifestyle of leveraged consumption that traditional credit reporting fails to capture. Consumers end up stacking multiple BNPL obligations simultaneously. This creates a compounding debt cycle that remains invisible to the banks as it expands. When the accommodation of credit lines is finally exhausted, the ripple effect moves swiftly from individual households to the broader market. As the debt ceiling is reached for more and more individual households, spending stops. And since 70 percent of the U.S. economy is driven by consumer spending, when consumers stop buying, the engine stalls. The resulting effect could lead to an unexpected contraction since the breadth and depth of the consumer credit picture is invisible. The overall picture is also obscured by the job market mirage…

Job Market Mirage

Politicians love to point at the unemployment rate. The fact that the unemployment rate, as of March 2026, is just 4.3 percent, supports an argument for a strong economy. But many of the jobs that are available to the average worker do not pay a wage that can cover the average rent and essential living expenses. Good-paying career positions are few and far between. As these jobs disappear, the jobs being added back are often in the low paying service sector. Jobs like hospitality, retail, and gig work. These aren’t the kind of roles that allow you to buy a home, start a family, or save for a rainy day. They are treading water jobs. Over the last decade, prices for essentials – housing, insurance, and healthcare – have reset at a much higher level. Wages, on the other hand, have failed to keep up. When the cost of living outpaces the value of labor, you eventually get a recession. As more people realize that working 50 hours a week still leaves them broke, they stop being slaves to the grind. This is evidenced by the sliding labor force participation rate. As of March 2026, it’s at 61.9 percent. This has been on a downward trend for several decades and is well below pre-covid levels. The declining labor force participation rate creates a hollowed-out middle class that is forced to rely on predatory credit to make ends meet. When the math of daily survival no longer adds up, the social contract begins to fray. We are witnessing a quiet exodus from the traditional workforce that no policy can mask, as the working class can no longer afford to work. The bizarre thing about a recession is that you don’t officially know you’re in one until you’re six months deep. It’s like a slow-motion train wreck. By the time you feel the impact, the locomotive has long since jumped the tracks. [Editor’s note: Get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield," when you join the Economic Prism mailing list today. If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from The Big Money Mirage to Economic Prism

Is Everything Contained in the Private Credit Market?

MN Gordon — Fri, 03 Apr 2026 08:05:19 +0000

Is everything contained in the private credit market? An affirmative ‘yes’ was the conclusion recently offered by Federal Reserve Chair Jerome Powell. "We're looking for connections to the banking system, and things that might, you know, result in contagion. We don’t see those right now. Interest rates are in a good place." Don’t mind the sudden appearance of restrictive redemption gates or the aggressive marking down of distressed collateral by the big banks behind closed doors. There’s supposedly nothing to see here. Over the last decade, private credit was the ultimate speculative stretch for yield in a stubbornly low-yield world. It offered the seductive promise of higher reward, without the potential pain of higher risk. It became a fashionable place where wealthy investors could eke out a few additional percentage points of seemingly risk-free income and flatter their sophisticated egos in the process. But now an eerie and familiar sense of impending déjà vu has settled over this shadow market. It’s a tragic movie we’ve already seen before. The one where localized and contained instability rapidly becomes systemic. Where financial contagion breaks out like a deadly virus through a crowded grade school classroom before anyone thinks to wash their hands. The illusory liquidity promised by the private credit market’s biggest and most prestigious funds has effectively evaporated overnight. If you want your hard-earned money back today, it’s simply tough luck. Too bad. So sad. You absolutely can’t have it until some obscure, undetermined date in the distant future. What’s going on in the private credit market? Why were the exits suddenly bolted shut? Let’s explore…

Trapped Capital

Investors in Morgan Stanley’s North Haven BDC, for example, recently asked for 10.9 percent of their money back. The fund handed back less than half that amount, effectively trapping the rest. At Cliffwater, requests hit 14 percent, yet a cap was set at 7 percent. Over at BlackRock, their $26 billion HPS fund hit its 5 percent redemption limit. Of course, 5 percent’s at least something. At Blue Owl, nothing gets through the gate. Quarterly redemptions from its OBDC II fund have been eliminated entirely. Investors in Apollo’s private credit fund requested to redeem 11.2 percent of their outstanding shares. The firm gated requests at 5 percent, only paying out $730 million of the more than $1.5 billion requested. Then there’s Blackstone, which is not to be confused with BlackRock. The world’s largest alternative asset manager had to inject $400 million of its own cash to stem a full-blown bank run. And this was with a 7 percent cap. When the big lenders must reach into their own pockets to honor withdrawals, it’s not out of virtue or generosity. It’s because they’re concerned about what happens when investors simultaneously try to sell what they can. The bull case for private credit was always built on the idea that these managers were better underwriters than the banks. They knew their borrowers. They had covenants. Well, the 2025 data just provided some unexpected clarity. The default rate for U.S. private credit hit 9.2 percent last year. For context, the historical safe average is between 2 percent and 3.5 percent. We have officially exceeded the default levels of the 1998 LTCM crisis and the 2020 COVID shock. Why is the private credit market running aground?

Offshore Shell Games

From what we gather it was inevitable. The structural integrity of these over-leveraged portfolios was built upon the shifting sands of cheap credit and floating-rate debt. Now the harsh reality of sustained relatively higher rates is finally tearing the foundation completely apart. These higher rates, relative to where they were several years ago, have resulted in the interest expense for a mid-sized software company or a manufacturing plant to double. Add in the AI-driven disruption that is currently destroying SaaS valuations (a favorite sector for lenders like Blue Owl), and you have a recipe for a wipeout. If you think you’re without risk because you aren’t a private credit market investor, think again. Do you have savings in a bank account? Is your retirement part of a pension fund? Do you pay insurance premiums? According to Moody’s, as of last October, private credit loan exposure by U.S. banks was nearly $300 billion. These banks – perhaps, your bank – are exposed. What’s more, many of these loans use payment-in-kind (PIK) structures. This allows companies to pay interest with more debt rather than cash. With the prospect of rates staying relatively high due to war-driven inflation, these debt piles are becoming unruly. There’s also the prospect of outright fraud. Steve Eisman, the guy who famously made big bucks betting against collateralized debt obligations prior to the 2008 subprime mortgage crisis, recently raised concerns about the integrity of the private credit market. He believes a certain mischief has infected the life insurance industry, calling it “a slow brewing scandal which could be one day a great financial crisis.” Eisman and forensic accountant Tom Gober have detailed some unsettling irregularities. From what they’ve uncovered, the big private credit management firms use captive insurance divisions to buy their own private credit while offloading billions in liabilities to offshore reinsurance subsidiaries that file no U.S. financial statements. According to Gober, “insurers are offloading liabilities to shell subsidiaries in Bermuda, Barbados and the Cayman Islands, then underfunding them. In one case he reviewed, $7 billion in liabilities were backed by roughly $200 million in real assets. The rest was filled with contingent instruments he compared to a lottery ticket before the drawing.” Do these types of financial shenanigans give you a warm fuzzy?

Who Do You Believe?

Where there’s smoke, there’s fire. Naturally, Fed Chair Powell wants people to think the smoke is coming from a controlled burn of raked leaves; not a structure fire that could conflagrate the entire city. Thus, he says the Fed sees no connection between the private credit market redemption crisis and the banking system. We’d take his statements with a grain of salt. If you recall, on March 28, 2007, then Fed Chair Ben Bernanke argued that subprime was a small, isolated corner of the market that didn’t touch the real banks, saying: “The ongoing tightening of lending standards, although an appropriate market response, will reduce somewhat the effective demand for housing, and foreclosed properties will add to the inventories of unsold homes. At this juncture, however, the impact on the broader economy and financial markets of the problems in the subprime market seems likely to be contained.” At the time of Bernanke’s statement, the big banks were loaded to the gills with these toxic assets. It wasn’t contained at all. Exactly one year later, Bear Stearns went belly up. Then, on September 15, 2008, after being in operation for 158 years, Lehman Brothers disappeared from the face of the earth. “When I find a short seller, I want to tear his heart out and eat it before his eyes while he’s still alive.” These were the futile threats made by Lehman Brothers CEO Dick “The Gorilla” Fuld just prior to his firms epic collapse. Today, Powell, like Bernanke before him, is trying to obscure reality. And the reality is that JPMorgan is already marking down private-credit collateral and restricting lending to the very funds that need bank repurchase agreement lines to survive. Who do you believe? Powell says there’s no connection to the banking system. JPMorgan’s markdown book says otherwise. [Editor’s note: Get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield," when you join the Economic Prism mailing list today. If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Is Everything Contained in the Private Credit Market? to Economic Prism

Living Internationally

MN Gordon — Tue, 31 Mar 2026 08:05:33 +0000

There are many reasons for living internationally. Fun and adventure. Meeting new people and experiencing different cultures. Better weather. Tropical beaches. Breathtaking mountaintop views. There are also practical reasons. Business opportunities. Stretching retirement dollars. Diversifying assets overseas. Having a place to go if and when things go haywire in your home country. And many, many more… Today we return with another guest article from our friend and cohort Joel Bowman and his Notes From the End of the World. Mr. Bowman, if you recall, resides for a good part of the year in Buenos Aires, Argentina. There he’s been dependably recording President Javier Milei’s dismantling of what had been a deeply entrenched, corrupt, statist political caste. It is, as Bowman calls it, The Greatest Political Experiment of Our Time. However, when he penned today’s article, he wasn’t in Buenos Aires. He was in Panama City, Panama – speaking at a conference hosted by the fine fellows at International Living. If you’ve ever pondered living internationally, suffered from intense episodes of wanderlust, dreamed of warm white sandy beaches and turquoise blue waters in January, or desired to escape from your present locale, then settle in. Adventure awaits you from the comfort of your trusty armchair. Here’s Mr. Bowman, from Panama City, Panama... Enjoy! MN Gordon P.S. After giving Mr. Bowman’s article a read, please head over to his website and subscribe to his newsletter for all the latest happenings from Argentia, and wherever else he happens to be. We have no financial arrangement with Bowman and do not profit from publishing his work. We simply find his observations and writing to be valuable and believe you will too. --

Living Internationally

Opportunities at many Ends of the World…

“Travel is fatal to prejudice, bigotry, and narrow-mindedness, and many of our people need it sorely on these accounts.”

~ Mark Twain, from The Innocents Abroad (1869)

Joel Bowman with today’s Note From the End of the World: Panama City, Panama...

“I’m looking for my fifth overseas property,” announced one smartly dressed gentleman, “and perhaps a sixth.” “I’d like a nice rental income,” added a pretty lady in a colorful cocktail dress, enjoying the warm ocean breeze on her back, “and a place to visit when it gets too cold back home…” “As for me, I’m just looking for a place to go when ‘SHTF’…” declared another fellow, to nods of general approval from the rest of the group. Your editor is here in Panama’s vibrant capital… looking… listening… learning... Over the past couple of days, we’ve heard about opportunities for intrepid real estate investors hoping to snap up beachfront condos in places like Cabo San Lucas, Mexico, along Nicaragua’s Emerald Coast, and in the picturesque Dominican Republic… or to purchase hilltop villas in the rich, Italian countryside or along Portugal’s Algarve Coast… or perhaps to invest in Paraguay’s compelling macro story or gain access to early-stage developments right here in Panama, where lifestyle and investment opportunities converge not by chance, but by design… Each of the deals offers its own compelling case. Pristine, white sand beaches… low cost of living amidst vibrant overseas communities… a second home or a reliable source of passive, “mailbox” income… and, of course, the dream of living an international lifestyle… the Caribbean one month, the Mediterranean the next. Everyone has his own idea of happiness, of course, his very own version of “Shangri-La.” “The first thing to do,” says Real Estate Trend Alert founder, Ronan McMahon, “is to profile yourself. What are you hoping to get out of your purchase? Are you looking for a second residence? A change of lifestyle? A revenue stream? A place to raise a family or start a business? Well, that’s the great thing about casting your net far and wide. When you’re willing to look everywhere, you’re bound to find somewhere, somewhere that’s just right for you.” Unaccustomed to such unabashed optimism (having spent the past two decades at “doom and gloom” finance and economics conferences), we let our imagination roam... With a half dozen new ‘must-visit’ destinations hastily jotted down in our notepad, we almost forgot we were due to give a presentation ourselves! Our topic, as faithful readers of these Notes will guess, was our own little End of the World...

The Perfect Storm

“For seventy-five years and more, Argentina has proven itself a world leader in economic self-sabotage and political ineptocracy,” we began, setting expectations suitably low. “Corruption… collectivism… civil unrest… currency debasement… one economic crisis after another. What the Argentines do not know about how to run a country into the ground is probably not worth knowing.” Then came the story we’ve been following in these pages, what we’ve been calling “The Greatest Political Experiment of our Age.” You know the broad brush strokes already… Annualized inflation crushed from ~300% to ~30% (with core, or wholesale, inflation down further still)… ~60,000 federal government jobs axed, while 240,000 private sector jobs have ben added… GDP growth up from -1.6% in Q4, 2023, to a western world-leading +4.5% in 2025… and that during a period of unprecedented fiscal discipline, balanced budgets, massive deregulation and all the things we cover each and every week in these humble Notes… As your editor was speaking to attendees here in Panama, on Friday morning, president Javier Milei and his top advisors were wrapping up “Argentina Week” in New York, during which the heads of major corporations lined up to meet with the radical libertarian leadership, including head honchos from Bank of America, Microsoft, Tesla/SpaceX, Ford, Adecoagro, Grupo Galicia, Grupo Murchison and JP Morgan. “This president has very strong convictions about how to fix a country,” remarked JP Morgan CEO Jamie Dimon, who called the disinflation on the Pampas “a miracle.” Dimon had previously said Argentina could attract “around $100 billion of foreign capital” if reforms continue and suggested Milei could “turn Argentina” if policies persist through his term. Prescient remarks. Indeed, the past week alone saw over $16+ billion dollars of investments announced, many by Argentine companies that are aggressively expanding in their home country. From the Buenos Aires Herald: “Mercado Libre [South America’s ‘Amazon’] will invest $3.4 billion to expand its logistics operations in the country, creating 1,900 direct jobs,” said a communiqué by the President’s Office. Transportadora de Gas del Sur (TGS), also an Argentine firm, announced a $3 billion investment in Vaca Muerta to process natural gas liquids. Pampa Energía applied to join the Large Investment Incentive Regime (RIGI) with an investment of over $4.5 billion earmarked for the exploration and production of unconventional oil. Meanwhile, Canadian-based mining firm First Quantum Minerals announced an investment of $5.25 billion in the Taca Taca copper project in the province of Salta, up where our old friend Bill Bonner raises his “sand-fed beef.” Like international real estate investors, capital tends to go where it’s treated best. Naturally. And right now, after 75 years of basket case, deadbeat economics, Argentina is at long last beginning to realize its potential. As the head of Milei’s cabinet, Manuel Adorni, said from the sidelines of this week’s conference in New York City: “We are facing a perfect storm for an economic revolution in the Argentine Republic.” Watch this space for more…

Final Notes…

Thanks to Ronan McMahon and the whole Real Estate Trend Alert team for inviting us to a lively event here in Panama this past week, and to Paradigm Press and International Living for their hospitality. And a special thanks to all the kindly attendees we met and conversed with over the weekend. It was a lot of fun! We’ll hopefully hear more from Ronan and his team in these pages in the future, both as he and his team uncover opportunities in various exotic climes around the planet, and as we give more coverage to real estate markets down in Argentina, too. In the meantime, stay tuned for more Notes From the End of the World… Cheers, Joel Bowman founder of Notes from the End of the World P.S. For all of Bowman’s latest musings head over to his website. While you’re there, subscribe to his newsletter for all his latest analysis and insights as they’re reported in real time.

Jar Farming for Dummies

MN Gordon — Fri, 27 Mar 2026 08:05:31 +0000

Starting a big war in the Middle East is much easier than stopping it. This is the lesson President Trump is now learning. After one month of dropping bombs and launching missiles at Iran, Trump has called for a time out. A proposed one-month ceasefire. He even put a 15-point peace plan on the table. It was delivered via intermediaries in Pakistan. The proposal included a comprehensive off-ramp to address everything from nuclear disarmament and missile limits to reopening the Strait of Hormuz. Tehran quickly put a match to it and countered with five conditions of its own – including demands for reparations. It was but one month ago when Operation Epic Fury kicked off. What was intended to be a brief operation of destruction rained down on Iran, turned into something much greater. The initial shock and awe adeptly targeted high-level leadership and missile infrastructure. But the operation quickly spiraled into a larger war of attrition that physically severed the world’s most vital energy artery – the Strait of Hormuz. The initial success was overshadowed by a grim, structural reality. Market volatility is one thing. Physical depletion of global resource reserves, which puts a big squeeze on every major economy, is entirely another. Perhaps some limited shipping will be allowed to traverse the Strait as the war rages on. One can only hope. Because if it remains closed for another 30 days, the emergency oil and gas reserves held by nations like Japan and Germany will stop flowing. In fact, hundreds of gas stations have already run dry across Australia. One more month of this will have dramatic consequences. Namely, it will result in the forced deindustrialization of energy-dependent economies as critical links in the world’s just-in-time supply chain breakdown. When shipping containers stack up in idle ports and fertilizer plants go dark, the survival of economies across the globe are at risk.

Physical Shortages

Month one, by and large, was nothing. The impacts to the average person were mainly limited to sticker shock at the gas pump. Brent crude briefly spiked above $120 a barrel, and everyone’s 401(k) took a modest nosedive. Month two, however, is when things really start to get serious. That’s when higher prices are met with physical shortages. The next 30 days are the real make or break moment for the global economy. In March, the world survived on oil and gas that was already in the pipes and the tanks. The U.S. and its allies tapped into strategic reserves to help buffer the price spikes. But those reserves are a very short-term solution. Around 20 percent of the world’s Liquefied Natural Gas (LNG) is currently trapped behind the Strait. QatarEnergy, the world’s LNG heavyweight, has had to declare force majeure on exports. Most major industrial centers in Europe and Asia keep about 30 to 45 days of gas in easily accessible storage. If the Strait doesn’t open by mid-April, we aren’t just talking about higher gas prices and heating bills. We’re talking about mandatory industrial shutdowns. If you can’t power the factory, you can’t make the product. Similarly, if you can’t supply fertilizer, you can’t grow food. In addition to being one of the world’s top suppliers of oil and gas, the Persian Gulf is also one of the world’s top suppliers of agricultural fertilizers. What’s more, fertilizer shortages couldn’t have come at a worse time. It’s spring planting season in the northern hemisphere. Farmers in the U.S. Midwest, Brazil, and India are looking at prices of nitrogen fertilizers that are 30 percent to 50 percent more expensive than they were four weeks ago. And that’s if they can find them at all. If supply constraints persist through April, farmers will simply plant less or conserve fertilizer. That means lower crop yields this fall. Moreover, it means there will be a global food security emergency that will peak in about six months.

Energy Holidays and Empty Shelves

You may have also heard of looming helium shortages. Most of the world’s helium, which is essential for cooling the machines that make high-end AI chips, comes from Qatar. High-end semiconductor fabricators in Taiwan and Arizona have about a three-month buffer of these specialty gases. One month’s supply is already gone. If we lose another, there could be a shortage of chips that power everything from your phone to the newest AI models. If the Keep Out signs stay up at the Strait through April, there could be several disagreeable consequences. For example, there will be energy holidays (i.e., forced rationing) in energy-hungry nations. Factories that make cars, plastics, and chemicals will go dark to conserve power for hospitals and homes. Shipping companies will also avoid the Persian Gulf. This will add an additional 15-day detour around Africa for goods being shipped from Asia to Europe. The additional transport time will add costs to imported goods. Many economies were already stalling out before the attacks on Iran. But now, if 20 percent of the world’s oil remains offline through May, it’s a near certainty that major economies like Germany, Japan, and China – and the USA – will slip into a recession. In short, month one was merely a siren. Month two is the start of the actual physical impact. Specifically, the global economy will move from higher costs to shortages. A world where shortages of everything from medical instruments to basic consumer electronics and manufacturing components, and essentials like gasoline and fresh fruits and vegetables, could soon be the reality. The buffer period provided by global strategic reserves is disappearing with each passing day. While the first 30 days stimulated a chaotic news cycle and wild market swings. The next 30 days will stimulate a structural shift in how people live.

Jar Farming for Dummies

At this point, there doesn’t appear to be a quick and easy end to the war with Iran that will restore passage of the Strait of Hormuz. If anything, things are escalating with the prospect of ground troops becoming more and more likely. So, without reservation, hard times are coming to a town near you. The just-in-time world was not built for a sustained severance of its primary jugular. When the oil and gas stops flowing, the helium stops cooling the fabrication machines in Taiwan, and the nitrogen stops hitting the soil in the Midwest, the convenience and abundance of modern life break down. So, too, does the debt and the credit edifice that sustains it. As part of the New Year edition of the Economic Prism, in the closing section titled Preparing for Chaos, we included one practical action you can take to prepare for war, inflation, or the breakdown of an ever-increasing complex digital world. Many people laughed at our suggestion. Few took our advice. But, for fun and for free, we’ll revisit this simple, but important recommendation… Assuming you have food storage, and some basic backup power such as a simple battery storage system that can charge with portable solar panels, there is the critical, and often overlooked need for micronutrients. After two weeks, no matter how much protein and carbs you have, you need micronutrients for your brain and body, or you start losing mental clarity, strength, and a well-functioning digestive system. The simple solution is sprouting. To get started, take a look at Sprout People. There you will find a great education section – simplified for dummies – and a large variety of nutrients you probably never imagined could be sprouted. We have no financial or business arrangement or affiliation with Sprout People. We’re merely passing on information we believe you will find valuable. When the time comes, the ability to be a ‘jar farmer’ to sustain health via sprouts will be essential. [Editor’s note: Get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield," when you join the Economic Prism mailing list today. If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Jar Farming for Dummies to Economic Prism

Why Gold Is Dipping While the Market Panics for Cash

MN Gordon — Fri, 20 Mar 2026 08:05:44 +0000

Day after day decisions pile up. Some good. Some bad. Good decisions generally bring wealth, prosperity, satisfaction, and freedom. Bad decisions generally bring poverty, failure, discord, and captivity. The U.S. national debt has now exceeded $39 trillion. That number is so large, and is growing so fast, that it’s nearly incomprehensible. Nonetheless, it will have a very real and direct impact on your savings and retirement. What’s more, your kids and grandkids will rue it. Over many decades, Washington has been completely devoid of fiscal responsibility. Reckless spending has stolen the future from younger Americans. They will get to keep less of what they earn. In return, they will get less for the tax dollars they pay. Moreover, because a greater percentage of their incomes will go to service the interest on past debts, instead of capital investment, they will be trapped in a slow growth or stagnating economy. As a result, younger Americans will have to make their way in an economy with fewer opportunities. By now, government debt has grown so large that just paying the interest consumes a significant portion of the federal budget. According to the Congressional Budget Office (CBO), interest payments will total over $1 trillion in fiscal year 2026. But that’s nothing. Within the next ten years, interest payments will rise to $2.1 trillion. This is because Washington’s completely incapable of getting a grip on spending. Balancing the budget, let alone paying down the debt, has long since disappeared from Congressional discourse. In fiscal year 2025, the government ran a $1.78 trillion deficit, spending $7.01 trillion while only bringing in $5.23 trillion in revenue. Interest payments accounted for over half of the deficit. For 2026, the CBO is projecting a deficit of $1.9 trillion. Each year these deficits are racked and stacked on top of the national debt – driving the current $39 trillion debt to the moon.

Borrowing for Bombs

However, the CBO projection is likely too low. When it’s all tallied up, the deficit in fiscal year 2026 will be well over $2 trillion. The ongoing bombing of Iran is pouring a bucket of gasoline on the fiscal forest fire. War is the ultimate act of capital destruction. In addition to blowing up buildings and infrastructure, it also blows up deficit spending. Washington is paying for missiles and bombs with borrowed money at interest rates that are significantly higher than they were five years ago. The interest on these missiles and bombs will be paid by unborn Americans over 100 years from now. But that’s assuming there are enough jobs to support gainful employment. If you’ve reviewed the 2025 benchmark revisions from the Bureau of Labor Statistics, you know exactly what we’re talking about. Calling the monthly revisions a disgraceful joke is perhaps the understatement of the decade. It wasn’t just a clerical error. It was a systematic hallucination. The official 2025 story, the one used to justify interest rates and strong economy rhetoric, was that we added 584,000 jobs. It was the storyline that fueled a thousand triumphant headlines and emboldened the Fed to ignore the cries for relief from the housing market. Yet it was all a crock of hogwash. The BLS recently took a giant, institutional eraser to 403,000 of those jobs. After finally reconciling their projections and models with actual unemployment insurance tax records, the hard data that doesn't lie, the real number for 2025 was revealed to be a pathetic 181,000. Let that sink in. That comes to roughly 15,000 jobs per month for the entire nation. In an economy of our size, 15,000 jobs is essentially a rounding error. It’s statistical stagnation. Moreover, it amounts to a staggering 69 percent reduction from the original reports. But wait, it gets worse. According to BLS, total nonfarm payroll employment fell by 92,000 in February 2026. Jobs are disappearing faster than Iranian leaders. Yet the monetary picture looks just as grotesque as the fiscal and employment pictures…

Liquidity Trap

The Federal Open Market Committee (FOMC) met this week. With the new realities of the labor market courtesy of the BLS revisions, it was anticipated that the Fed would cut interest rates. But that was before Iran closed the Strait of Hormuz and the price of oil spiked to $100 per barrel. The combination of higher gas prices with already elevated consumer prices – increasing at an annual rate of 2.8 percent – left the Fed with little room to maneuver. Thus, it maintained the federal funds rate within its target range of 3.5 to 3.75 percent. This decision to hold rates steady was probably a mistake. The fact is, interest rates will have to go much higher over the next decade to keep inflation in check. High rates, in turn, will make the interest on the $39 trillion debt even more expensive. At the same time, because the U.S. weaponized its financial system through sanctions following the Russian invasion of Ukraine, many nations are easing up on their dollar reserves. As global demand for Treasuries drops, the Treasury has to offer even higher interest rates to entice buyers, further deepening the debt interest spiral. Yet, since the bombs started dropping on Iran the dollar has curiously grown stronger, both on the foreign exchange market and relative to gold and silver. What gives? Were gold and silver overbought following last year’s runup? Were they due for a significant price correction? Perhaps. But normally, when missiles fly the geopolitical uncertainty pushes gold and silver higher. Right now, however, we’re seeing capital running towards the dollar. The last we checked, the dollar index was back over 100. While gold is a store of value, the dollar is the world’s liquidity. When the war in Iran escalated, investors preferred being liquid to being safe. What to make of it…

Why Gold Is Dipping While the Market Panics for Cash

Gold and silver aren’t falling relative to dollars because people no longer want them. They’re falling because people need cash. As stock markets panicked, big institutional players faced margin calls. To cover those losses, they sold their winners, which, after a massive 2025 rally, were gold and silver. At the same time, the private credit market (i.e., non-bank lending to mid-sized companies) is facing its first real stress test. Come to find out, many of these loans use payment-in-kind (PIK) structures. This allows companies to pay interest with more debt rather than cash. With the prospect of rates staying high due to war-driven inflation, these debt piles are becoming unmanageable. Consequently, there’s been a surge in investors trying to pull their money out of private credit funds (redemptions hit over $10 billion recently). Since these loans aren’t easily sold, the redemptions are limited. Investors want out, but the cash is locked in long-term loans. The irony is that the more the private credit market wobbles, the more people scramble for the perceived safety of dollar. Thus, creating a feedback loop that keeps gold and silver under pressure for now. Still, we aren’t counting gold and silver out just yet. In fact, all the fundamentals that have propelled this bull market are still in place. If anything, the war in Iran has made the fundamentals for gold and silver stronger. Short term market volatility and chaos will continue. But long term, as the government does everything it can to inflate away the debt, gold and silver will prevail as the best, and truest form of money. The dollar, on the other hand, will return to its intrinsic value – somewhere between toilet paper and birdcage liner. Stay liquid, stay diversified, and hold on to your gold. [Editor’s note: Get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield," when you join the Economic Prism mailing list today. If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Why Gold is Dipping While the Market Panics for Cash to Economic Prism

Running On Empty

MN Gordon — Fri, 13 Mar 2026 08:05:19 +0000

The opening bombardment of Operation Epic Fury on February 28 succeeded in taking out the heart of the Iranian regime. But it also triggered extreme geopolitical instability in the Middle East and severed the aorta of the global economy. The massive barrage of missile strikes, the chaotic swarm of counter-drone attacks, and the succession of Mojtaba Khamenei offer sensational headline material. Yet the real destruction, the kind that reshapes civilizations, isn’t happening in the smoky ruins of Tehran. It’s happening in the empty shipping lanes of the Strait of Hormuz. Skyrocketing oil prices are a noted precursor to declining economic activity. Higher gas prices are not just an inconvenient market fluctuation. They act as a regressive tax on every single human being who eats, moves, or buys things. When the price of gas spikes and the pumps run dry, the very foundation of the global economy crumbles. As of March 12, Californians are already paying $5.36 per gallon to fill up their cars. That may seem like a lot if you’re living elsewhere. In the south, for example, we’re paying $3.22 per gallon. But according to the math of human survival, $5.36 per gallon is still the bargain of a lifetime. It’s a clearance sale on the very substance that built the modern world. As the supply of oil is disrupted across the globe, we’re about to learn a painful lesson. That the modern economy has been living off an unearned inheritance of energy productivity. Without this liquid gold, the cost of everyday convenience, from overnight shipping to fresh fruits and vegetables in February and central air conditioning, would be utterly impossible.

Pistons vs. Perspiration

When the math of energy’s boiled down to its crystalline essence, a great disparity is discovered. Cheap, abundant petroleum has detached people from the physical reality of work. The actual costs to move a mountain or even a minivan have been obscured. Splitting wood with an axe, for example, is much harder than using a gas-powered log splitter. Assuming a $20-an-hour labor wage, let’s look at the engineering reality. A single gallon of gasoline contains roughly 33.7 kilowatt-hours (kWh) of energy. To put that in perspective, a healthy human being, working a grueling 8-hour shift of manual labor, produces about 0.6 kWh. Do the math (33.7 divided by 0.6). One gallon of gas does the work of 56 days of back-breaking human labor. If you pay a worker $20 an hour to do what that gallon of gas does, you aren’t paying $5.36. You are paying for 448 hours of labor. Thus, at $20 per hour of labor, the real value of a gallon of gas, in terms of human effort, is $8,960. Even when accounting for the inefficiency of small internal combustion engines (at roughly 25 percent), that gallon is still doing the work of 112 hours of manual labor. That puts the fair price of gasoline, the price where human sweat is finally competitive with a piston, at $2,240 per gallon. When you drive to Starbucks for your morning cup of coffee, you aren’t just burning fuel. You are burning the equivalent of a man working for two weeks straight to push your 4,000-pound SUV to the drive-thru window. Over many decades, the precious utility of gasoline has been taken for granted. But the Strait of Hormuz is now closed. Soon enough, it will become very apparent how little can be accomplished without the aid of refined petroleum.

Approaching the Caloric Cliff

Yet the closure of the Strait doesn’t just mean you can’t afford to fill up your gas tank. It means the world can’t afford to eat. Energy and food are often thought of as two different cornerstones of civilization. But, in reality, they’re the same thing. Impacts to the supply of oil and gas lead directly to impacts to the supply of fertilizer and food production. You can’t have an abundance of food brought to market when the tractor has no diesel and the soil has no nutrients. About 30 percent of global nitrogen and phosphate fertilizer transits the Strait. What’s more, in the Northern Hemisphere’s it’s currently spring planting season. The most vulnerable moment in the calendar. Natural gas doesn’t just heat homes. Rather, it’s the primary feedstock for urea. Without it, crop yields dramatically decline – often by half or more. By this, we are looking at a significant reduction in global grain carry-over (storage inventory) if this blockade lasts through April. In addition, as the petrochemical industry halts, the miracle of the Green Revolution, which allowed 8 billion people to exist on a planet that naturally supports far fewer, disappears. The world population for most of human history was capped by the amount of nutrient rich soil, water, and sunlight that were available. That cap was busted through in the mid-20th century thanks to fossil fuels. Without synthetic fertilizers, energy powered water conveyance pump stations, and diesel-powered tractors, the carrying capacity of planet earth drops by billions. The caloric math simply becomes too small a number to provide the sustenance everyone needs to live. In short, the entire agricultural infrastructure is a mechanism for turning fossil fuels into calories. When the fuel stops, grocery store shelves go empty. What’s the backup plan?

Running On Empty

Markets reacted favorably this week to the G7 and the International Energy Agency (IEA) proposals for a coordinated release from the Strategic Petroleum Reserve (SPR). Something on the order of 300 to 400 million barrels has been mentioned. This is massive. Nearly double the emergency release of 2022. It makes good headlines. And helped ease the price of a barrel of WTI crude from $115 to below $90 for a day or two. But, once again, the math reveals a great disparity. The Strait of Hormuz isn’t just a small spider vein. It’s the aorta main line artery. With it closed, the world is staring down a shortfall of roughly 20 million barrels per day (mbd). If the G7 and IEA actually manages to dump 400 million barrels into the market, that historic intervention covers the gap for exactly 20 days. That’s it. Less than three weeks of breathing room. And that’s assuming the logistics even work. You can’t just press a magic button and have 400 million barrels appear where it’s needed. The maximum drawdown rate for the U.S. SPR is only about 4.4 mbd, and the rest of the G7 nations have even tighter bottlenecks. It’s physically impossible to pump the oil out of the reserves fast enough to replace what used to flow through the strait. The SPR was designed for basic supply disruptions. A hurricane in the Gulf. Or a pipeline strike. It wasn’t built to subsidize a global blockade of the world’s energy aorta. If Operation Epic Fury isn't over in three weeks, the G7 will be running on empty. At that time, it will become lucidly clear what happens when over a century of energy abundance vanishes. The impacts are both countless and extreme. For starters, the futile chickens of building cities in deserts, developing sprawling suburbs, and just in time delivery of food to market will come home to roost. [Editor’s note: Get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield," when you join the Economic Prism mailing list today. If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Running On Empty to Economic Prism

The Suffocating Fog of AI Generated Warfare

MN Gordon — Fri, 06 Mar 2026 09:05:32 +0000

“War is the realm of uncertainty; three-quarters of the factors on which action in war is based are wrapped in a fog of greater or lesser uncertainty. A sensitive and discriminating judgment is called for; a skilled intelligence to scent out the truth.” – Carl von Clausewitz, On War (1832)

Wrong Lesson from Caracas

Do you get the sense that the world is being run by a menacing algorithm? Between the capture of Maduro in January and the current war in Iran, we’ve moved from strategic operations to what feels like a high-stakes beta test for AI generated warfare. In early January, the world watched as Operation Absolute Resolve snatched Nicolás Maduro and his wife from Caracas in a lightning strike. To the White House, this was the ultimate proof of concept. A clean, surgical extraction that decapitated a regime with zero U.S. casualties. But Iran isn’t Venezuela. By applying the Maduro Playbook to Tehran – specifically the assassination of the Supreme Leader on February 27 – the Trump administration ignored the fundamental difference between a crumbling narco-state and a deeply ideological, regional powerhouse. Capturing Maduro was a police action. Martyring the Ayatollah was a religious and geopolitical earthquake. Instead of a peaceful transition, the USA-Israel consortium triggered a phased retaliation from Iran that Alastair Crooke notes is designed to systematically evict the U.S. from the Middle East entirely. What’s more, President Trump triggered this war of choice with a dangerously light belt of ammo. He recently admitted that while our medium-grade munitions are plentiful, our highest-end stockpiles, the stuff that actually stops incoming ballistic missiles, are “not where we want them to be.” Four years of shoveling top-tier hardware into Ukraine has left the cupboard bare. We are currently burning through Patriot interceptors and Tomahawks faster than they can be manufactured. In a war of attrition against Iran’s swarms of low-cost Shahed drones, the math is completely unbalanced. We are using $2 million missiles to stop $20,000 drones.

Why Anthropic Had to Go

The timing of the Anthropic ban last Friday wasn’t a coincidence. It was a clearing of the decks. Anthropic’s refusal to allow Claude to be used for mass surveillance or fully autonomous lethal systems made it a national security risk in the eyes of the Pentagon leadership. In Anthropic’s place, comes OpenAI and the GPT-5.3 Codex upgrade. The administration didn’t just want a chatbot, they wanted an agentic system capable of managing a multi-theater conflict in real-time. By designating Anthropic a supply chain risk and switching to OpenAI, the government has essentially handed the keys to a system that doesn’t have the same restraints and guardrails. We are now in an era of war where AI is calling-the-shots. If the strike on the girls elementary school in southern Iran, which killed more than 100 children, felt calculated, it’s likely because an algorithm determined that the “inflame-and-solidify” metric was more valuable than the “humanitarian-outcry” risk. This shift marks the end of human-centered oversight in modern warfare. Under the new GPT-5.3 Codex framework, tactical decisions are processed at speeds that make human ethical deliberation an obsolete bottleneck. By stripping away Anthropic’s internal AI constraints, the Pentagon has moved from assistive technology to a predictive authority that treats civilian casualties as data points in an ‘end justifies the means’ equation. The destructive reality of the Southern Iran strike illustrates this pivot. When a system is programmed to prioritize long term advantages over immediate moral cost, the obliteration of an elementary school becomes a logical move in a global chess game. This machine now operates with detached precision. The AI algorithm has no soul.

Dragon in the Machine

Yet the U.S. may not have the AI edge it supposed. Recall the China-Russia-Iran trilateral pact signed back in January. While the U.S. is betting on OpenAI, Iran is being backed by Chinese electronic warfare and AI tools. In this regard, China is treating the Middle East as a proxy laboratory. It isn’t just sending hardware. It’s providing the AI-driven data to blind Western sensors and predict U.S. naval movements. If we see a cyber-virus or a mass grid-down situation, it won't be a random event. It will be a targeted strike by a Chinese AI that has been training on our patterns for years. China has ample rationale for escalating its support of Iran. A major objective of the attack on Iran is to severe the flow of oil from Tehran to Beijing. For years, the ghost fleet – a shadowy network of aging tankers – has taxied millions of barrels of Iranian crude to Chinese independent refineries. The ghost fleet has effectively bypassed U.S. sanctions and fueled the very industrial base that produces the AI chips now being used against America. The Pentagon’s AI-driven modeling likely gamed that a conventional embargo was no longer enough. To truly de-risk from China, the administration had to kill the source. By turning the Persian Gulf into a war zone, the U.S. is attempting to physically blockade the energy supply of its greatest global rival. However, this is where the AI logic hits a wall. The U.S. strategy assumes that China will simply sit back and watch its energy security evaporate. Instead, we are seeing the Dragon breathe fire through Iranian proxies.

The Suffocating Fog of AI Generated Warfare

As the war escalates, President Trump’s finding it harder to pull miracles out of his hat. The switch from Anthropic to OpenAI’s GPT-5.3 was supposed to provide a God’s-eye view of the battlefield. But it seems to have created a feedback loop of overconfidence. The AI model said a strike on a civilian target would break the enemy’s will based on data from a completely different cultural context (like Venezuela). Instead, this resulted in a massive surge in volunteer martyrdom. The Trump administration’s reliance on AI generated warfare, where every life is a data point and every missile is a line of code, has blinded them to the human element. They learned from COVID-19 that a shocked population can be managed. But they are learning now that a population with nothing left to lose cannot be computed. The question of whether AI is ready for the big leagues is being answered in blood. In Venezuela, it worked because the variables were simple. In Iran, the variables are infinite. AI is unable to comprehend it. If the goal was a quick, surgical regime change, the AI has failed. If the goal was a total global shock that leads to “owning nothing and being happy,” then the chaos is a feature, not a failure. At this point in the operation, we expect chaos to multiply and ricochet about like metastatic cancer for decades to come. President Trump, War Secretary Pete Hegseth, and Israel Prime Minister Benjamin Netanyahu, thought they were playing a video game where the AI always ensures a win. They forgot that the other side has a computer too. And theirs is backed by a billion people and a lot of historical resentment. As these rival AI systems clash, the distinction between strategic victory and systemic collapse vanishes into a haze of predictive errors and unintended escalations. We have moved past the era of human accountability into a new reality where no one – not the generals, not the presidents, and certainly not the architects of the code – can see through the suffocating fog of AI generated warfare. We’re, no doubt, destined for uncertain catastrophe. [Editor’s note: Get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield," when you join the Economic Prism mailing list today. If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from The Suffocating Fog of AI Generated Warfare to Economic Prism

The Dutch Blueprint for the Global Middle Class Heist

MN Gordon — Fri, 27 Feb 2026 09:05:12 +0000

“Meten is weten.” (Measuring is knowing) – Dutch proverb

Taxing Phantoms

If you want to see the future of socialism and its rabid appetite to consume your life savings, you don’t have to look at the history books. Instead, look at the Netherlands. On February 12, 2026, the Dutch House of Representatives passed the Actual Return in Box 3 Act (Wet werkelijk rendement box 3). On the surface, it’s promoted as a fairness correction to a system the Dutch Supreme Court ruled unconstitutional in 2021. In reality, it is a financial suicide note that turns every investor into a tenant of the state. Instead of returning to sanity following the Supreme Court ruling, the Hague doubled down. This new bill is the supposed correction. But it replaces the prior tax on assumed return with a rapacious system that treats your portfolio’s fluctuating value as a liquid ATM for the state. This legislative overreach ignores the fundamental principle of private property, effectively penalizing success before it is even realized. It also signals a predatory shift where the fruits of your labor and risk-taking are no longer your own, but rather a communal pool for bureaucratic redistribution. Starting January 1, 2028, the Dutch government plans to tax residents at a flat rate of 36 percent on the actual returns of their savings and investments. But here’s the kicker: actual returns don’t just mean the money you actually put in your pocket. They include unrealized capital gains. These are the annual increase in the value of your stocks, bonds, and bitcoin, even if you haven’t sold a single dime. You are forced to pay taxes with cash you might not have on profits that could vanish in a market crash the following morning. It is another heist of the middle classes’ future.

Moving the Goalposts

There’s a classic bit of lore famously referenced in Star Trek VI: The Undiscovered Country about the origin of the word sabotage. Spock notes that disgruntled Dutch workers would throw their traditional wooden shoes, called sabots, into the gears of the automated looms to break the machinery. Thus, sabots became sabotage. The Dutch government is currently taking its own sabot and hurling it directly into the gears of its economy. By taxing money that doesn’t exist yet (paper gains), they are ensuring that the machinery of private wealth accumulation grinds to a halt. If your portfolio goes up by €100,000, you owe €36,000 in cash by tax day. If you don't have that cash sitting in a low-yield savings account, you are forced to sell to pay up. If you’re in the USA and thinking, “Glad it’s them and not us,” think again. During the 2024 campaign, Kamala Harris made no secret of her support for similar billionaire minimum taxes. Her proposal targeted individuals with over $100 million in wealth, suggesting a 25 percent tax on unrealized gains. While the billionaire label makes it a popular ‘tax the rich’ talking point for the Democrat base, the Dutch example shows us where the goalposts eventually move. What starts as a tax on the ultra-wealthy is soon applied to the middle class once the government realizes that the $100 million club doesn’t buy as many votes (or pay as many debts) as it used to. The logic is identical. That the state has a right to a piece of your success before you’ve even realized it. It’s a transition from taxing income to taxing existence.

Stealth Wealth Registry

The most sinister aspect of this isn’t even the 36 percent rate. It’s the administrative surveillance required to enforce it. To tax an unrealized gain, the government must first know the value of everything you own. This isn’t just about your Charles Schwab account. To fulfill the requirements of the Actual Return in Box 3 Act, the state busybodies have to look at everything you own that could appreciate. The pre-1965 jar of junk silver coins. Your kid’s Squishmallows. The gold necklace that was inherited from your great grandmother. Under the law, these must be valued and reported so they can be taxed. If you fail to report them, you will face tax evasion charges. That’s when everything that’s yours becomes theirs. When the state demands an annual accounting of your wealth to calculate a paper gain, it is establishing a de facto wealth registry. Once the government goons have the list, the leap from taxing the gain to forfeiting the asset is a very short one. If you fail to report a bottlecap that suddenly becomes a collector’s item, you aren’t just a hobbyist. You’re a criminal. With respect to financial markets, the Actual Return in Box 3 Act will cause absolute chaos. If everyone is forced to sell 3 to 5 percent of their holdings every year just to pay the tax on the rest of their holdings, you create a permanent, artificial sell pressure. And what happens when the market crashes? The Dutch bill suggests you can carry forward losses. But that doesn’t put cash back in your pocket when you need to pay the mortgage today. It is a one-way street where the government confiscates your wins but merely notes your losses for the future.

The Dutch Blueprint for the Global Middle Class Heist

Once again, this is all part of the “you will own nothing” plan that is playing out in real-time. By taxing the potential of wealth rather than the result of it, the state ensures that private capital can never reach the escape velocity needed to remain independent of the government. The Dutch are throwing the sabot into the economic machine. We here in the USA should be watching very closely. The socialists, like Gavin Newsom and AOC, who want to run the American economic machine are holding their own wooden shoes, waiting for their turn. This is the great confiscation disguised as a spreadsheet correction. When the state begins taxing the potential of an asset rather than its realized value, it effectively converts all private property into a government lease. You no longer truly own your stocks, your gold, or your home. You merely manage them for a silent partner who demands a dividend in cash every year, regardless of whether you’ve made a cent. It’s the ultimate sabotage of the middle class. The logic of Box 3, and its blueprint for similar laws in America and elsewhere, relies on the hope that you won’t notice the transition until the trap is sprung. By the time the average family realizes their retirement account and all their private assets are being cannibalized to fund a bureaucratic deficit, the wealth registry will be absolute. The ability to accumulate capital for independent growth will be degraded into a criminal system of state-managed dependency. Once the taxman moves his grubby hands from our income to our existence, we’re no longer just paying a fee. We’re surrendering the very concept of a future. [Editor’s note: Get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield," when you join the Economic Prism mailing list today. If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from The Dutch Blueprint for the Global Middle Class Heist to Economic Prism

Grinding the American Middle Class to Dust

MN Gordon — Fri, 20 Feb 2026 09:05:38 +0000

The housing market, for much of the 20th century, was the bedrock of the American Dream. Home ownership, and the financial stability it represents, was a sure path to middle-class prosperity. That dream turned to a nightmare for many American families during the epic real estate bubble and subsequent bust in 2008-09. What’s more, in the near two decades that followed, federal monetary policies coupled with restrictive local development standards have huffed and puffed an even more perilous bubble than the last one. Now the crumbling façade of American real estate and the associated economic squeeze has become too great to ignore. To understand why the real estate market is falling apart, you must look at who’s expected to buy the houses. The arithmetic simply doesn’t work. We’ve reached the point where discretionary income, the money left over after you’ve paid for basic needs, has effectively vanished for much of the population. When 67 percent of Americans are living paycheck to paycheck, saving for a down payment is impossible. Currently, about 72 percent of Americans are struggling to pay their monthly bills. We aren't talking about luxury vacations or even unexpected medical expenses. We’re talking about keeping the lights on and the fridge full. When the buffer is gone, the entire economic engine stalls. The lack of affordable housing has created a generational rift. Young workers find themselves trapped in a permanent renter class. They’re unable to build the equity that once anchored the nation's middle class. Right now, more than 75 percent of homes across the country are unaffordable for the typical household. Most Americans are effectively priced out of the housing market. And this number is climbing. Between higher interest rates, relative to four years ago, and artificially inflated valuations, the entry-level home no longer exists.

The Mortgage Death Trap

The ladder of social mobility has been pulled up. Millions of Americans have been left behind. Shelter is no longer a basic path to financial stability, but an unreachable speculative asset. What we are seeing is the rent servitude of a generation. If you can’t buy, you rent. If you rent, you can’t save to buy. It’s a closed loop that keeps equity in the hands of the few while the middle class are stuck paying for a roof they will never own. The modern American household also operates in a fragile state. Most families require two incomes just to keep the mortgage current. This dual-income trap means there is zero margin for an unexpected job loss. If even one spouse loses their job, which is becoming a looming threat as the labor market adjusts to the realities of AI, the house quickly turns from a burden to a liability. The timeline from missed paycheck to foreclosure notice is shorter than most people realize. According to the Bureau of Labor Statistics, the labor market is strong. But the reality on the ground tells a different story. We are staring down a year where millions of jobs are projected to vanish. Automation and AI are displacing white-collar jobs that used to be safe. There have been massive layoffs in technology, finance, and manufacturing. In previous downturns, there were usually sectors that could absorb the displaced. Today, every sector, except low-cost elder care jobs, is contracting simultaneously. When the jobs go, the houses follow. A bank doesn’t care about your years of loyal service. When the 30-day clock on a missed payment starts ticking that’s all that matters.

Engineered Collapse

Despite what the data from the Bureau of Labor Statistics says, there’s mounting evidence that this isn’t just a run of the mill economic cycle. When you look at the speed of the decline and the specific targeting of the middle class, it appears to be something else entirely. The middle class, specifically the segment that has historically held the most private property, is under attack. By squeezing the life out of the housing market, wealth is being funneled upward. When families lose their homes to foreclosure, they don’t just lose a roof, they lose their primary vehicle for intergenerational wealth. The result is a civilization of serfs. We’re rapidly transitioning to a rentership society. If you don’t own property, you don’t have a stake in the future. You’re left out in the cold. In 2008, the crash was about bad paper and subprime loans. Today, the crisis is about affordability and insolvency. House price inflation in the face of stagnating wages has become too much to overcome. Moreover, as houses are lost en masse to the banks they aren’t being foreclosed on and put back on the market at a lower price. They’re being sold in bulk to hedge funds, who promptly jack up the rents. What this means is your neighborhood could soon be owned by a corporation that doesn't have a face, let alone a soul. The real estate market isn’t just cooling off. It’s being hollowed out. Between the loss of discretionary income, the instability of the job market, and the sheer impossibility of the two-income mortgage, the American middle class is standing on a trap door. Yet the collapse isn’t coming. It has already begun. The question isn't whether the market will survive, but who will be left owning anything when the dust settles.

Grinding the American Middle Class to Dust

For decades, the home was a forced savings account that allowed a mechanic or a teacher to retire with dignity. Today, that vehicle has been hijacked by institutional capital. As the supply of affordable homes dwindles, we see the rise of the build-to-rent trend. This is where entire subdivisions are constructed not for families to buy, but for corporations to lease back to them in perpetuity. This shift marks the transition from a stakeholder society to a subscription society consistent with the WEF diktat of, “you will own nothing and be happy.” Housing, the most basic of human needs, has become a subscription service. Thus, the ability to accumulate private wealth through long-term home ownership has disappeared. As a renter, you are no longer building equity and wealth, you are funding a hedge fund’s quarterly dividends. This exploitive model ensures that the fruits of one’s labor are siphoned away from the community and into the coffers of distant shareholders. As a result, the working class are left with nothing but receipts and a sense of perpetual instability. The economic ladder has been replaced by a treadmill to nowhere. In addition, a society of renters is a society of transients that lack the long-term community ties that homeownership once encouraged. As the trap door swings open, the fall both destroys people’s finances and shatters the very concept of the neighborhood. Community engagement and local pride disappear when the residents of a street have no permanent stake in its future. Vibrant towns turn into anonymous places for an increasingly displaced workforce. No one makes eye contact. No one cracks jokes. No one helps their elderly neighbor bring in the groceries. The doors are closing on the era of American middle-class independence. The dream of home ownership is being replaced by the reality of permanent debt, and the bedrock of the American middle class is ground into dust. [Editor’s note: Get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield," when you join the Economic Prism mailing list today. If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Grinding the American Middle Class to Dust to Economic Prism

California and The Art of Economic Suicide

MN Gordon — Fri, 13 Feb 2026 09:05:34 +0000

“The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups.” – Henry Hazlitt, Economics in One Lesson (1946)

The Golden Fleece

Have you heard of California’s latest act of economic suicide? Once again, the Golden State’s come up with new and ridiculous ways to turn gold into lead. If you haven’t been watching the headlines, the 2026 California Billionaire Tax Act (Initiative No. 25-0024) is officially making its way onto the stage. Sponsored by the SEIU-United Healthcare Workers West, this ballot measure wants to slap a one-time 5 percent excise tax on the net worth of every individual in the state worth over $1 billion. The measure’s sales pitch even has a nice, philanthropic ring to it: “Eat the rich to save the sick.” In reality, it’s a classic case of what happens when a state treats its most productive citizens like an ATM with an infinite balance. It’s also another fine example of why California’s circling the toilet bowl. The proponents of the Act claim the state is staring down a fiscal abyss. Certainly, that’s true. Sacramento currently needs to fill a deficit that swings wildly between $3 billion and $20 billion depending on which way the wind blows. Apparently, federal cuts to healthcare (Medi-Cal) and food assistance are leaving a multi-billion-dollar gap. Thus, per the hacks in state government, an emergency tax on billionaires is needed to save California’s healthcare system from collapse. By taxing the roughly 200 billionaires living in California, the money grubbers estimate a one-time windfall of $100 billion. On paper, it sounds like a nifty solution. Supposedly, ninety percent of the money will go to healthcare. Yet when it comes to Sacramento, no amount of money is ever enough for the blood suckers in the legislature. We’ve seen this script before. Temporary taxes become permanent fixtures. One-time levies become emergency annual dues. In California, a budget crisis isn't a fluke. It's a feature of a system that spends money faster than a Silicon Valley founder at a Burning Man auction.

Mass Exodus

If Sacramento thinks billionaires are just going to sit around and wait for the Asset Seizure Team to show up and confiscate their wealth, they haven’t been paying attention to the moving truck traffic heading east on I-10 and I-80. California is already losing people. In fact, for six consecutive years the state has recorded a net loss in residents – roughly 216,000 in 2025 alone. We were born in California. We lived and worked there for over four decades. We got the hell out in 2022. At this point, it’s not just retirees moving to Arizona for the dry heat and affordable housing. It’s the high earners. Recent data shows that while lower-income residents leave due to housing costs, the wealthy exodus is accelerating due to the tax climate. Since 2019, more than 200 major businesses have relocated out of the state, including Oracle, Hewlett Packard Enterprise, Charles Schwab, Chevron, In-N-Out Burgers, and many more. Industry insiders are already reporting that 80 to 90 percent of the individuals targeted by this tax have either already established residency elsewhere or are in the process of doing so before the tax obligation date. Nonetheless, it may already be too late, as exit tax proposals are being considered to rob wealthy residents when they bail out for the last time. We are witnessing a high-stakes game of geographic musical chairs where the music has already stopped. These wealthy billionaires aren’t just moving their families. They are re-domiciling their entire financial legacies to jurisdictions that don’t view them as milk cows. When the state treats its most successful citizens like a captive resource, those citizens simply remove the captive part of the equation. By the time the tax collectors arrive with their clipboards, they’ll find nothing but empty mansions and “For Sale” signs as the tax base evaporates into the Nevada desert. When you tell someone you’re going to take 5 percent of everything they’ve ever built – not their income, but their existence – they don’t just gladly pay up. They leave. And when they leave, they take their future investments, their charitable foundations, and their capital gains taxes with them.

The Seen and the Unseen

This brings us to the core of the problem, famously articulated by economist Henry Hazlitt in Economics in One Lesson. Hazlitt warned of the “seen and the unseen.” In this case, the “seen” is the $100 billion the state hopes to confiscate. It’s the shiny new clinics, the press releases about funded programs, and the politicians cutting ribbons. This is what the public sees, and it’s why 60 percent of likely voters currently support the measure. The “unseen” is the destruction of capital. To pay a 5 percent wealth tax, billionaires don’t just reach into a vault of gold coins. Their wealth is held in productive assets, including stocks, real estate developments, and venture capital funds. When Sacramento forces a fire sale of these holdings, they aren’t just taxing a person. Rather, they are decapitalizing the very industries that keep California’s economy afloat. This mandatory liquidation triggers a ripple effect of devalued stock prices and stalled innovations that never get off the drawing board. We don’t see the thousands of jobs that were never created or the breakthroughs in technology and medicine that simply vanished because the seed money was siphoned off to feed the bureaucratic machine. To pay the state, the billionaires must sell these assets. Every dollar paid to Sacramento is a dollar not invested in a new startup, a new housing project, or a new piece of medical technology. Moreover, when a billionaire leaves, the state doesn't just lose that 5 percent. It loses the 13.3 percent top marginal income tax rate and capital gains tax they pay every year. By focusing on the “seen” (the immediate cash grab), Sacramento is blind to the “unseen”. That is the slow-motion collapse of the state’s capital system.

California and The Art of Economic Suicide

California already has the most progressive tax system in the industrialized world. The top 1 percent of earners pay nearly 50 percent of the state’s income tax. By targeting billionaires with a wealth tax, the state is effectively sawing off the branch it’s sitting on. If the 200 billionaires leave – and many already are – the tax burden doesn’t disappear. It just shifts down. When the blood suckers in Sacramento realize the $100 billion windfall didn’t fix the structural deficit, because they spent it all on new recurring programs, they will come for the near-billionaires, then the multi-millionaires, and eventually, the upper-middle class. The 2026 Billionaire Tax Act is a desperate play by a state that is unwilling to operate with fiscal discipline. It treats wealth as a static pile of cash to be looted rather than a dynamic engine that drives the economy. If this measure passes in November, Sacramento might get its $100 billion relief for a year or two. But the unseen cost – the lost jobs, the vanished startups, and the permanent departure of the state’s tax base – will haunt California indefinitely. Ultimately, this is the tragedy of the California Dream souring into a cautionary tale. By the time the legislature realizes that wealth is mobile and capital flows to where it is treated best, the damage will be irreversible. You cannot build a stable society on the foundation of resentment and confiscation. As the engines of innovation flee the state, California will be left with a bloated bureaucracy and a crumbling infrastructure that no amount of emergency levies can fix. The state isn’t just taxing the rich, it’s taxing its own future into oblivion. Alas, Governor Gavin Newsom – a gaslighting failure – is the leading 2028 Democratic presidential candidate. Should voters fall for his slick hairdo, California’s wealth confiscation policies will ensnare the entire nation. [Editor’s note: Get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield," when you join the Economic Prism mailing list today. If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from California and The Art of Economic Suicide to Economic Prism

The Tale of Mr. Scrap Metal

MN Gordon — Tue, 10 Feb 2026 09:05:10 +0000

When a national economy has been completely overrun by a crooked socialist political class, hope, along with prospects for individual prosperity, fades. Decisions cease to be made for financial or economic reasons. Instead, entrenched politics and corruption direct the flow of capital to the greedy insiders at the expense of the many. Today we return with another guest article from our friend Joel Bowman and his Notes From the End of the World. If you recall, Mr. Bowman, from his outpost in Buenos Aires, Argentina, has a front row seat to what he’s dubbed, The Greatest Political Experiment of Our Time. Over the last two years, President Javier Milei has executed aggressive shock therapy. He’s slashed government spending, halved ministries, and eliminated thousands of bureaucratic roles to crush hyperinflation and dismantle a corrupt, statist political caste. The best way to understand what this means, really, is through tales and anecdotes offered by elders who’ve lived through the endless decades of political and economic corruption. If this interests you, you’re in for a real treat. What follows is the anecdote of Mr. Scrap Metal, as revealed through a 94-year old’s eyes, and an unlikely comeuppance that was some 70 years in the making. Here’s the latest from Buenos Aires... Enjoy! MN Gordon P.S. After giving Mr. Bowman’s article a read, please head over to his website and subscribe to his newsletter for all the latest happenings in The Greatest Political Experiment of Our Time. We have no financial arrangement with Bowman and do not profit from publishing his work. We simply find his observations and writing to be valuable and believe that you will too. --

The Tale of Mr. Scrap Metal

Plus Peronist protectionism, upside down economics and the road to Argentina…

“The years teach much which the days never know.”

~ Ralph Waldo Emerson, from his essay Experience (1844)

Joel Bowman with today’s Note From the End of the World: Buenos Aires, Argentina...

“After all these years, I am still amazed by the minds of men. I wish, just for one moment, that I too could think of absolutely nothing.” At 92-years young, Ana is wise beyond her years. She and her husband, Luis (who will celebrate his 94th lap around the sun next week) called in for coffee and cookies yesterday. Apparently unaware that “gender is a social construct,” Ana explicated freely on the differences between the sexes. “I sometimes ask Luis what he’s thinking and do you what he says to me? ‘Oh, nothing dear.’ How I would love to experience such peace of mind! Alas, it’s not for us. We women are different,” she nodded knowingly to our own dear wife. “We can’t just ‘switch off’ like men can. Our brains are wired differently. We always have a million things going on. Now, whether or not all these thoughts are important, I am not at liberty to say...” Knowing better than to take that bait, Luis turned instead to his favorite subject, his beloved Argentina, leaving the fairer sex to their busy minds.

The Tale of Mr. Scrap Metal

“I see that you’re following along with our great experiment here,” he began, making no attempt to hide the excitement in his eyes. “I have great hope for the future. And it grows everyday. Did you see the latest story in the newspapers, about Don Chatarrín?” We confessed we had not and that, in any case, we would prefer to hear it from our dear friend instead. “That’s the nickname Milei gave to the country’s biggest steel tycoon, Paolo Rocca. It means ‘Mister Scrap Metal.’ I could hardly believe it when I read it, but this president is a different kind of man. He’s not really a politician, you know. But I’ll get to that... “This Señor Rocca, ‘Mister Scrap Metal,’ is the head of Techint, a large multinational based here in Argentina. They began when I was still in my twenties, beginning my career as an engineer. They won their first big contract to build an oil pipeline down in Patagonia, in Comodoro Rivadavia. That was back in forty-nine, I recall, not long after Peron came to power... “That was a different time, you must realize,” Luis continued. “Perón was a nationalist and a socialist, as you know, and in the very worst ways. His big three ideas, las tres banderas [the three flags], as he called them, were ‘political sovereignty,’ ‘economic independence’ and ‘social justice.’ A lot of his ideas he borrowed from his hero, Mussolini. People talk about these ideas today as though they are something new, as if Peron and men of his sort had not spent the past eighty years discrediting them, but that’s another issue... “Perón was a very charismatic man and a highly skilled orator, two characteristics that are very dangerous when found in a politician. He could charm a crowd into believing the most absurd things imaginable. And so he did. Regarding his so-called ‘economic independence,’ Peron promoted the idea of ‘import substitution industrialization,’ which sounds marvelous, provided one has no idea of how an economy actually works...

Argentina First (to Last)

“The basic premise – clear, simple... and wrong – was that Argentina could reduce its ‘dependency’ on foreign nations by manufacturing here at home what it had previously imported from abroad, even if it had to do so at higher cost to the consumer, which was almost always the case. Naturally, people don’t want to pay more for inferior goods, so the government would have to do what it does best: force them to do so... all in their own interest, of course, and in service of the ‘common good.’ So Perón levied tariffs and imposed strict quotas on imports, making them less competitive domestically. Thus, according to the big man’s ‘thinking,’ would home-grown industry be protected from the predations of evil foreign powers, who were really just our trading partners. In the meantime, our local manufacturers would be given ‘room to grow and flourish,’ delivering us a bounty of ‘Argentine First’ products. So went the idea, anyway... “The result was so predictable, so obvious, that almost nobody saw it coming. Far from delivering quality products for cheaper prices, local producers took advantage of the protections and raised prices to just below that of the artificially inflated prices imposed on imported goods. Meanwhile, free from outside competition and enjoying a captive market at home, our once-proud industry grew slack and lazy, such that the quality of our goods declined to the miserable state we find them in today. Innovation stalled. The much anticipated economic boom never materialized. Quite the reverse. Indeed, many of the companies that managed to survive at all did so because of tariff protections, not because they built better products. And so, Argentines who had happily marched along behind Perón’s fantastical ideas suddenly found their cost of living skyrocketing, while their store shelves were either stocked with products of embarrassingly poor quality, or left altogether empty. And that’s just for starters... Luis shook his head, as though baffled even now by how such a cruel fate came to pass... “It was apparent even from the beginning that this was not going to work,” he went on, “at least not the way Perón had intended. For one thing, local industry still needed to import goods. Machinery, tools, spare parts, industrial inputs of various kinds and so on. Now these were suddenly much more expensive, a cost that was duly passed on to the customer. As local industry lagged, the state involved itself ever more, spending enormous sums to subsidize and prop up domestic production. Since our exports could not keep pace, and dollars were scarce as a result, the state took to printing money to cover its ever expanding expenses. The expanding monetary base meant wage-price spirals and persistent fiscal deficits. The government naturally responded to this disaster by turning it into a catastrophe, enacting currency controls and printing even more local currency. That’s when inflation, which had been a cyclical inconvenience, like a seasonal cold, turned into a chronic illness. Then came the most renewable resource in all of Argentina’s politics: corruption...

Indian Giving

“With practically all power in the country now centralized unto the state, the economy became less about which businesses produced the most valuable goods and services and all about which industry was the most politically connected. Lucrative contracts were awarded not to the best companies, but to insiders who knew how to rig the system, to pay off the right people, to grease the right palms. The government was entongados [in cahoots], as we say, with the heads of powerful unions, the syndicalistas. In the end, the only people that benefited from Perón’s ‘economic independence’ were those working the system, the corrupt politicians and their corporatist cronies. “Which brings us back to Mr. Scrap Metal. When a large contract was offered for a major pipeline project down in the Vaca Muerta oilfields, Rocca probably thought he was a certainty. That his products, his steel pipes, are not the best in terms of price and quality would not have mattered in the past. He knows the right people in government and has the right political connections that such things were not a primary consideration. According to the papers, Rocca’s bid was 40 percent higher than the competition, an insult to the very concept of market competition... “You must imagine his surprise, then, when his company lost the contract – part of a $15 billion LNG project – to an Indian firm [Welspun Corp.]. It was the first major contract the firm has lost in over 70 years, since way back in the Perón era. This is a new way forward for us. A repudiation of the idea that the state alone knows what’s best and not the people, that it should dictate markets from the top down, that it should plan our economy and our lives. As we’ve seen here, that only ends in disaster. Not many people are around today who still remember when this all protectionist nonsense began. I’m glad to see it being repealed with my own eyes... “Don Chatarrín,” Luis laughed again. “Remember Juan Perón. He was the politician. He was the one who set this country on its disastrous course. As for Señor Milei, he’s no politician. And thank goodness for that!” We turned back to the ladies, deep in their own conversation, just in time to hear Ana declare, “We have only one rule in the family chat: no politics.” Seeing their menfolk once more attentive, Ana turned her smiling expression to Luis and asked what the two of us had been talking about all this time. To which her husband of seventy-something happy years replied, “Oh, nothing dear.” Stay tuned for more Notes From the End of the World... Cheers, Joel Bowman founder of Notes from the End of the World P.S. For all of Bowman’s latest musings head over to his website. While you’re there, subscribe to his newsletter for all his latest analysis and insights as they’re reported in real time.

How to Trade the Warsh Doctrine

MN Gordon — Fri, 06 Feb 2026 09:05:48 +0000

Over the last week, the precious metals market went through a meat grinder. Gold and silver went from moon shot to abrupt crash and back to liftoff in the span of about a week. It’s been a classic case of market psychology, leverage, and the sheer chaos that happens when Washington throws a spitball at Wall Street. Several distinct features come to mind. The “Warsh Shock and Flaw”, for example, and why the inflation hawk narrative you’re hearing on the news is likely wrong. To understand where we are, we have to look at how we started 2026. Quite frankly, January was insane. Gold wasn’t just rising. It was skyrocketing. By January 29, gold hit a staggering all-time high of $5,608 per ounce. Silver was even crazier, breaching $120 per ounce; up nearly 70 percent in a single month. But, as anyone who’s followed markets for a cycle or two knows, prices cannot go vertically for long. A rapidly rising market will soon outpace the underlying economic reality. A peak is reached where the cost of assets exceeds the available pool of capital and the actual productivity of the economy. When prices decouple from fundamental value, the system naturally resets through gravity-defying margin calls and exhaustion. There are simply no buyers left willing or able to chase the next leg up. On January 30, the trapdoor opened. In a single day, silver delivered a brutal 27 percent plunge. This marked its worst one-day rout in history, even beating the infamous Hunt Brothers crash of 1980. Gold followed suit, dropping nearly 12 percent. By the time the dust settled, trillions in paper wealth had evaporated. Then, just as headlines were declaring the gold bull market over, the first week of February brought the bounce. Gold has pushed back up around $5,000, and silver is fighting to stay above $80.

Who’s Pulling the Strings?

This wasn’t just a simple case of mom and pop selling their dusty jewelry and sterling silverware for extra cash. This was a violent, systemic liquidity event. When prices started to dip, the CME Group – the massive exchange that dictates the rules – abruptly hiked margin requirements. This aggressive move forced anyone trading on borrowed money to either instantly come up with significantly more cash or liquidate their positions immediately. Most chose – or were forcefully liquidated – to sell. This created a terrifying price vacuum where there were simply no buyers left to catch the falling knife. In addition, for months, as a core part of the popular debasement trade, sophisticated big funds had been betting heavily that the U.S. dollar was finally going to collapse under its own weight. When a certain Fed nomination suddenly suggested the dollar might stay strong, these massive institutional whales all tried to exit the same narrow door at the same time, causing a chaotic bottleneck. In this regard, the primary catalyst for this total chaos was President Trump’s nomination of Kevin Warsh to succeed Jerome Powell as Fed Chair. Because Warsh was such a vocal, public critic of printing money via Quantitative Easing back in 2008 and 2011, the global market instantly labeled him a hardline inflation hawk. The logic was simple: Warsh hates inflation. Warsh will protect the dollar. Warsh will keep rates higher for longer. Therefore, gold, which pays no interest or yield, is now perceived as a bad investment. That reasoning sent the U.S. Dollar Index (DXY) above 97 and sent precious metals into a disastrous tailspin. But here’s the thing, the broader market is very likely misreading the modern Kevin Warsh.

Warsh Shock and Flaw

If you dig into Warsh’s recent writings, specifically his 2025 op-eds, he isn’t a traditional, one-dimensional hawk who wants to crush the economy with high rates. Rather, he believes that through higher productivity gains from the ongoing AI revolution, the economy can comfortably handle significantly lower rates without triggering high inflation. Warsh has argued that the current AI boom and massive productivity gains mean the entire economy can handle lower interest rates without sparking a 1970s-style inflation spiral. He isn’t looking to stay artificially restrictive for the sake of it. Instead, he’s looking to get the Fed out of the way of American business. Per Warsh: “AI will be a significant disinflationary force, increasing productivity and bolstering American competitiveness. Productivity improvements should drive significant increases in real take-home wages. A 1-percentage-point increase in annual productivity growth would double standards of living within a single generation.” In short, Warsh doesn’t necessarily want punishingly high interest rates. He wants a leaner, smaller Fed balance sheet. By this, he means he wants the Fed to stop buying Treasuries and mortgage-backed securities, allowing the private market to determine the true price of capital again. Under the Warsh Shock and Flaw, he may actually cut rates much faster than Jerome Powell ever would have, so long as he can successfully shrink the Fed’s massive footprint at the same time. Last week’s frantic precious metals wash out happened because panicked traders saw the Kevin Warsh of 2008, not the 2026 version who is closely aligned with the Trump administration’s aggressive pro-growth, pro-technology agenda. What to make of it?

How to Trade the Warsh Doctrine

So, if the hawk label is a misreading of the modern Kevin Warsh, what does the future actually look like? If we step away from the panic of late January, and apply a little abstract thinking, a picture emerges where the Warsh Doctrine could paradoxically fuel the next major rally in silver. Warsh’s core thesis is built on the simple idea of AI-driven productivity. Most Fed chairs are obsessed with the long obsolete Phillips Curve, the theory that low unemployment must lead to high inflation. Warsh thinks that’s outdated. He argues that if AI makes workers and companies more efficient, the economy can grow at 3 percent or 4 percent without prices spiraling. This gives him the cover to ‘run it hot’ with lower interest rates. For a metal like silver, which is both a monetary hedge and an industrial metal, this is a dream scenario. You get the benefit of lower rates (which makes non-yielding silver more attractive) combined with a high-growth industrial environment where silver is needed for everything from AI chips to solar panels and battery energy storage systems. The real risk, and the potential flaw, in the Warsh Doctrine is his focus on shrinking the Fed’s balance sheet. He wants the Fed out of the bond-buying business. While he might cut short-term rates to help the consumer, his refusal to buy long-term Treasuries could cause long-term yields to stay high. This would create a steepening of the yield curve. Historically, when the curve steepens and the Fed is actively shrinking its footprint, it puts immense pressure on the traditional banking system. If the banks start to creak under the weight of holding all those government bonds without Fed help, investors will run right back to the safety of hard assets – like gold and silver. The January crash was a necessary and well overdue market cleansing. The gold and silver market had become a meme trade, driven by a zealot belief that the dollar was imminently doomed. Now that the Johnny-come-latelies are out. What’s left are the cool heads and strong hands who understand that a productivity-focused Fed is actually the perfect setup for a sustainable, long-term bull market in real assets. The January selloff wasn’t the end of the story. It was the resetting of the gold and silver market from a runaway speculative bubble to a fundamental bull market run. Trade it accordingly. [Editor’s note: The Warsh Shock just wiped-out trillions in gold and silver value, but the headlines might be dead wrong. While the herd screams inflation hawk, a deeper look at his 2025 writings reveals a different playbook: an AI-driven productivity boom that could actually lead to lower rates and a massive second leg for hard assets. >> Don’t trade the 2008 version of Kevin Warsh. Trade the 2026 reality.] Sincerely, MN Gordon for Economic Prism Return from How to Trade the Warsh Doctrine to Economic Prism

Ghosts of the Plaza Accord

MN Gordon — Fri, 30 Jan 2026 09:05:53 +0000

Imagine you found a magical bank that lets you borrow money at 0 percent interest. Naturally, you’d take that free money and put it into a high-yield savings account or the stock market to pocket the difference, right? That, in a nutshell, is the Yen Carry Trade. For over a decade, Japan’s interest rates were stuck near zero – or even negative. Investors, from massive hedge funds to Mrs. Watanabe (the stereotypical Japanese retail trader), borrowed trillions of yen for next to nothing, swapped them for U.S. dollars, and bought higher-yield assets like U.S. Treasuries or even high-flying tech stocks. It was the ultimate infinite money machine until very recently. Now the glitch has started to fix itself as increased volatility ripples through global markets. The carry trade only works if the yield differential – the gap between Japan’s rates and everyone else’s – stays wide. But in 2026, that is starting to change. The Bank of Japan (BoJ) finally blinked at inflation in early 2024 and started slowly nudging interest rates up from below 0 percent. Simultaneously, the U.S. Federal Reserve, under intense pressure from President Trump, has been slowly cutting rates. While the FOMC announced a dovish pause this week, the federal funds rate is down from 5.25 percent in August 2024 to 3.5 percent today. This narrowing spread forces traders to liquidate positions to cover mounting costs. Remember, bond yields move inverse to bond prices. Rising yields mean the price of the bonds are going down. The yield on the Japanese 10-year government bond recently spiked above 2.3 percent. That’s the highest it has been this century, effectively ending the era of cheap capital and triggering a massive deleveraging cycle.

Panic in Tokyo

As that gap narrows, the carry – your profit – vanishes. If you’re paying 2 percent to borrow yen but only earning 4 percent on dollars, and you have to worry about the exchange rate, the math starts looking ugly. To pay back the yen loans, carry trade speculators have to sell their U.S. assets and exchange their dollars back into yen. Should everyone rush to sell U.S. assets and buy yen all at once things could get especially ugly. This can cause a liquidation feedback loop. Speculators sell U.S. stocks to cover their rising debt, which pushes stock prices down, which triggers margin calls, which forces more selling of U.S. stocks and buying of more yen. Because so much of this trade was done with leverage, an abrupt unwind would cause massive chaos for markets. At the same time, the need for a stronger yen has become political. While Japan has historically loved a weak yen to boost its massive exporters, this has now become a political and economic problem. Because Japan imports almost all of its energy and a huge amount of its food, a weak yen makes these essentials incredibly expensive. Japanese households are facing a cost-of-living crisis. Public discontent has become intense leading to political panic in Tokyo. It has even forced Prime Minister Sanae Takaichi to dissolve the lower house of parliament and call for snap elections on February 8, 2026. To win voters, Takaichi is proposing to suspend the sales tax on food and beverages. But the Japanese government’s finances, with a debt-to-GDP ratio over 230 percent, are even worse than the U.S. government’s finances. The loss of tax revenue could be the final straw that breaks the camel’s back and triggers a sovereign credit crisis – further weakening the yen. As of early 2026, the BoJ has held its key short-term interest rate steady at 0.75 percent, a 30-year high reached in late 2025. But it hasn’t been enough to stop the bleeding. The cost of importing energy and food has continued to skyrocket, hitting Japanese households hard.

Gold $5,500, Silver $120

It was reported last Friday that the New York Fed has been checking the yen’s exchange rate with banks. This was seen as a precursor to coordinated intervention. Why would the U.S. help Japan prop up the yen? It’s not just out of the goodness of the U.S. Treasury’s heart. This all comes back to Washington’s massive pile of government debt. Japan, with a pile of $1.1 trillion in U.S. Treasuries, is one of the largest holders of U.S. debt. If the yen collapses, the Japanese Ministry of Finance would be forced to sell its U.S. Treasuries to bring cash home. This would quickly send U.S. interest rates higher and increase mortgage rates and corporate borrowing costs. Yet servicing interest costs is already one of the largest parts of the U.S. federal budget. The U.S. Treasury is having to issue new debt just to pay the interest on the old debt. Higher interest rates would compound this debt spiral. President Trump certainly wants lower interest rates. So, too, he wants to reduce the U.S. trade deficit. A weaker dollar would help American exports be more competitive. If the U.S. and Japan move forward with a joint intervention, the dollar’s value would further suffer. We’ve already seen gold and silver spike to record levels – gold above $5,500 and silver above $120 – as investors lose faith in paper currency and look for real assets. An intervention would mean the U.S. Treasury is effectively selling its own currency to buy yen. This would put downward pressure on the dollar index, which has already slipped well below 97. For American consumers this would mean higher costs for imports, above and beyond the costs of Trump’s tariffs. This would also contribute to stock market volatile. Companies that rely on global supply chains and stable currency will likely suffer as foreign exchange volatility spikes. Moreover, currency intervention to prop up the yen at the expense of the dollar could compel a flight from dollar assets as speculators look to stay ahead of the coordinated operation. But what else?

Ghosts of the Plaza Accord

These sorts of coordinated currency interventions don’t have a very good track record. To better understand what could happen, we can look back to the 1980s. In 1985, for example, the U.S. dollar was incredibly strong. So strong it was crushing American manufacturers because their exports were too expensive for the rest of the world. The proposed solution was the Plaza Accord. Central planners from the U.S., Japan, Germany, France, and the UK met at the Plaza Hotel in New York. They agreed to collectively dump dollars and buy other currencies to bring the greenback’s value down. It worked on surface. The dollar plummeted, and the yen surged. But the unintended consequences directly pumped up the bubble economy in Japan that burst in the early 1990s. The Japanese Nikkei index didn’t recover for nearly 34 years. At the time of this writing, the chatter of a coordinated currency intervention appears to be nothing more than blowing smoke. We saw reports intervention is imminent. We also saw reports that Japan may hold off for now. Still, we haven’t heard anything that would resemble a concrete proposal. In fact, when asked this week if the U.S. is intervening in the currency market or strengthening the yen, Treasury Secretary Scott Bessent said, “absolutely not.’ But where there’s smoke there’s fire. And with markets on edge, perhaps the Fed’s reported rate check was enough to keep yen bears from pushing the currency further down – for now. Intervention, no doubt, is very tempting for control freak central planners. Yet they would be wise to resist. Efforts to prop up a weak yen would likely fail. And even if they succeed, in the short-term, and fix one problem, this would be at the risk of creating many more – with ramifications that would persist for decades. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Ghosts of the Plaza Accord to Economic Prism

Meltdown in the Alps

MN Gordon — Fri, 23 Jan 2026 09:05:53 +0000

Aggressive tariff threats. Punishing historic allies. Disregarding Danish sovereignty. Perhaps in President Trump’s mind the ends justify the means. This week, Trump’s high stakes push to acquire Greenland quickly escalated into a geopolitical hubbub. On Tuesday, Greenland’s Prime Minister Jens-Frederik Nielsen told authorities to start preparing for a possible military invasion. Trump’s motivation includes security and control of the G-I-UK Gap (the northern Atlantic gap between Greenland, Iceland and the United Kingdom) and ownership of vast amounts of rare earth elements. These ambitions all fit perfectly within the framework of the Donroe Doctrine and the objective of asserting undisputed American supremacy throughout the Western Hemisphere. Denmark, however, remains stubbornly resistant to these advances. So far, the big chill emanating from these frigid northern waters is being felt directly in the fluctuating value of the U.S. dollar. Typically, when the world gets nervous, the dollar acts like a comfortable weighted blanket that everyone hides under for safety. But this time, that blanket has holes in it as investors grow tired of the extreme diplomatic posturing. Trump, as far as we can tell, isn’t just scouting for a scenic new spot for a luxury golf course. Rather, he covets Greenland’s massive, untouched cache of critical minerals. These materials are the essential building blocks of the modern economy. They’re required for everything from advanced AI computer chips to EV batteries and sophisticated precision guided weapons systems. Currently, Beijing has a stranglehold over the global supply of rare earth elements. Having complete, sovereign control over Greenland’s untapped reserves would be a massive strategic asset for generations to come. But Greenland belongs to the Kingdom of Denmark. And Denmark, standing firm with its European neighbors, is not on board with relinquishing control of its territory.

Greenland or Bust

Trump’s initial efforts to strike a friendly deal were flatly rejected. Don Trump Jr. had even previously taken to the streets of Nuuk to hand out MAGA hats to locals. This act of kindness failed to cement a lasting bond. Consequently, the rhetoric shifted from negotiation to a more aggressive stance of making them pay. Last weekend, Trump announced on Truth Social that starting February 1, eight European nations – including the UK, Germany, and France – would face a 10 percent blanket tariff on all exports to the U.S. If there’s no deal for Greenland by June, that number would jump to 25 percent. These tariff threats were perceived as more than just a traditional trade war. European leaders called them economic blackmail. Markets reacted in kind. Usually, in a crisis, people buy dollars. But because the U.S. was the source of this instability, investors ran to gold and silver. In fact, this week gold eclipsed $4,900 per ounce while silver spiked above $96 per ounce. Everyone’s losing trust in the dollar. Tariffs, as we’ve mentioned many times before, act as a tax on the American consumer. A 25 percent tax on European cars, seafood, and machinery means higher prices at home. Higher prices mean higher inflation Higher consumer price inflation typically compels the Federal Reserve to hike rates. But with Trump openly hammering Fed Chair Powell, investors are worried the central bank has lost its independence. When people stop trusting the central bank, they stop trusting the currency. At the same time, the EU dusted off its Anti-Coercion Instrument and threatened €93 billion in counter-tariffs. Obviously, a trade war between the two biggest economic blocs on earth would be followed by a global slowdown. The rhetoric continued in Davos…

Davos Losers

This week a vast collection of globalists and billionaires overran the Swiss Alps for the annual circus in Davos. Trump made a grand, fashionably late, appearance on Wednesday. True to form, he did his best to stir the pot and set the agenda on fire. He kicked things off by called for immediate negotiations to acquire Greenland, flat out calling it “our territory.” He openly ridiculed Denmark, pointing out they lost the territory in six hours during WWII, inferring they’re lucky we gave it back. He also promised not to use excessive force to get the deal done. But he made sure everyone in the room knew he could be unstoppable if he wanted to be. He then left the Danes with an ultimatum: “You can say yes and we’ll be appreciative, or you can say no and we will remember.” Trump also turned his sights on climate change activists and fired shots at the green energy crowd. He called wind turbines total losers. He stressed that they’re killing the birds, ruining the world’s most beautiful views, and making every taxpayer go broke. He essentially called the European leaders fools for buying wind turbines from China. Even fashion choices weren’t safe. French President Emmanuel Macron, who showed up wearing Top Gun aviator sunglasses indoors – apparently due to a burst blood vessel – also became an object of Trump’s ridicule. “I watched him yesterday with those beautiful sunglasses," Trump laughed. “What the hell happened?” Trump certainly had his fun while amongst the Davos elites. But what will come of it?

Meltdown in the Alps

Warren Buffett once said to “never bet against America.” But that was long before Trump occupied the Whitehouse. On Tuesday, Trump’s erratic policies prompted a “Sell America” sentiment. This marked a shift in global risk perception. Instead of seeing the USA as a global stabilizer, the world saw it as a source of chaos. If the U.S. is willing to weaponize its currency and trade to force a sovereign nation to sell its territory, what’s next? This unpredictability is souring foreign investors on the dollar. No one knows what the next tweet will demand. This sentiment reached a boiling point on Tuesday, January 20. The Sell America trade effectively wiped out the S&P 500’s gains for the year. On the day, the index nearly dropped 2.1 percent. But investors didn’t just sell stocks. They sold American assets entirely. While the S&P 500 dropped over 140 points, the U.S. dollar and Treasuries also took it on the chin. The dollar index dropped nearly 1 percent, while gold and silver soared to record highs. Tech stocks also took a beating, with Nvidia and Tesla both declining by over 4 percent. On Wednesday and Thursday, the U.S. stock market recouped some of Tuesday’s losses, as Trump said he wouldn’t use force to take Greenland. Moreover, later in the day Trump announced on Truth Social that a deal framework had been formed and that he was cancelling the tariffs: “Based upon a very productive meeting that I have had with the Secretary General of NATO, Mark Rutte, we have formed the framework of a future deal with respect to Greenland and, in fact, the entire Arctic Region. This solution, if consummated, will be a great one for the United States of America, and all NATO Nations. Based upon this understanding, I will not be imposing the Tariffs that were scheduled to go into effect on February 1st.” What this deal will ultimately entail is unclear. According to the New York Times, the United States would obtain “sovereignty over land for military bases.” While the immediate threat of a trade war and complete taking of Greenland has cooled, the underlying financial market volatility simmers hot. Tuesday’s "Sell America" meltdown provides a warning of a fragile future. Heed it with intention. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Cash Machine – Why You Should Own this Mineral Royalty with a 12% Yield." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Meltdown in the Alps to Economic Prism

Countdown to May Madness

MN Gordon — Fri, 16 Jan 2026 09:05:17 +0000

“Tis in vain therefore to go about effectually to reduce the price of Interest by a Law; and you may as rationally hope to set a fixt Rate upon the Hire of Houses, or Ships, as of Money.” – John Locke, 1691

The Subpoena Strategy

May 2026 cannot come soon enough for Federal Reserve Chair Jerome Powell. That’s when his term is up. He can hang around as a Fed governor until 2028. Though, in the past, most Fed chairs have stepped down when their term is over. Perhaps he will get picked up by one of the big banks and get paid big bucks. Or maybe he’ll write a book and go on a speaking tour and collect big fees. Or, if he’s smart, he’ll go fishing, indefinitely. Who knows? In the meantime, he’s got President Trump and the Department of Justice (DOJ) all over his backside. This past Friday, as you likely know, the DOJ served the Federal Reserve with grand-jury subpoenas. On Sunday night, Powell did something central bankers almost never do. He got in front of a camera and went on the offensive. The DOJ’s investigating Powell’s testimony from last June regarding the massive $2.5 billion renovation of the Fed’s headquarters. Critics in the administration, including the Office of Management and Budget’s Russell Vought, have been hammering Powell over pretentious costs. They’ve pointed to expensive marble, special elevators, and rooftop gardens. In his video statement, Powell was blunt. He told the American public that this isn’t about marble or construction budgets. It’s about intimidation. According to Powell, the threat of criminal charges is the consequence of the Fed refusing to follow the President’s preferences on interest rates. “This is about whether the Fed will be able to continue to set interest rates based on evidence and economic conditions – or whether instead monetary policy will be directed by political pressure or intimidation.” From our perspective, the Fed shouldn’t exist in the first place. Powell and his cohorts at the Fed have no more clue what interest rates should be than the rest of us. Their intervention in credit markets is destructive and distorts prices throughout the economy. Nonetheless, what’s Trump really up to? Is this all part of a strategy of maximum pressure to bring rates down to ease the burden of Washington’s massive debt?

Extreme Dollar Debasement

Trump has made no secret of his desire for much lower interest rates. He says this will fuel the “greatest economy in history.” But Powell, a man who pretends to do what’s right, has been moving cautiously. He’s concerned that inflation – boosted by recent tariffs – could flare up once again. Still, Powell’s already initiated a rate cutting cycle. In fact, he’s slowly brought the federal funds rate down from 5.25 percent in August of 2024 to 3.5 percent today. But for Trump this is too little too late. By sicking the DOJ dogs on Powell over building renovations, Trump is attempting to weaken Powell during the final months of his term. By sticking him with a potential indictment now, the administration paints him as a criminal. At the same time, Trump is already vetting his shortlist for the next Chair. Names like Kevin Hassett (the frontrunner and loyalist), Kevin Warsh, and Rick Rieder are at the top. It’s expected that whoever takes the seat in May won’t just continue Powell’s incremental rate cutting cycle. Rather, they’ll aggressively hack them. We’re talking about extreme dollar debasement. If you care about the dollars in your savings account this is cause for concern. The Fed’s perceived independence is the only thing standing between the U.S. dollar and a full printing press mentality. If the new Chair (starting in May) comes in and aggressively slashes rates while the government is still running massive deficits and escalating trade wars, we are looking at another episode of runaway inflation. When you lower rates while also increasing tariffs, the value of the currency drops. More dollars chasing fewer goods equals higher consumer prices. What little remains of the Fed’s price stability mandate will be the first thing out the window come May.

The Ultimate Escape Hatch

When the Fed’s independence is openly undermined by the President, the markets get nervous. On Monday, gold and silver reacted by breaking above $4,600 per ounce and $84 per ounce, respectively. They both continued to rise from there as investors sought refuge from the growing dollar instability and geopolitical escalation in Iran. If the Fed’s captured by politics, and is compelled to destroy the dollar, then precious metals are the ultimate escape hatch. Should the new Fed chair come in and cut rates by 50 or 75 basis points to show their loyalty to Trump, precious metals could go parabolic. This shift would signal the end of objective monetary policy, replacing data-driven decisions (which are bogus in their own right) with presidential mandates. Conversely, the Dollar Index (DXY) is looking shaky. Foreign exchange investors are concerned the U.S. dollar will no longer be managed by a predictable, non-political institution. If the world decides the Fed is just an arm of the White House, trust in the dollar vanishes. A weaker dollar makes imports more expensive, further fueling the inflation fire and eroding the purchasing power of every American household. Lower rates are usually perceived as being good for stocks and housing because borrowing gets cheaper. However, if the market senses that the Fed is cutting rates for political reasons rather than economic reasons, we could see investors start to bail en masse. The risk of a sudden, violent repricing of assets becomes unavoidable when the underlying currency loses its credibility. Who wants to buy into a bubble that’s being inflated by a subpoena? If you thought monetary policy was bad under Powell, just wait until May. That’s when things will get absolutely mad, as the thin line between out-of-control fiscal spending and monetary printing disappears.

Countdown to May Madness

As the countdown to May Madness begins, sitting on cash is no longer a neutral position. It’s a guaranteed loss. To protect your wealth from a politically captured Fed and the resulting dollar debasement, it has never been more critical to shift from paper promises to hard assets and strategic hedges. As noted above, gold and silver remain the ultimate anti-dollar. While gold at $4,600 and silver at $90 may seem high, it reflects the dollar’s shrinking value. Their recent rise has been fast and furious. Certainly, they’re both due for an abrupt and substantial correction. But what choice do you have? Holding a foundation of physical bullion is essential. Unlike digital entries, physical metal cannot be printed into oblivion by a loyalist Fed chair. Once you have a solid footing of physical bullion you can consider some mining company speculations, including royalty and streaming companies. The other thing to understand is that inflation is a transfer of wealth from lenders to borrowers. With residential real estate prices at what seem like extreme highs this may come with little consolation. But it is important… Long-term financing at fixed interest rates is an advantage when the currency you’re borrowing in is being debased. By holding real estate with a long-term, fixed-rate mortgage, you are paying back the bank in cheaper dollars while the property value and rental income rise with inflation. We don’t like it. We’d prefer a housing market that wasn’t so absolutely distorted by currency debasement. But this is the world we live in. It is important to place some chips accordingly. So, too, tax deduction allowances for rental property investors are also very rewarding. A portfolio of high-quality stocks that compound faster than inflation is also essential. Don’t just buy the index. Buy individual shares of well managed companies. Avoid those with high debt and low margins. Instead, look for companies with a protective moat that can raise prices tomorrow if the dollar drops today. The reality here is that May Madness is rapidly approaching. And when the printing presses go into overdrive, the exit door for wealth preservation will get very small, very fast. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Utility Payment Wealth - Profit from Henry Ford's Dream City Business Model." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Countdown to May Madness to Economic Prism

Seizing the Orinoco

MN Gordon — Fri, 09 Jan 2026 09:05:04 +0000

Last weekend’s capture and extraction of Venezuelan President Nicolás Maduro was both fun and exciting. Disregarding national sovereignty and international law feels good when the outcome is favorable. Doing something reckless, like train surfing or drunk driving, and getting away with it teaches a dangerous lesson. Namely, that you’re invincible and can take things up another notch – or two. Does might make right? The time to answer this question has come and gone. Wrong or right. What’s done is done. Once a cucumber has become a pickle it can never be a cucumber again. There’s no going back. Perhaps Maduro, a corrupt and illegitimate dictator with a long list of abuses, had it coming. Handcuffs appear fitting. Certainly, opinions abound. Ours is of little concern. What we’re interested in better understanding is, what’s the meaning of it all? The world appears to be significantly different than when the clock struck midnight on January 1, 2026. The headlines are moving fast. By physically removing a head of state and assuming control over the world’s largest oil reserves, the U.S. has put its force behind the recently published Trump Corollary to the Monroe Doctrine – now called the Donroe Doctrine. Specifically, it has cut China off from its strategic oil investments in Venezuela. Michael Burry, the eccentric contrarian who made a fortune shorting subprime mortgages in 2008-09, said on Monday that this is a “paradigm shift despite the market’s yawning.” To Burry’s point, on the surface, the market’s immediate reaction was quiet. Brent crude climbed less than 1 percent. And while stock futures opened higher on Monday, they didn’t exactly skyrocket. But this doesn’t mean there aren’t significant economic and geopolitical ramifications…

Breaking BRICS in the Hot Sun

Burry believes the “game just changed” for global energy and American consumers. If he’s right, this maneuver will rapidly diminish the influence of the BRICS nations while creating a captive energy supply for American industry. The taking of Maduro and the subsequent U.S. promise to “run” the country is a source of short-term uncertainty. But assuming it doesn’t turn into another military quagmire, this could have long-term advantages for the American economy. For example, tapping into Venezuela’s massive reserves – the largest proven crude reserves in the world – could lead to a sustained drop in gas, diesel, and jet fuel prices. Cheap, plentiful energy is a critical input for a thriving economy. It’s what America needs to suspend its day of reckoning. As production and transport costs decline, lower fuel costs flow through the entire supply chain. For American consumers, this could be the ultimate answer to the inflation that has dogged the 2020s. According to Bloomberg, Chevron has 11 ships scheduled to arrive in Venezuela this month. Chevron is the only Western oil company allowed to produce and export oil in Venezuela, operating under a license granted by the Treasury. The expectation is that it will increase production and delivery of crude to refineries in the U.S. Gulf Coast and East Coast. This could also be a boon for the big oil service companies like Halliburton, Schlumberger, and Baker Hughes. These companies will likely be tasked with upgrading Venezuela’s crumbling pipelines and refineries and maximizing production. There’s also the question of how the U.S. takeover of Venezuelan oil assets impacts the global balance of power.

Doctrine of Disruption

If Washington succeeds in redirecting the world’s largest oil reserves to the U.S. Gulf Coast refineries, then Beijing and Moscow are looking at a major readjustment. For years, China has used its Belt and Road Initiative (BRI) to extend influence into South America, lending over $60 billion to Maduro’s government. Those loans were collateralized by future oil output. That output is now controlled by the U.S. From a practical standpoint, about 4 to 5 percent of China’s oil imports currently come from Venezuela. If the U.S. diverts that oil to its own ports, China loses a key source of low-cost oil supply. Moreover, this has a larger impact on China’s BRI throughout Latin-America. It demonstrates to other regional partners that Chinese financing can be severed overnight by a shift in U.S. policy. In addition, Russia’s development rights to billions of barrels of Venezuelan oil via Roszarubezhneft, a Russian state-owned oil company, are now in legal limbo. So too, by taking control of Venezuelan crude, the U.S. minimizes the influence of Russian oil on the global market. As Venezuela’s output is restored and modernized by American contractors, Russia will lose the strategic leverage it has over energy markets. If the U.S. successfully ramps Venezuelan production back to its peak of 3 million barrels per day, the resulting global oversupply will drive prices down. A drop in oil prices below $50 per barrel would be devastating for Moscow’s war-inflated finances. While there are reasons to be bullish on the economic upside for America, there’s also potential fallout. The U.S. captured a dictator. But it also took on a nation in collapse.

Seizing the Orinoco

Ask any poker player. A massive win at the table often comes with a ‘bad beat’ for someone else. In this case, the risks are as deep as the Orinoco Belt itself. While the prospect of several decades of $2.00 per gallon gas is tempting, the reality of running a nation in collapse is a potential nightmare. What President Trump calls a liberation, leaders in Mexico City, Brasília, and Bogotá are calling aggression and recolonization. By invoking the Trump Corollary, the U.S. has effectively told every sovereign nation in the hemisphere that their borders only matter so long as they don’t interfere with America’s interests. What sort of blowback could result? Could neighbors like Colombia or Brazil be compelled to pivot even harder toward the BRICS bloc for protection? Instead of isolating China, the U.S. might have just given every Latin American nation a reason to sign a mutual defense pact with Beijing. Likewise, the influx of Venezuelan heavy crude is not without problems. Most U.S. refineries are optimized for light, sweet crude. To process the sludge coming out of Venezuela, massive, multi-billion-dollar upgrades will be needed to Gulf Coast facilities. Also, by centering the Venezuelan recovery entirely on oil, the U.S. risks creating a concentrated economy on a national scale. If oil prices stay low, Venezuela’s economy will continue in chaos, potentially leading to a permanent U.S. military presence just to keep the lights on. In short, the Donroe Doctrine represents a high-stakes gamble, trading international law for energy dominance. Seizing Venezuela’s reserves could slow inflation and weaken adversaries like China and Russia. But it comes at the risk of regional blowback and costly military entanglements. In the end, long after Trump has taken his last breath, the United States may find that the true cost of seizing the Orinoco is a hemisphere permanently turned against it. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Utility Payment Wealth - Profit from Henry Ford's Dream City Business Model." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Seizing the Orinoco to Economic Prism

Outlook 2026: Chaos and Control

MN Gordon — Fri, 02 Jan 2026 09:05:20 +0000

“Adde parvum parvo magnus acervus erit.” –Ovid

Four Dominant Themes for 2026

Do you like the world around you? Are you eager to take another trip around the sun? Like it or not. Eager or not. The New Year is here… We intend to make the best of it. We suppose you do too. Where to begin? Silver delivered some excitement to close out the year. After skyrocketing past $80 per ounce, the grey metal (Ag) has been on a volatile ride between liquidity squeezes and midnight margin calls. Behind the scenes, naked shorting – the fraudulent move where big banks sell silver they haven’t even borrowed – pushed the financial system to the breaking point. When prices spiked, these paper bets got torched. To maintain solvency, it is suspected the banks took to the overnight repo market for instant cash to cover their short positions. This may have provided a temporary solution. But the Federal Reserve, via the overnight repo market, cannot print silver. It can merely extend credit. We believe the market disorder that hit the day after Christmas will return in the New Year. And it’s only a matter of time before one of the big banks will be caught swimming with its pants down. As we enter 2026, it’s quite evident that the global landscape stands at a precarious crossroads. From our vantage point in Southern Appalachia, we see the convergence of a bursting technological bubble, a seismic shift in geopolitical aggression, and a radical transformation of the very nature of money and securities. Through ongoing discussions with our friend Dick, we’ve distilled this down to roughly four themes we expect will dominate in 2026. These four themes are presented herein. And, as a special bonus for reading to the end, we’ve included a practical recommendation for off-grid survival. So put on your favorite work boots – the older the better – and grab a shovel. It’s time to dig into the New Year’s edition of the Economic Prism. First off…

Why the $5 Trillion AI Bubble is Set to Burst

There will be a broad realization in 2026 that the rapid buildout of AI has been a giant waste of money. That the trillions of dollars in capital piled into data centers and chips has been set on fire. This realization will appear in the form of a mega, AI driven stock market crash and associated debt crisis and economic contraction. We’re not predicting the end of AI. We’re merely suggesting that AI is something much different than what’s been advertised. Without question, AI can and will support many useful applications. When integrated into processes and systems where outcomes are dependent on data and logically defined protocols, AI has demonstrated abilities to quickly complete tasks. However, returns from the development of AI enabled tools are nowhere near what’s needed to justify the capital being expended. A recent study from MIT, for example, found that 95 percent of enterprise AI pilots fail to deliver a measurable return on investment. AI tools and applications may ultimately become ubiquitous. But unless something dramatically changes with the technology, above and beyond addressing degradation and hallucinations, AI will never be a form of actual intelligence or a replacement for the human ability to ask questions, innovate, and invent. Robert Gore, at Straight Line Logic, explains: “At root, the problem is that although AI can answer a seemingly infinite number of questions, it can’t ask a single one. It can be programmed to spot and attempt to resolve conflicts within data, but it doesn’t autonomously ask questions. From birth, the human mind is an autonomous question generator; it’s how we learn. […]. Curiosity and questions are the foundation of learning and intelligence. Reading even a page of something interesting or provocative will generate questions. Generative AI ‘reads’ trillions of pages without an iota of curiosity. No one who either hails or warns of AI surpassing human intelligence (HI) has explained how it will do so while bypassing the foundation of HI.” This critical defect is why AI will not live up to the expectations placed upon it. Moreover, when the realization hits that AI isn’t the immediate productivity miracle promised, the $5 trillion valuations we’re seeing will evaporate. Since AI-related stocks drove nearly 80 percent of market gains in 2025, a tech correction will trigger a broad market crash. As capital dries up, companies will cut spending and jobs, leading to a sharp recession or depression. The central planners in government generally respond to economic depressions in three ways. Through printing massive amounts of money, starting or escalating wars, or fabricating a pandemic. The money printing serves to bail out the big banks while a burgeoning war or faux pandemic, with the right propaganda, distracts the population from the problems at home, while also justifying massive money printing. This leads us to our next theme for 2026…

Blockading Beijing

For years, the focus was on the Forever Wars of the Middle East. Then it was the ongoing proxy war with Russia via Ukraine. But as we head into 2026, the Trump administration has executed a massive strategic pivot. The new front line? Venezuela. White House advisor Stephen Miller recently set the tone for this new focus with intense rhetoric on the history of Venezuelan energy. He stated: “American sweat, ingenuity and toil created the oil industry in Venezuela. Its tyrannical expropriation was the largest recorded theft of American wealth and property. These pillaged assets were then used to fund terrorism and flood our streets with killers, mercenaries and drugs.” By highlighting the nationalization of oil as a direct theft from the American people, the White House makes a moral and legal case for more aggressive intervention and gunboat diplomacy. Under Operation Southern Spear, the U.S. has moved a massive naval force into the Caribbean, including the USS Gerald R. Ford carrier strike group. Over the last few months, the U.S. has conducted dozens of maritime strikes against what it says are narco-terrorist vessels. In reality, this strategic focus on Venezuela has little to do with drugs and has everything to do with Venezuelan oil exports to China. President Trump has effectively declared a maritime blockade, with the Navy now authorized to seize sanctioned tankers. This is because despite heavy sanctions, China remains the primary buyer of Venezuelan crude, importing roughly 570,000 barrels per day. By blockading these waters, the U.S. isn’t just targeting the Maduro government of Venezuela. It’s cutting off a critical energy artery for Beijing. The administration’s Trump Corollary to the Monroe Doctrine essentially warns that the Western Hemisphere is closed to Chinese strategic investment. The New Cold War is about more than semiconductors and TikTok. The waters off the coast of Venezuela are now the location of the global power struggle between Washington and Beijing. China isn’t just a casual observer in Caracas. It is the country’s greatest financier. Over the last two decades, Beijing has poured over $60 billion into Venezuela, much of it structured as ‘oil-for-loan’ deals. When Stephen Miller talks about the “tyrannical expropriation” of American assets, he’s also pointing to who moved in after the U.S. left (i.e., China). By keeping the Maduro government afloat with infrastructure projects and debt extensions, China secured a strategic foothold in the Western Hemisphere – in what the U.S. traditionally considers its backyard. Operation Southern Spear is a direct shot at China’s energy security. The U.S. is now physically seizing tankers like the Centuries, which was intercepted in late December carrying nearly 2 million barrels of oil bound for China. By stopping these shipments, President Trump is forcing Beijing to choose between backing Venezuela and risking a direct naval confrontation or losing billions in invested capital and an important source of oil. As this escalates in 2026, it will provide cover for the U.S. government to, once again, radically change the form and feel of money, which is our next theme for 2026.

The New Backbone of U.S. Debt

Several weeks ago, we talked about how the GENIUS Act, which was signed into law by President Trump on July 18, 2025, requires stablecoins to be backed one-for-one by U.S. dollars or other low-risk assets, primarily short-term U.S. Treasuries. We noted that this policy commences the next shift in American money. If you haven’t been keeping up with this development, join the club. The idea of stablecoins becoming a de facto digital dollar, and creating massive new demand for U.S. Treasuries, sounds enigmatic. Perhaps this is why hardly anyone is talking about it. Quite frankly, we don’t like the idea and would rather ignore it. But, alas, this is happening whether we like it or not. And it will be a major theme in 2026. Stablecoins, as we understand them, are issued by private entities not by central banks. They are not a Central Bank Digital Currency (CBDC). Their issuance is driven by market demand, not monetary policy. When stablecoin issuers back their tokens with Treasury securities, they own the Treasury asset. Any interest payments from those Treasuries go to the issuer because the issuer holds the asset. In fact, the GENIUS Act prohibits stablecoin issuers from paying interest or yield directly to stablecoin holders as part of the stablecoin product. The GENIUS Act also requires a stablecoin issuer to publicly disclose reserves each month certified by executives. Larger issuers face additional auditing requirements. To add confusion, there are stablecoins that operate outside of the jurisdiction of the U.S. and are not compliant with the GENIUS Act. Tether, for example, issues a popular stablecoin called USDT and maintains a stable value pegged 1:1 to the U.S. dollar. Tether, at the same time, has essentially told Uncle Sam and its GENIUS Act to pound sand. Rather than backing its tokens exclusively with U.S. Treasuries, as required by the Genius Act, Tether keeps a chunk of its reserves in bitcoin and precious metals. In Q3 2025, Tether was the biggest buyer of gold, buying more gold than any central bank. Also, rather than providing audits, per the GENIUS Act, Tether prefers quarterly attestations. And, because it’s headquartered in El Salvador, it doesn’t meet the US-based requirement. Does that mean that USDT is better or worse than the USDC stablecoin issued by Circle, which is based in the U.S. and fully compliant with the GENIUS Act? Perhaps Tether’s existence as an offshore international digital dollar that operates outside of the U.S. government’s control, and with some of its reserves in gold, is an advantage. This, too, could be its demise. Remember, the Trump administration’s objective with the GENIUS Act is to create a new source of Treasury demand funded by private issuers so that America’s massive debt can be financed and an explicit default can be avoided. This is a power preserving adaptation. Tether is out of line with this objective. We believe the next shock event – economic recession, war escalation, or another pandemic – will serve as a midwife to stablecoin implementation. People rarely change their financial habits when things are going well. It takes a shock to compel them from an old system into a new one. Stablecoins, for instance, could be the perfect vehicle for sending and receiving government stimulus checks. They could also provide refuge during a banking crisis, where people can hold their cash outside the traditional fractional-reserve banking system. This will also come with countless hazards. Systemic risks of a run on stablecoin reserves and how this spills over into the Treasury market are still unknown. In short, as with all financial assets, and especially the new, untested variety, if stablecoin adoption accelerates, diversification across various stablecoins, such as USDT and USDC, is advised. Lastly, stablecoins factor into another one of our themes for 2026…

The Tokenization Era

Asset tokenization has been in the works for many years. If you recall, during the covid pandemic mania of 2020-21, NFTs (Non-Fungible Tokens) of art or collectibles became all the rage. The use of blockchain technology to record ownership allowed NFTs to be bought, sold, and traded. This technological application caught the attention of the big financial directors. Not for art and collectibles, but for major financial assets. Larry Fink, the chairman and CEO of BlackRock, said in January 2024: “We believe the next step going forward will be the tokenization of financial assets, and that means every stock, every bond … will be on one general ledger.” Asset tokenization, in short, is the process of turning a real-world building, a stock, a bond, or a gold bar into a digital chip. And stablecoins are the money used to play the game. Before the GENIUS Act, big banks were hesitant to touch tokenization because they didn’t have a legal version of digital cash to use for settlement. The GENIUS Act created Payment Stablecoins (like the compliant version of USDC). Now, a bank like JPMorgan can tokenize a US Treasury bond and feel safe accepting a compliant stablecoin as payment, knowing the coin meets federal reserve and audit standards. What’s more, a tokenized bond using stablecoins can be issued without a single human accountant being involved. Imagine a corporation wants to borrow money. Instead of a traditional bank loan, they issue a Tokenized Bond on the blockchain. First, the corporation sets up a Smart Contract for the bond. The contract could say: “I am borrowing 1,000,000 USDC. I will pay 5 percent interest annually. Payments happen every 30 days.” In the traditional banking world, a bank would have to manually calculate interest for thousands of bondholders and mail checks or process wires. In the tokenized world, at midnight on the payment date, the Smart Contract takes a digital snapshot of every wallet holding the bond tokens. It instantly calculates how much interest each person is owed. The contract then automatically pulls the interest amount from the corporation’s stablecoin reserve and pushes it into the bondholders’ wallets in USDC. As we said at the outset, we don’t like the idea of stablecoins becoming a de facto digital dollar. Its advancement via the GENIUS Act is for the purpose of allowing the federal government to keep running up massive deficits. We consider this to be deceitful. We’d rather ignore it. But we can’t. The legislative framework is in place, and the big banks are moving forward. At this point we have more questions than answers. Namely, by tokenizing assets, which can then be traded, and can act as collateral, won’t the growth of money explode? What will this do to consumer price inflation, and the value of dollars people hold in their traditional bank accounts? There are also issues of privacy. The complete digitization of money and tokenization of assets comes with full system surveillance and tracking. How will a person’s spending be tracked? Will spending be tied to a social credit score with preprogrammed allowances and restrictions? Will the loss of financial privacy destroy what’s left of freedom and liberty for American citizens? What are the systemic risks inherent to building such a complex digital financial world? What happens if there’s a major black sky event where power and communications are disrupted for an extended period of time, whether from a geomagnetic storm, cascading grid failure, or a coordinated cyber-attack? No doubt, we’ll be monitoring and tracking the greater adoption of stablecoins and development of asset tokenization as they take shape throughout the year. We’ll look to adapt accordingly, while also maintaining diversification across both old money and new money systems. Certainly, maintaining wealth that is completely off-grid and outside of the banking system, like physical gold and silver, is of critical importance.

Preparing for Chaos

Before we close, we’d like to leave you with one practical action you can take to prepare for war, inflation, or the breakdown of an ever-increasing complex digital world. Assuming you have food storage, and some basic backup power such as a simple battery storage system that can charge with portable solar panels, there is the critical, and often overlooked need for micronutrients. After two weeks, no matter how much protein and carbs you have, you need micronutrients for your brain and body, or you start losing mental clarity, strength, and a well-functioning digestive system. The simple solution is sprouting. When the time comes, the ability to be a ‘jar farmer’ to sustain health via sprouts will be essential. To get started, take a look at Sprout People. There you will find a great education section and a large variety of nutrients you probably never imagined could be sprouted. We have no financial or business arrangement or affiliation with Sprout People. We’re merely passing on information we believe you will find valuable. Also, if you’re looking to protect your wealth and profit in the chaotic year ahead, take a look at our Wealth Prism Letter. We’re currently putting the finishing touches on the January 2026 issue. It will be published on January 5 and includes a savvy way to profit from a historic anomaly we’ve uncovered in the commodities market. Here’s to a happy, healthy, and prosperous New Year! [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Utility Payment Wealth - Profit from Henry Ford's Dream City Business Model." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Outlook 2026: Chaos and Control to Economic Prism

The Most Freedom in the World

MN Gordon — Tue, 30 Dec 2025 09:05:40 +0000

The expert class is opposed to freedom. They devise theories, supposedly backed by academic rigor, to promote greater state control and intervention over individuals. When something challenges their rhetoric, they pile on the propaganda and fear. Yet they are consistently wrong. While the expert class was busy clutching their pearls and predicting total collapse, something strange happened at the edge of the world. Freedom and liberty improved people’s lives. The results, by all measures, are extraordinary. Today we return with another guest article from our friend Joel Bowman and his Note From the End of the World. If you recall, two years ago, Javier Milei stepped onto the stage in Argentina with a chainsaw and the promise of smaller government and greater freedoms. The ivory tower elites shrieked about social chaos and destruction. They warned that a libertarian experiment would only bring suffering to the masses. Fast forward to Christmas 2025, and a preponderance of evidence has piled up in support of Milei’s cause. From crushing triple-digit inflation to igniting the fastest growth in the Western Hemisphere, the data tells a story the mainstream media refuses to touch. Grab a glass of Malbec and settle in. Here’s the latest from Buenos Aires... Enjoy! MN Gordon P.S. After giving Mr. Bowman’s article a read, please head over to his website and subscribe to his newsletter for all the latest happenings in The Greatest Political Experiment of Our Time. We have no financial arrangement with Bowman and do not profit from publishing his work. We merely find his observations and writing to be valuable and believe that you will too. -- The Most Freedom in the World The nascent light of liberty shines bright in Argentina…

“We are not going to stop until Argentina is the country with the most freedom in the world.”

— Javier Milei speaking at the 41st IAEF congress in Buenos Aires, December 2025.

Joel Bowman with today’s Note From the End of the World: Buenos Aires, Argentina...

When we left you last week, we were lamenting the sorry situation regarding vanishing freedoms in our nanny state of birth, Australia. But where the tide of liberty ebbs cruelly from one shore, it flows gently upon another. Today, we offer a pithy, Christmas Week update from our adopted home, where The Greatest Political Experiment of Our Time is two years young this month... Readers will recall that, at the time the “libertarian” experiment began, the expert class were warning off unmitigated disaster and “devastation” for the country at the End of the World. Remember the clairvoyants over at The Guardian, all idiot, no savant: And really, who doesn’t love an “open letter” from sneering know-it-alls in academia, whose favorite saying a dear reader summed up recently: “Sure, it works in real life... but does it work in theory?” From the article... “Ghosh, a development economist from the University of Massachusetts Amherst, said she and the letter’s other two co-authors, Piketty and Milanovi?, worried Milei’s policies ‘would be deeply damaging for Argentina and very unfortunate for the entire continent’. ‘“This is not just the social chaos that could be generated by extreme right positions but also the economic chaos that would ensue from a decline in both public revenues and public spending,’ Ghosh added. ‘“Argentinians are going to vote in an election where there are these very tough choices. But a libertarian solution that vilifies the public sector will only add to the suffering.”’

Inconvenient Truths

Damning prognostications, to be sure. How’s it going so far, then? Herewith, a few choice data points to chew on over the Chrissy holidays...

When “far-right” Milei took office, inflation was running at a white hot ~300% per year. It has since fallen 90%, to around 30% annually.
While Piketty et al were sounding the false alarms, warning anyone who would listen of the dark evils of free markets and the redemptive virtue of public bureaucracy, the economy, which was shrinking at a rate of 1.6% annually, was teething on the brink, accelerating to a 2.6% decline in Q4, 2023. Today, Argentina is one of the fastest growing economies in the entire Western Hemisphere, registering 5.3% growth year-over-year.
According to the Ministry of Economy, the 4.5% accumulated growth in the first 7 quarters of Milei’s presidency is the highest in the last 20 years.
November’s $2.5 billion trade surplus was four times higher than the market had forecast, according to the REM (Relevamiento de Expectativas de Mercado — the Market Expectations Survey published by the Banco Central de la República Argentina (BCRA)
When Milei took office, wholesale inflation (essentially the same as the Producer Price Index) was running at 276% annualized. The latest data, for November, shows it has slowed to 1.6% per month, or 24.3% year on year, a greater than 90% drop.
As for employment, the private sector has added +238,000 thousand jobs in the last 12 months... quadruple the 60,000+ “jobs” Milei has slashed from the government’s well-marbled underbelly with his trademark chainsaw.
On the investment front, Argentina’s “country risk,” (the premium investors demand to hold Argentine sovereign debt relative to U.S. Treasuries), has fallen from over ~2,000 basis points when Milei took office... to just ~600 today, the most positive reading since 2018.
Meanwhile, total exports are at all time highs, Industrial Manufacturing Exports had their 4th highest month in the last 11 years, the country just registered a massive accumulated energy surplus, with the Neuquén geological formation producing 575.4 Mbbl/day of oil for the month of November, a staggering 32.9% higher than the same period a year ago...
So the list goes on, and on, and on...

The Heart of the Matter

But perhaps the most heartening data point of all, at least for those who suffer the occasional pangs and pains associated with possessing the requisite organ in the first place, comes from the Ministry of Human Capital (translated from the official): “Poverty in Argentina reached 27.5% during the third quarter of 2025, according to a projection by the National Council for the Coordination of Social Policies (CNCPS) based on information from the National Institute of Statistics and Censuses (@indecargentina). “This represents a year-on-year decrease of 10.8 percentage points compared to the third quarter of 2024, and a decrease of 27.3 percentage points since President Javier Milei took office. “It is also estimated that extreme poverty fell by 3.8 percentage points compared to the third quarter of the previous year. Since the beginning of this administration, extreme poverty has decreased by 14.8 percentage points. This means that millions of people have been lifted out of extreme poverty.”

Liberty’s Light

When we began following this “devastating” experiment, back in 2023, the conspicuously compassionate socialists had left the place an utter quilombo... with poverty at 52.9%. For those esteemed economists, who claim so verily to care about the downtrodden, the unwashed masses, the ignorant and indigent, that rate has since fallen every... single... quarter (source, Ministry of Human Capital/INDEC): Q1, 2024: 52,9% Q2, 2024: 44,7% Q3, 2024: 38,3% Q4, 2024: 36,3% Q1, 2025: 34,4% Q2, 2025: 31,6% Q3, 2025: 27,5% Now, will Piketty and his cadre of rich-nation snobs be issuing any retractions or apologies anytime soon? Will these enlightened experts feel any shame or embarrassment for condescending to poor countries from their ivory towers, forecasting “devastation” where hope was being sown, mongering fear and darkness when liberty’s light was but a nascent glow? Will they, in good faith, finally admit to being wrong, recognizing that the wellbeing of real world people is more important than the fantasy of their wrong-headed theories? Nobody knows for sure, dear reader. Better yet, nobody cares. Stay tuned for more Notes From the End of the World... Cheers, Joel Bowman founder of Notes from the End of the World P.S. For all of Bowman’s latest musings head over to his website. While you’re there, subscribe to his newsletter for all his latest analysis and insights as they’re reported in real time.

Why Market Fundamentals Always Win in the End

MN Gordon — Fri, 26 Dec 2025 09:05:08 +0000

The U.S. stock market, as measured by the S&P 500, is closing out another solid year. With just a few trading days left in 2025, it’s up over 17 percent. Once again, buy and hold index fund investors have been rewarded for their mindless rigor. Good for them. A bull market is no time for sound thinking and contemplating risk. Blindly riding the index higher is both fun and easy. The results are gratifying. Nonetheless, we believe now is precisely the time to consider risk and a prudent portfolio allocation. It is highly likely 2026 will be less pleasant for S&P 500 index investors who bet the farm on its perpetual buoyancy. The uncomfortably fact is we’re currently staring at a stock market that is, by almost every historical metric, priced for perfection. In our experience, perfection is a very high bar to clear. Fundamentals may be boring. They may seem irrelevant and outdated after such an extensive bull market run. But if you ignore them, you’re doing so at great peril. Fundamentals, by definition, never go away. There may be extended periods where they seem to have disappeared. But like a night prowler, they’re always lurking, waiting for just the moment when you’ve let your guard down. As we roll into 2026, investors would be wise to keep their dukes up. This is no time for complacency. Investment fundamentals always reappear at the worst possible time – when everyone expects stocks will only go higher. If the S&P 500 closes out December in the green, which it appears it will, this would mark an 8-month streak of positive closes. This would be the longest streak since the 10-month streak that ended in January 2018. So perhaps there will be another month or two of a rising stock market. But all win streaks are eventually broken. This one, no doubt, is moving towards its end.

The Ghost of 1999

The big banks, like Morgan Stanley, JPMorgan Chase, and UBS, all see the S&P 500 going up by 10 to 15 percent in 2026. Bank of American has a more modest estimate of 5 percent. The general consensus is that Federal Reserve rate cuts, artificial intelligence (AI) efficiency gains, and accommodative regulatory and tax policies will float the index higher. This ignores market fundamentals. And while this has been advantageous for the last three years, we believe, in 2026, basic market fundamentals will crash the party. If you want to understand why the bears see gloom and doom, just take a look at the Shiller PE Ratio – also known as the Cyclically Adjusted Price Earnings (CAPE) ratio. Unlike a standard P/E ratio that just looks at the last year of earnings, Professor Robert Shiller’s version takes the average of the last 10 years of earnings, adjusted for inflation. It’s like looking at a person’s average health over a decade instead of just how they felt after a good night’s sleep and a cup of coffee. The Shiller PE is currently over 40. To put that in perspective, the historical average is roughly 17. Thus, we are currently 135 percent above the long-term trendline. The only other time it was higher was in December 1999, when it hit 44 right before the dot-com bubble burst. We all know how that ended. When the Shiller PE is this high, the market is essentially expecting the next decade to be the greatest economic run in human history. If it’s anything less than that – say, just a decade of moderate growth – stocks have to fall (or stay flat for a long time) to let the earnings catch up to the price. Most likely, stock prices will suffer an abrupt decline to come in line with earnings.

Big Problems

Right now, the stock market is riding high in fantasyland. There is an unfounded belief that AI will boost productivity so much that profit margins will stay at record highs forever. So far, AI has failed to deliver on this promise of productivity gains and mushrooming revenues. What if AI turns out to be a great big capital destroying dud? Investors are also banking on Fed rate cuts to keep credit flowing and further inflate stocks. We all know that consumer price inflation is well above what’s reported. The prospect of another big break out – like in 2022 – isn’t out of the question. How long can the Fed cut rates and juice the economy before there’s another consumer price inflation flareup? Should prices spike again, the Fed will have to decide between maintaining an asset bubble or limiting a currency crisis. There’s also the expectation that corporate earnings will continue to grow. In fact, current estimates project double-digit earnings growth for 2026. Most of these projections look at the recent past and extend it out into the future. What if businesses cannot deliver the expected growth? In addition, there’s the problem of market concentration. The top 10 stocks in the S&P 500 now make up about 40 percent of the index. At the peak of the dot-com bubble the top 10 stocks only accounted for about 29 percent of the S&P 500. Many index fund investors believe they’re diversified. In reality, they’re unwittingly betting on a handful of tech companies to keep hitting grand slams every single inning. When 10 stocks make up close to 50 percent of the index, you can expect there will be big problems. History suggests that such an extreme narrowing of market breadth often precedes a violent correction.

Why Market Fundamentals Always Win in the End

“Markets can remain irrational longer than you can stay solvent.” We’ve all heard that remark from John Maynard Keynes. Ultimately, the laws of math are undefeated. Market fundamentals eventually reassert themselves through a process called mean reversion. The stock market can run above or below its average for an extended period. But it must always revert to its average at some point or another. There can be countless triggers for a sky-high market to reverse course. For example, as the 10-year Treasury yield stays above 4 percent, it acts as a competitor for your money. Why bet on a tech stock with a 40 P/E ratio when you can get a guaranteed 4 percent from the government? What if there’s an earnings miss? High valuations leave zero room for error. If a hot tech company reports 12 percent growth instead of the 15 percent the market expected, the stock will quickly sell off. There could be any number of things that precipitate a bear market. The point is, when the Shiller PE is at extreme highs (like now), the subsequent 10-year returns are almost always flat or negative in real terms. In other words, the current risk-to-reward ratio for owning stocks is incredibly lopsided. Quite frankly, you don’t have to be a gloom and doomer to recognize that the math simply doesn’t add up. Fundamentals aren’t a theory or idea. They are a natural law – like gravity – that holds the financial world together. And while the market can float high above the real economy for a while, gravity always, always wins. You can take that to the bank. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Utility Payment Wealth - Profit from Henry Ford's Dream City Business Model." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Why Market Fundamentals Always Win in the End to Economic Prism

From Inflation to Implosion

MN Gordon — Fri, 19 Dec 2025 09:05:42 +0000

The 2026 fiscal year started on October 1. The Treasury, so far, has reported its spending for the first two months. The dismal results should come as no surprise. The U.S. government has already run up a deficit of $458 billion – and there’s still 10 more months to go. Specifically, for the months of October and November there were total outlays of $1.198 trillion, with receipts of just $740 billion. The difference – the $458 billion – was made up with debt. Of the $1.198 trillion in outlays, $179 billion was to pay the net interest on the debt. Here at the Economic Prism, we remember when the ‘annual’ deficit first exceeded $450 billion. You may too. It wasn’t very long ago – 2008 to be exact. At the time we thought spending was totally out of control. Little did we know, just one year later, 2009, the budget deficit would spike to $1.4 trillion. Now trillion-dollar annual deficits are the norm. With this current rate of spending, the 2026 fiscal year deficit will come in around $2.75 trillion. This deficit, like each annual deficit, will be racked and stacked on top of the total government debt. After many decades of extreme deficits, the U.S. national debt is at $38.5 trillion – and rising fast. The critical observation here is that too much spending is never enough. Congress, the politicians elected to represent us, have failed at their jobs. They are incapable of making the tough decisions needed to balance the budget. Each member has his or her pet projects and programs to cover. Some want free drugs for old people. Others want taxpayer loot for roads and bridges in their district. Some want more warfare spending. Others want more welfare spending. Many want both.

Short Timer Thinking

The Washington politicians know the runaway spending cannot go on forever. But they intend to be retired – or dead – when the ultimate debt and currency crisis erupts. The average age of members of the House at the beginning of the 119th Congress was 57.9 years. And for Senators the average age was 63.9 years. These are short timers. With short timer thinking. And they care little about future generations or the nation’s long term financing prospects. Similarly, President Donald J. Trump is 79 years old. He’s not thinking about the next decade or two. He’s thinking about the upcoming mid-term election. He wants to use the government purse to buy votes. One means Trump recently stated is to distribute tariff revenue in the form of $2,000 checks. Trump calls it a dividend check. Yet, this tariff revenue was effectively the spoils of a regressive tax on American consumers. The Committee for a Responsible Federal Budget estimates this plan could cost $600 billion, which is double the tariff revenue projected for fiscal year 2026. The difference, the $300 billion, would be made up with debt. Trump has also said he wants to eliminate the income tax. It’s about time. The income tax shouldn’t exist to begin with. If you didn’t know, the income tax was unconstitutional under the constitution that was drawn up by the original authors. The Supreme Court case Pollock v. Farmers’ Loan & Trust Co. (1895) struck down an earlier income tax, saying it was a “direct tax” requiring apportionment by population, which was impractical. To overcome Pollock, the 16th Amendment was passed, stating, “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived, without apportionment among the several States, and without regard to any census or enumeration”. This level of power and extreme theft would have been completely unacceptable to America’s founders. Yet we live with it each and every day.

Unleashing the Beast

The 16th Amendment is what unleashed “the beast” and is the origin of today’s mammoth government that reaches its tentacles into all corners of American life and across the globe. Eliminating the income tax would be a vast step in the direction of smaller, more limited government. But this assumes spending is dramatically cut and long-standing promises, like social security, are revoked. From what we can tell, this isn’t Trump’s intent. He believes that in the absence of the income tax, government funding will be made up with tariff revenue. The tariff revenue, however, isn’t enough to cover his dividend checks. In fact, annual tariff revenue wouldn’t even be enough to cover one month of current government outlays. Regardless, all the talk of using tariff revenues to pay out dividend checks and eliminate the income tax is a giant distraction from the fact that the nation is flat out broke and is maxing out its credit cards before its creditors ultimately cut it off. When the government spends money it doesn’t have, it has two main ways to cover the tab. It can borrow the money by selling T-Bills to domestic and foreign investors. Or it can borrow from credit the Federal Reserve creates out of thin air. Both add to the $38.5 trillion debt. Both inject money into the economy that has not been earned. The effect is simple, and intuitive. Every new dollar conjured into existence dilutes the value of every existing dollar already present. It’s simple supply and demand. When the supply of money goes up way faster than the supply of real goods and services – like cars, houses, or even a loaf of bread – the purchasing power of your money plummets. That’s why you’re paying more for groceries, more for rent, and why your savings account seems to be shrinking in real terms, even if the number in the bank stays the same. The connection is direct…

From Inflation to Implosion

Runaway government spending is the engine, and consumer price inflation is the toxic smoke it burps into the atmosphere. The spending on pet projects and $2,000 dividend checks is just more fuel being dumped on an already raging fire. But there’s a danger far greater than domestic inflation. The U.S. dollar, for all its current woes, still holds the title of the world’s primary reserve currency. This status is what allows the U.S. to run these astronomical deficits without instantly collapsing. The rest of the world, from central banks to global commodity traders, needs U.S. dollars for international trade. They effectively finance our debt by holding dollars and T-Bills. The GENIUS Act is an attempt to perpetuate this. However, the world isn’t stoopid. They see America’s spending and debt problems. They see the $38.5 trillion debt bomb and the total lack of political will to defuse it. Every time Congress greenlights a massive, debt-funded spending bill, it tells international creditors that Washington does not care about financial integrity. As trillion-dollar deficits become routine, and the President talks of eliminating the income tax without a credible revenue replacement, these global players watch with unease. They know that sooner or later Washington will try and inflate its way out. And that this will ultimately lead to the inevitable outcome of a significant dollar devaluation. By this, the dollar’s value would implode relative to all goods and services. Moreover, this would happen as all currencies continue to lose value against gold. From a practical standpoint, consumer prices would explode higher, interest rates would spike up, and the standard of living would collapse. If you think this could never happen in America, you’re living in ignorant bliss. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Utility Payment Wealth - Profit from Henry Ford's Dream City Business Model." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from, From Inflation to Implosion to Economic Prism

The Great Digital Dollar Switcheroo

MN Gordon — Fri, 12 Dec 2025 09:05:21 +0000

U.S. government finances are failing. But instead of allowing things to continue to their inevitable demise, the central planners are looking to pull off another switcheroo. Like the issuance of Greenbacks during the Civil War or FDR’s gold confiscation in 1933, the U.S. government is scheming to radically change the form and feel of money once again. The goal is to mask an outright default. Yet make no mistake, the little guy – that’s you – will get screwed.

The GENIUS Act and the New Digital Dollar

America is 54 years into its experiment with pure fiat money, which followed the termination of the Bretton Woods Agreement in 1971. We are now witnessing the start of another financial re-engineering of money. The move to a digitally native, stablecoin-anchored dollar system. This is happening whether you like it or not. In fact, the overarching legislation has already been put in place. It’s called the GENIUS Act. And it was signed into law by President Trump on July 18, 2025. The acronym stands for Guiding and Establishing National Innovation for U.S. Stablecoins Act. Stablecoins, if you didn’t know, are a type of cryptocurrency that are backed by assets considered to be reliable such as a national currency or a commodity. Stablecoins are typically used to transfer funds between different cryptocurrency tokens. The GENIUS Act requires stablecoins to be backed one-for-one by U.S. dollars or other low-risk assets. Its focus is on mandating 100 percent reserve backing for payment stablecoins, primarily with short-term U.S. Treasuries. This policy commences the next shift in American money. The stablecoin framework links the exploding global digital asset economy directly to U.S. liabilities. Every time a stablecoin issuer creates a digital unit, they are legally compelled to purchase a piece of U.S. debt (to maintain their 1:1 backing). As digital trade, tokenized assets, and instant payments grow worldwide, the demand for these stable, regulated, dollar-pegged assets (stablecoins) will become immense. This translates directly into a structural, near-unlimited demand for U.S. Treasury bills. If this works, as intended, the U.S. government will have a virtually unlimited pool of credit to finance its spending and debt. So, too, the demand for dollars created by the 1:1 backing with stablecoins will preserve the dollar’s value and its status as the reserve currency of the world.

The Complete Digitization of Finance

The stablecoin, in effect, is becoming the “New Digital Dollar.” That is, a private-sector tokenized liability that is globally liquid and instantly settled yet remains tethered to the sovereign credit of the U.S. government through the Treasury reserve requirement. It’s fiat money on steroids, reinforced by digital demand. It should also be noted that this “new dollar” is not a Central Bank Digital Currency (CBDC) issued by the Federal Reserve. Instead, it is the private sector’s tokenized, regulated, and dollar-backed stablecoin. In this scenario, the “old dollar” (physical cash and traditional bank deposits) begins a long, slow decline. Physical currency (cash dollars) will become a niche product, still legal tender but used mostly for small, private, or ceremonial transactions. At the same time, the vast mountain of old debt (current national debt) doesn’t disappear. Instead, its refinancing and management will become significantly easier. The stablecoin ecosystem will act as a colossal, passive, non-taxpayer funding source for the Treasury, injecting stability and liquidity that reduces political stress around government borrowing. This digital dollar transition paves the way for the complete tokenization of finance. All assets – stocks, real estate, commodities, and art – will be represented by tokens on a blockchain. Transactions will use stablecoins for instant, 24/7/365 settlement, eliminating the multi-day lag of legacy banking systems. Thus, the world’s finance will move from the slow, segmented rails of the 20th century to the lightning-fast, transparent rails of the 21st. Of course, this complete digitization of money comes with full system surveillance and tracking. There are some sinister predictions that a person’s spending will be tracked and tied to their social credit score, and even their health metrics. For example, if you exceed your carbon credit allotment for the month you will not be able to buy gas and will be forced to ride the bus. Or, if you’re overweight, certain food items will get rejected from your grocery purchase at the checkout counter. Certainly, this new era of money that’s coming seems a bit wild and abstract. But there’s more. The GENIUS Act isn’t the only thing in the works to remake money as we know it…

Monetizing the U.S. Balance Sheet

Simultaneously, key figures like Treasury Secretary Scott Bessent have publicly discussed the idea of “monetizing the asset side” of the U.S. government’s balance sheet. This centers on the long-held debate over the U.S. gold reserves. Currently, the U.S. government holds its massive gold reserves of 261.5 million troy ounces on its books at an official, ceremonial price of $42.22 per ounce, a value set in 1973. This results in a total book value of about $11 billion. But the true market value of the gold at its current price – over $4,000 per ounce – is over $1 trillion. Bessent’s idea is to revalue the gold to its market price. This would immediately create a trillion-dollar-plus paper surplus on the government’s balance sheet. This windfall isn’t actual cash, but an accounting mechanism. This newly recognized asset value could be used to seed a U.S. Sovereign Wealth Fund, which would create a massive endowment for strategic national investments in technology, energy, and AI. It would also provide a massive visual counterweight to the national debt, fundamentally changing the psychological perception of the nation’s financial health as it navigates the digital transition. To really capitalize on the gold revaluation, the U.S. Treasury could revalue the price of gold much higher – say at $20,000 per ounce. This would act as an abrupt debasement of the dollar, while inflating away something on the order of $5 trillion in government debt. It would also buy some time while the dollar demand created by the burgeoning use of stablecoins develops. In short, the GENIUS Act tackles the dollar’s liabilities (debt demand), while the gold revaluation addresses its assets. Together, they form a coordinated, unprecedented strategy to fortify the U.S. financial position against global rivals. Will it work to America’s advantage? Will the loss of financial privacy destroy what’s left of freedom and liberty for American citizens?

The Great Digital Dollar Switcheroo

The political push to make the U.S. the “crypto capital of the world” is a consistent theme of President Trump and the current administration. This posture is seen as a key strategy for economic growth and maintaining technological leadership. However, this policy drive is shadowed by the lucrative, high-profile crypto ventures of the President’s family. The Trump family’s reported financial involvement in the crypto space, including co-founding a decentralized finance (DeFi) firm that issued its own stablecoin (USD1) and launching affiliated meme coins (like $TRUMP), is certainly something to scrutinize. Trump’s legislative and policy actions – particularly the wholesale embrace of private digital assets and the rejection of a Fed-issued Central Bank Digital Currency (CBDC) – could directly and significantly inflate the value of his family’s private holdings. This muddies the waters between whether policy decisions are being made for the national good or for personal financial gain. Whether you like it or not, the move to a digital dollar is inevitable. The question is not if the financial system will change, but how the new rules will be set, who will profit, and whether the foundational integrity of the world’s reserve currency can survive the transition unscathed. The answers to these questions will be revealed in good time. But, in the meantime, these developments should not be ignored. By all accounts, we’re sitting on the cusp of the biggest financial switcheroo since the end of the gold standard. It’s not just about a new coin. It’s about a new kind of dollar, a new way to manage debt, and a complete rewrite of the U.S. financial balance sheet. The transition to a new era of money, like stablecoins regulated under the GENIUS Act, comes with both opportunities and risks for the average person’s wealth. The GENIUS Act aims to bring stability to payment stablecoins by requiring them to be backed one-to-one by high-quality assets (like U.S. dollars and short-dated Treasuries) and mandating regular financial disclosures and audits. While these rules are designed to provide stability, the actual transition will undoubtedly be messy. [Editor’s note: The above article is an extract from the December edition of MN Gordon’s Wealth Prism Letter. Paid up subscribers also discovered several proactive steps to safeguard their wealth during this period of extreme uncertainty. Become a subscriber and access this critical information today.] Sincerely, MN Gordon for Economic Prism Return from The Digital Dollar Switcheroo to Economic Prism

Spoon-Fed Labor

MN Gordon — Tue, 09 Dec 2025 09:05:38 +0000

Benjamin Franklin, in a 1789 letter to Jean-Baptiste Le Roy, remarked that “in this world nothing can be said to be certain, except death and taxes.” There is, however, a third certainty that is often cited. That is, change. Change, of course, can be for the better. But it can also be for the worse. With the prospect of change, there also comes fear. Humans, particularly those lacking in spiritual guidance, can have an intense fear of the unknown. The swift conquest of Artificial Intelligence is currently threatening a scope and scale of change unlike anything in living memory – if ever. The complete overhaul of modern employment, and the mass loss of livelihoods, is inciting mass fear across the general population. But what if it’s all for the best? Today we turn to Joel Bowman, and his Notes From the End of the World, for unique perspective and insights you won’t hear anywhere else. After giving it a read, please head over to his website and subscribe to his newsletter so you can stay abreast of all his latest deliberations. Enjoy! MN Gordon P.S. We have no financial arrangement with Bowman and do not profit from publishing his work. We merely find his observations and writing to be valuable and believe that you will too. --

Spoon-Fed Labor

Plus Musk, A.I. and the curse of man’s crab pot mentality…

“Why not use spoons?”

~ Milton Friedman’s response when told by government officials that it was better to dig ditches with shovels than bulldozers because more jobs were created that way.

Joel Bowman with today’s Note From the End of the World: Buenos Aires, Argentina...

We awoke yesterday morning (do not ask us at what time, dear reader), to the familiar clashing and clanging of pots and pans. Known in these parts as a cacerolazo, the casserole cacophony is a peaceful form of protest whereby people take to their balconies and give voice to their discontent by conducting a discordant symphony of kitchen utensils and baking trays. Folks abroad will recognize this as either noble “civil disobedience” or good ol’ fashioned “throwing one’s toys out of the stroller,” depending on their sympathy with the causa del dia. And the cause for this particular concerto? Hard to say, though a few amigos offered some guesses... “[Dog-owning President] Milei was found to have 1,000 cloned dogs in the Casa Rosada, kept in horrible conditions. Animal fanatics are apoplectic!” joked one. “Protesting a proposed tax on bovine flatulence,” chimed another (linking to an actual story about imposing a tax on gassy cows out on the Pampas. No joke.) “No one would wake up to bang a pot,” ventured another, a porteña. “Probably just drunk people.”

Deeper Cuts

Being spontaneous in nature, it is difficult to say what inspired the latest outburst... but if we had to guess, we would say it was the announcement by the Milei government that it will deepen its chainsaw cuts to the public sector. The latest, from La Derecha Diario: “Milei’s government is moving toward a new reduction of the state workforce in 2026 “The libertarian administration seeks to dismiss ‘ñoquis’ and militant employees in order to continue lowering taxes “Javier Milei’s government is working on a new stage of the state reduction plan, aiming to further reduce the state structure during 2026, and thus continue lowering taxes. “Although the government avoided specifying how many public employees could be involved in this new phase, they let it be known that the reduction would cover “another 10%,” which would imply a large-scale cut to the current workforce.” “Ñoquis,” for the uninitiated, refers to the potato-based pasta traditionally served here on the 28th of every month... when, in times of few, family financial ends stretch to meet. Locals use the term to describe notoriously indolent public functionaries, who likewise show up once a month... and then only to collect their paycheck. Public sector pink slips has, thus far, been something of a hallmark of the Milei administration, having handed out close to 60,000 of them (representing about 17% of the total ‘ñoquis’) during its first two years. Here’s the latest graph, published on X yesterday by Fede Sturzenegger, head of the Ministry for Deregulation, along with the unambiguous caption: “CHAINSAW. Less public spending = less taxes. VLLC!” As predicted in this space, the migration from public lethargy to private innovation, from tax-funded coercion to voluntary cooperation, from ossified statism to dynamic free markets, has been an enormous boon for the Argentine economy, to say nothing of its long-enduring people. But it also raises an interesting philosophical question regarding the very nature of “work” itself. When we left you last week, we dared ask: Who wants a job, anyway? Today, we take up the task...

Optional Labor

The subject and nature of “labor” is, of course, as old as mankind itself. Indeed, we would not be here today, tapping away on our laptop computer, were it not for the convenient fact that enough of our forebears managed to dodge the cosmic unemployment lines such that the species itself could carry on. Smith, Marx, Ricardo, Menger, and plenty of other bright and shiny minds besides, waxed and waned on the topic, advancing various theories to suit their time and circumstances. Today, the question is brought into higher and higher relief by accelerating advances in bright and shiny technologies, Artificial Intelligence (A.I.) and humanoid robotics in particular. And what of those catalyzing twin phenomena, approaching a doe-eyed workforce at the infinite speed of distributed information? Speaking at a recent investment summit in The Kingdom of Saud, the world’s most controversial envy magnet, Elon Musk, had this to say on the matter: “In the long term, where will things end up? My prediction, for the next ten to twenty years... is that work will become optional. It will be like playing sports, or a video game. Something like that.” Ah, but our dear reader has already foreseen the predictable reaction... Almost as the words were falling from Mr. Musk’s monied maw, Pavlovian pooches in the comments section were decrying the fact that the “greedy capitalist” was depriving them of their beloved leg irons. “Work being ‘optional’ is CEO-speak for workers being terminated,” cried one card-carrying comrade, evidently unable to tear himself from the drool-soaked security blanket that is his own lack of imagination. “Why do I suspect it is we, people, who will become optional and irrelevant?” chimed another, apparently unable to differentiate his value as a human being from his temporary job title. Setting aside the absurd implication that anyone is somehow owed a job by anyone else, much less from someone they openly resent, the notion that humans are best employed at the absolute lowest threshold that technology allows is fundamentally an anti-human attitude, one that ignores Browning’s aspirational line: A man’s reach should exceed his grasp, Or what’s a heaven for?

Universal Basic Poverty

Typically, humans do not so much want jobs, per se, as much as they desire the spoils of the job having been done... either by their own two hands or, so far as they harbor collectivist tendencies, by those belonging to someone (anyone) else. And here we arrive at the crux of the matter... a crab pot mentality that, because it is unable to imagine a future unlike the past, remains hostile to any intelligent life form capable of doing so, decrying anyone whose reach dares “exceed his grasp.” Politically speaking, this infantile convulsion is best expressed as the doctrine of socialism: the lurking suspicion that someone, somewhere is getting ahead... and that something must be done about it! Doubtless there are those among us who wish to see humans eternally bound to their menial tasks, yoked to history’s ever-grinding millstone, lest one poppy dare grow taller than the rest. For the terminally, gleefully myopic, the only goal worth aiming at is one every layabout, every mental defective, every slacker, halfwit and ne’er-do-well can achieve... which is to say, absolute and unrelenting equality... of poverty. And here a solution presents itself, obvious and wrong, in the form of endless drudgery as befits the lowest common denominator. After all, nothing could be easier than “accomplishing” full employment, as long as we actively retard all efficiency and technological progress along the way. In precisely this manner the Soviets (in)famously achieved “Full Employment.” They even contrived a sassy slogan, an anthem for the ultimate boondoggle era: “We pretend to work; they pretend to pay us.” Taking a leaf from the Luddite’s playbook, why search for a complex solution when an elementary one is staring us in the face? Why learn to adapt, strive and aspire... when we could stifle, whine and impede? Let us begin, then, by banning simple machines. That is to say, screw the screw, hang the pulley, and counter the lever! Imagine the swelling employment rolls, if only society could find within its overfed ranks the resolve to ax the wheel and axle! And why halt the regression there? Perhaps we could set up a Ministry of Inefficiency, to see that no process is trimmed of its necessary lard, or a Ministry of Equality, to ensure that no single human inches ahead by way of his ideas, actions or cooperation with other such ambitious co-conspirators. Finally, after all the fire and spark is extinguished, after the drive and ambition is snuffed out, we could all get jobs in the Argentine government. Just don’t expect them to pay. Stay tuned for more on the nature of man’s Works and Days in future Notes From the End of the World... Cheers, Joel Bowman founder of Notes from the End of the World P.S. For all of Bowman’s latest musings head over to his website. While you’re there, subscribe to his newsletter for all his latest analysis and insights as they’re reported in real time.

Is the End of QT a Green Light for an Asset Rally?

MN Gordon — Fri, 05 Dec 2025 09:05:22 +0000

On Monday, December 1, the Federal Reserve terminated Quantitative Tightening (QT). The job wasn’t even halfway done. From our experience, half measures avail nothing. In this instance, they guarantee consumer prices will never, ever, return to pre-covid levels. Stocks, gold, and, until recently, bitcoin, are all at or near record highs. What does the end of QT mean for these assets? To answer this question, let’s first take a gander back to the great money flood of 2020-22. If you recall, the central planners, under the pretense of the faux pandemic, locked down the economy. They said if we all hunkered down for two weeks, we could bend the curve and stop the spread. This turned out to be a crock of hogwash. What’s more, the dreaded coronavirus was no worse than the common flu. But the control freaks got such a thrill out of trampling people’s basic rights and freedoms, they extended the lockdown and forced people to wear masks and get repeated clot shots. Much of the populace was eager to oblige. Shutting down the economy had countless consequences. Two of the more obvious ones were breaking supply chains and cutting off people’s income. To address people’s loss of income the Federal Reserve went into mass Quantitative Easing (QE) money printer mode. Not only did the Fed cut the federal funds rate to zero, but it also created $5 trillion in credit out of thin air. It then used this fabricated credit to buy massive amounts of U.S. Treasury bonds and mortgage-backed securities (MBS). The Treasury took the burst of credit and used it to mail out stimmy checks. At the same time, 30-year fixed rate mortgages fell to just 2.5 percent, launching a massive housing bubble.

Binge and Purge

The intent of the QE was to flood the financial system with liquidity, stabilize crashing markets, and push interest rates even lower across the board. The operation was beyond mega. The Fed’s balance sheet, which was already at an inflated $4 trillion before the pandemic, ballooned to a historic peak of nearly $9 trillion by the spring of 2022. By limiting production while inflating the money supply the central planners propelled the rate of consumer price inflation to a 40-year high. This surge of cheap money was also the fuel for today’s everything bubble. Stocks soared to all-time highs, inciting an AI mania. Real estate prices went vertical, locking two generations out of the dream of home ownership. Bitcoin and the broader crypto market were overwhelmed with extreme speculation. When money is free and plentiful, it inevitably flows into the riskier corners of the market, chasing higher returns. All the while, Fed Chair Jerome Powell gaslit the public by telling them exploding consumer prices were ‘transient.’ By June 2022, rampant consumer price inflation became too much for even the Fed to ignore. First came the rate hikes. Second, came the reverse of QE, which is QT. QT, however, happens much slower than QE. Its implementation takes a slow, measured process of shrinking that massive balance sheet. Instead of actively selling bonds (which would be too disruptive), the Fed simply stops reinvesting the proceeds from maturing bonds. Every month, a set amount of Treasuries and MBS would “roll off” the balance sheet. This has the effect of slowly draining reserves from the banking system and mopping up excess liquidity from the broader economy.

The New Baseline

For three and a half years, the Fed’s liquidity drain was cracked open. Yet the Fed only withdrew about $2.4 trillion – not even half of the credit created from 2020-22. In the end, it shrunk the balance sheet from $9 trillion down to roughly $6.6 trillion, but not the $4 trillion it was at when the clock struck midnight on January 1, 2020. This tightening cycle should have done more to stifle risk assets. Less money in the system means tighter financial conditions, higher borrowing costs, and less appetite for speculative bets. But aside from a few rough years for the bond market, most assets held or pushed higher. Certainly, stocks had a rough year in 2022. But once the AI mania kicked in, the stock market ran higher. Residential real estate, stalled somewhat, and pulled back in some regions of the country. Nonetheless, house prices remain well above pre-2020 prices across the board. And now, despite consumer prices and asset prices being extraordinarily elevated, December 1, 2025, marks the date the Fed officially ended QT. Why the sudden stop before the job was even halfway done? The official line is that bank reserves are now deemed “ample,” meaning they can stop the runoff without risking market stress (like the short-term funding issues seen in 2019). The central planners believe the balance sheet, which shrank from $9 trillion to $6.6 trillion, is now stabilized at this lower, but still historically massive, level. In other words, $6.6 trillion is the new baseline. To be clear, ending QT is not the same as starting QE. The Fed, for now, isn’t actively creating new credit out of thin air. It is simply reinvesting all maturing principal payments back into the market, specifically into shorter-term Treasury bills. This changes the composition of the balance sheet without changing its size immediately. It also serves to help finance Washington’s massive pile of debt.

Is the End of QT a Green Light for an Asset Rally?

So, while the end of QT is not the start of QE, it is a marked shift in the direction of accommodation. This is in addition to the Fed’s rate cutting cycle that commenced on September 18, 2025. Will investors and speculators take the end of the tightening regime as a green light for risk assets, even if it’s a tactical shift and not a full-blown QE party? Less liquidity pressure and the expectation of future rate cuts (with market odds of a December cut running high) provide a tailwind. Companies that rely on cheap financing for future expansion, like technology-driven growth stocks, will likely run higher. The NASDAQ and the S&P 500, with the help of a Santa Claus rally, could hit new all-time highs by the end of the year. Gold, after briefly dipping below $4,000 last month, recovered and was at about $4,200 per ounce last we checked. As the Fed moves toward easier monetary policy, real rates (interest rates minus inflation) fall. Since gold yields nothing, its opportunity cost drops, making it more attractive. With the Fed easing and global uncertainty persisting, we expect gold will continue its bull run, acting as a crucial hedge against both monetary debasement and geopolitical risk. Bitcoin, after selling off over the last two months, is where the real excitement will likely be. According to Fundstrat’s Tom Lee, the last time the Fed ended QT, the crypto market rallied roughly $17 percent within three weeks. In closing, the Fed has prematurely ended QT. While this isn’t a new round of QE, it’s an undeniable shift in the direction from tightening to accommodating. Be smart, manage your exposure, but recognize that the path of least resistance for assets like stocks, gold, and bitcoin, just tilted upward. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Utility Payment Wealth - Profit from Henry Ford's Dream City Business Model." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Is the End of QT a Green Light for an Asset Rally? to Economic Prism

Where Will All the Cubicle Dwellers Go?

MN Gordon — Fri, 28 Nov 2025 09:05:57 +0000

The September 2025 unemployment data from the Bureau of Labor Statics (BLS) was published last week. Its release was delayed by the government shutdown. If you didn’t see it, the headline numbers appeared somewhat favorable. Nonfarm payrolls increased by 119,000. However, the unemployment rate still rose to 4.4 percent. But if you squinted at the fine print. You found a number that was counter to the promise of a college education, and the expectation that it’s a golden ticket to gainful employment and a middle-class life. Specifically, a record 25 percent of all unemployed Americans now hold a four-year college degree. On the flipside, this means 75 percent of the unemployed are without a college degree. Still, if you’ve invested four years and tens of thousands of dollars acquiring a college level education, you’d want the statistic to show that 100 percent of the unemployed are without a college degree. In short, one in four people currently looking for work have done what they thought was the right thing. They spent four years, and likely a mountain of debt, pursuing an education. They thought this would be their golden ticket. It’s what worked for prior generations. Yet this is no longer proving to be true. For the month of September, the unemployment rate for bachelor’s degree holders alone rose to 2.8 percent. This comes to over 1.9 million adults aged 25 and over without a job, a level we’ve never reached before this year. The safety net that a college degree once provided has a gigantic hole. What to make of it…

Shifting Sands of the White-Collar World

College degrees in America have been the ultimate insurance policy for well over one hundred years. They offered a clear path from graduation cap to corner office, or at a minimum, a stable white-collar entry-level job. Now that path is obstructed by mud and ruts. The unfavorable data isn’t just about the number of jobs. Rather, it’s about the actual landscape of the work itself. Professional services jobs, which have long been a sponge for new college grads, are contracting. These jobs experienced an outright decline in employment over the first nine months of 2025. Meanwhile, the only two industries powering job growth are low paying Healthcare/Social Assistance and Leisure/Hospitality positions. By and large, these are not the dynamic, well-paying jobs people went to college for. Why the sudden weakness for the educated class? The answer, we believe, is a single, two-letter acronym: AI. The rapid integration of Artificial Intelligence into the corporate world is not just automating assembly lines. It’s automating many entry-level office tasks. The work new hires do, like summarizing reports, entering data into spreadsheets, conducting routine market research, and customer service, is often repetitive grunt work. Generative AI is remarkably good at these mindless, repetitive tasks. This is driving a white-collar employment slowdown that has never been experienced. Companies are recognizing they can achieve the productivity of a team of junior staffers with a subscription to an AI platform. No benefits need to be paid out. No holiday pay. AI bots never call in sick or take vacation days. They never file harassment claims with HR. AI may not be killing all jobs – yet. But it’s eliminating many of the entry level positions.

The Experience Trap

Of course, if the entry level jobs are being eliminated how are young people ever going to gain the experience needed to reach a mid-career position? Where will they learn the important lessons that come from performing grunt work? Young workers, in particular, are in the most trouble. The unemployment rate for those aged 20 to 24 climbed to 9.2 percent in September. This is a surge typically only seen during full-blown recessions. What’s more, it’s hitting a generation already burdened by crushing student loan debt. For those fresh out of college, there’s a sense of betrayal and angst. This comes with the difficult realization that the rules they played by, and the sacrifice they made, were for a world that no longer exists. Now they’re standing in the exact same unemployment line as those who didn’t go to college. Only they’re carrying a five- or six-figure debt load. In this unfortunate scenario, the diploma stops feeling like an achievement and starts feeling like an expensive receipt for a service that was never delivered. Then what? When millions of educated, motivated young people – those we’re counting on to run the future – feel cheated and are unable to launch their lives, there are going to be problems. There’s already a sharp distrust in the finance system that profits from their debt, the educational institutions that charged them premium tuition, and the government that recklessly spends away their future. When a generation loses faith in the promises of the past, that is the breeding ground for social instability and friction. Deep frustrations can quickly go from posting sad tweets to throwing bricks. The safety net a college degree once provided has a gigantic, gaping hole. And the millions of young adults falling through it are going to have an extreme reaction.

Where Will All the Cubicle Dwellers Go?

If the four-year degree is no longer a golden ticket to gainful employment, then what is? The reality is that the entire economic landscape is being remade. Like past transitions from the farm to the factory and then from the factory to the office, the AI transition is going to be messy. This time it’s coming for the cubicle. So, where will all the cubicle dwellers go? As the traditional first rung on the corporate ladder suddenly vanishes, a whole generation of youth are left stuck on the ground floor. If they can’t land their first entry level job, they can’t get the experience to land the second, better one. This thinning of the workforce will further the need for companies to double down on AI platforms, thus compounding the problem. Some cubicle dwellers will take on gigs as a means for subsistence income. They’ll drive for Uber or Lyft. They’ll deliver food or rake people’s leaves. Others will rely on the benevolence of mom and dad well into adulthood, as they try and come up with a Plan B. Some may go into the trades. Ultimately, where all the cubicle dwellers will go is unclear. But what is clear is that the economic landscape is dramatically changing and there’s no going back. A college degree, on its own, no longer delivers its promise. But AI isn’t the end all. As far as we can tell, AI still cannot replicate critical and abstract thinking. It cannot replace genuine human creativity and real intelligence. It cannot start a business, establish relationships, develop a product line, bring it to market, and persuade people to buy it. AI may be able to assist in these things and do them at a much lower cost than humans. But it cannot run point across the entire continuum that’s needed to create something from nothing and generate the associated wealth. It still takes a real, living, breathing person to do that – college education or not. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Utility Payment Wealth - Profit from Henry Ford's Dream City Business Model." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Where Will All the Cubicle Dwellers Go? to Economic Prism

The Irresistible Promise of Free Money

MN Gordon — Fri, 21 Nov 2025 09:05:54 +0000

“People that are against Tariffs are FOOLS! We are now the Richest, Most Respected Country In the World, With Almost No Inflation, and A Record Stock Market Price. 401k’s are Highest EVER. We are taking in Trillions of Dollars and will soon begin paying down our ENORMOUS DEBT, $37 Trillion. Record Investment in the USA, plants and factories going up all over the place. A dividend of at least $2000 a person (not including high income people!) will be paid to everyone.” – President Donald J. Trump, November 9, 2025, TruthSocial

Free Money!

Politics is a dirty trade. To get elected, politicians must make promises they cannot possibly deliver. Then, once in office, they must somehow pretend to be delivering. Giving away free money to people is one of the more popular devices. Typically, this is in the form of spending programs or tax credits. The objective is to redirect money to preferred areas of the economy – like defense or energy – and those who operate there. On occasion, however, when the times call for it, politicians will mail out checks directly to people who didn’t earn them. These checks are above and beyond basic welfare and social security benefits. We saw this with Bush the Younger’s rebate checks and then with stimmy checks during the coronavirus fiasco. The news from Washington, particularly the recent announcement of a “tariff dividend” to be paid to the American people, is another example of political candy with a new twist. This time, a destructive tax is being depicted as an economic boon. President Donald Trump is peddling the loot raised in U.S. tariff revenue. He presents it as a windfall from foreign nations. He’s proposing to take this revenue and distribute it as $2,000 checks. He calls it a “dividend,” and plans to send it out around July 2026 – just in time for the mid-term elections. He also claims this will somehow reduce the national debt. This is a fine example of the “seen and the unseen” error that’s ignored in public economic discourse. Billions in tariff revenue enter the Treasury. We are told this is new wealth that can be freely disbursed. This is the seen. What is unseen is the actual, destructive cost of obtaining this revenue through tariffs and the inevitable consequences of distributing that money back into the economy in the form of mass payments.

A Tax on the American Consumer

To be clear, tariffs are not a punishment inflicted upon foreign nations that they alone absorb. A tariff is a tax on the importing citizens of the nation that imposes it. For example, when the government levies a tax on imported washing machines, that tax must be paid by someone. But who? Initially, the importer pays it to the customs authorities. But it doesn’t start and end there. Remember, business is not a charitable endeavor. When providing goods or services, businesses must earn a profit. To remain solvent, the importer must pass this cost along. In this example, they sell the washing machine to the retailer at a higher price. The retailer, in turn, sells it to the American consumer – that’s you – at a higher price. At best, the final price of the imported good is inflated by the full amount of the tariff. We say at best because when protectionist games are being played, domestic producers of competing goods are afforded an artificial cushion. They are incentivized to raise their own prices. Tariffs acts as a general sales tax levied on specific goods. This tax primarily burdens low-income families who spend a larger percentage of their earnings on essential goods. Customs duties collected in fiscal year 2025 came to $195 billion. In fiscal year 2026, this may rise to around $300 billion. Regardless, the tariff revenue the government collects is not a “dividend” from China or Mexico. It’s hundreds of billions extracted from the pockets of American consumers and producers. Tariff revenue represents hundreds of billions in higher costs for materials, tools, and finished goods, making American industry less competitive and diminishing the real wages of every worker. To celebrate this revenue is to celebrate a self-imposed national decline in real purchasing power.

The Destructive Nature of Protectionism

Beyond elevating prices, tariffs are destructive to the natural flow of the economy. They are a tool central planners use to artificially guide capital and labor into industries where, without protection, they would not succeed. Tariffs are policies of protectionism. They aim to save domestic jobs in high-cost, inefficient industries from competition. However, resources are not infinite. To keep one inefficient industry alive by force of law requires drawing capital, labor, and talent away from other, more efficient, wealth-creating industries. Tariffs, for example, may save 1,000 jobs in the steel industry. But, in return, 5,000 jobs are lost in industries that use steel – such as construction, manufacturing, and automobiles – because their material costs have been artificially raised. This makes their final products more expensive and less competitive within the U.S. and with foreign trading partners. Tariffs, in short, subtract wealth. They do not add to it. They make the nation poorer, not richer, by subsidizing inefficiency and penalizing productivity. The idea that we can grow rich and pay down the debt by intentionally preventing ourselves from buying goods at the lowest available price is absurd and has been refuted for centuries. The other absurdity, however, is the proposed “dividend” distribution. The Committee for a Responsible Federal Budget estimates this plan could cost $600 billion, which is double the tariff revenue projected for fiscal year 2026. If the payout were equal to the projected revenue – say, $300 billion – the government has merely collected $300 billion from the American people via the tariff-tax and handed it straight back to them. American citizens have not gained anything in aggregate. The tariffs’ destructive, distorting effect on trade and production remains. The cost of goods remains high, and the overall economy is still poorer than it would have been under free trade. But the payout is not equal to the projected revenue. It’s double ($600 billion!). This is where President Trump’s promise to reduce debt breaks down. A $600 billion expenditure against a $300 billion revenue stream means the government must borrow the additional $300 billion. The claim that we’ll also pay down the debt while simultaneously proposing a $600 billion program based on only $300 billion in revenue doesn’t add up. But that’s not all…

The Irresistible Promise of Free Money

The act of dumping $600 billion dollars back into the economy as government sponsored consumption stimulus checks, even if partially offset by tariffs, will further the inflation problem. Yet, that is the very problem the checks are supposed to solve. People are frustrated with the high cost of living. They want more money. But what causes the cost of living to rise? Too much money chasing too few goods. The tariffs restrict the supply of goods by penalizing imports and distorting domestic production. Then, the dividend checks inject a massive surge of new purchasing power (some of it borrowed) into the hands of consumers. Tariffs, followed by tariff dividend checks, limit the supply of goods while simultaneously inflating demand. This is a plan that promises relief while, in effect, it accelerates the very inflation that consumers are being destroyed by. In short, a tariff dividend is not a dividend at all. It’s a refund of an economically damaging tax. Moreover, this refund will be partially financed with debt. Ultimately, you can’t get something for nothing. The wealth of a nation is generated by production, efficiency, and the division of labor that is best facilitated by free exchange. Tariffs, on the other hand, destroy wealth. Paying the tariff revenue back to the people simply redistributes a net loss. What’s more, it finances that distribution through deeper debt and currency debasement. So, why do it? Like all government programs, it comes down to politics. Tariff dividend checks are great politics. Trump is a great politician. The promise of free money for the majority of Americans is simply irresistible. And in a democracy, where the mob rules, that’s what counts. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Utility Payment Wealth - Profit from Henry Ford's Dream City Business Model." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from The Irresistible Promise of Free Money to Economic Prism

How to Use Game Theory to Protect Your Wealth

MN Gordon — Fri, 14 Nov 2025 09:05:14 +0000

The stock market further traversed its high wire act this week. Tiptoeing along, while trying to not look down. Congress even reopened the government – until January 30. That way members can kick back over the holidays before they return to Washington, where they’ll once again pretend to do real work after the New Year. For sensible investors, staring down extreme valuations and mounting uncertainty, there’s little out there to grab onto. Given these prospects, what can a savvy investor do to find something – anything – that feels genuinely certain? To answer this question, let’s turn to one of the greatest minds of the 20th century. A Renaissance man named John von Neuman who shaped everything from quantum mechanics to digital computing, and the development of the first American atomic and hydrogen bombs. Von Neumann was born in Budapest in 1903 and studied in Berlin at a leading scientific institution; one that considered Einstein unqualified for a research grant. He’s also referred to as “the founder of game theory,” and could multiply eight digits by eight digits in his head. But beyond the abstract math and algorithms, and his love for telling ribald jokes and reciting off-color limericks, von Neumann had a fiercely practical approach to problem-solving. This pragmatic worldview gives us a powerful framework for navigating today's confusing market. There’s a classic anecdote about von Neumann that boils his philosophy down to its very essence. When asked to define certainty his answer was centered on an example of radical practicality. It wasn’t abstract or academic. It was simple to understand and tangible. He said that to achieve certainty, you must first design a house and ensure the living room floor will not give way. To do that, you must: “Calculate the weight of the grand piano with six men huddling over it to sing. Then triple that weight.” That will guarantee certainty.

From Piano Floors to Probability

Think about the simplicity of that statement. Certainty, for von Neumann, wasn’t the absence of risk. It was the extreme overcompensation for every possible risk. It wasn’t about building a floor just strong enough for the expected load. It was about building a floor strong enough to handle an improbable party, a rowdy sing-along, and then multiplying that stress by a factor of three. This could be applied to your investments in terms of the ultimate stress test where you build in a safety margin to the power of three. When looking to build wealth in an overvalued market, like now, this idea is worth your consideration. The piano story may be a simple anecdote. But it also captures von Neumann’s serious academic contributions to probability and Game Theory. In 1944, von Neumann co-authored Theory of Games and Economic Behavior with economist Oskar Morgenstern. This groundbreaking work established game theory as a distinct field. At its core, game theory is the mathematical study of strategy and decision-making when the outcome of your choices depends on the choices of others. Von Neumann focused on how rational players can arrive at the best possible outcome (the Nash Equilibrium, though named later, is based on these concepts) in situations where information is incomplete and competitive actions are involved. But here is where his work intersects with the piano story. Von Neumann saw that in any complex arrangement – a duel, a poker game, or an economy – you cannot merely calculate the most likely scenario. You must calculate the worst reasonable scenario and then design your strategy to survive it.

Our “Maximum Load” Scenario

For investors, this means two things: First, probability is not necessarily destiny. Just because the market is most likely to keep going up over the long term doesn’t mean you should bet your life on that single probability. Game theory forces you to consider competing moves. Things like the unexpected inflation spikes, the unforeseen geopolitical events, world wars, the mass panic selloffs. Second, there’s the Minimax Strategy. A key concept in von Neumann’s zero-sum game theory is the Minimax theorem. In simple terms, a rational player seeks to minimize their maximum possible loss. They don’t aim for the highest return. They aim to avoid catastrophic ruin. The grand piano story is just Minimax applied to structural engineering: Minimize the maximum chance of the floor collapsing. Right now, we are in a market that is extremely overvalued. Whether you look at the Shiller P/E Ratio (or CAPE), Price-to-Sales, or even the market capitalization to GDP. The stock market, as a whole, is trading well above historical averages. The “load” on the foundation of the stock market – i.e., the expected future earnings supporting current prices – is already heavy. If the expected load is already heavy, what is the tripled load? What is the worst-case scenario we must overcompensate for? It’s not just a minor correction. It’s a perfect storm of systemic stress. A prolonged recession that causes a long-term decline in corporate earnings. Persistent high inflation that forces interest rates upward. The abrupt de-rating of high-flying growth stocks, priced for perfection, which causes them to fall back to earth. What if all three of these scenarios happen simultaneously?

How to Use Game Theory to Protect Your Wealth

The goal of investors applying von Neumann’s framework isn’t to pick the stock that will go up 200 percent. Rather, it’s to construct a portfolio that won’t collapse when the market takes a nose-dive. From a practical sense, this involves companies that are cash rich. Do they have enough cash on hand to survive not just one year of bad earnings, but three years? If the economy freezes, will they still be able to service their debt and fund operations? If interest rates suddenly tripled, could the company still easily pay its obligations? This also requires being brutally pessimistic when considering a company’s fair value. What would happen if the company only grew its earnings by 5 percent per year instead of the assumed 15 percent? Extreme diversification is also requisite. This goes beyond just buying stocks from different sectors. It includes buying different asset classes. Cash, commodities, gold, and even some real estate holdings. Certainty, as defined by von Neumann, is an action taken, not a state granted. It is the active decision to overbuild, over-save, and over-prepare for the absolute worst. Investing, no doubt, is a cutthroat game. Von Neumann’s work provides a rulebook for survival. So, if you’re tempted to chase the latest high-flying stock based on the flimsy story of an AI revolution bringing unlimited growth, remember the grand piano. Calculate the absolute maximum stress that economic reality could place on that company’s earnings, its valuation, and its industry. Then, triple that stress. If the stock – or your portfolio – can not only survive that test but is priced cheap enough to thrive after the collapse, then and only then, have you achieved the kind of certainty John von Neumann would approve of. An overly pessimistic framework? Perhaps. But with today’s extreme valuations and economic fragility, actively preparing for the absolute worst economic outcome is a must. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Utility Payment Wealth - Profit from Henry Ford's Dream City Business Model." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from How to Use Game Theory to Protect Your Wealth to Economic Prism

Chainsaw First

MN Gordon — Tue, 11 Nov 2025 09:05:26 +0000

One of the mysteries of life is why a large cross section of the population is opposed to freedom. When given the choice of liberty and independence they resist. They demand more government programs. More government intervention in the economy. And more meddling in their lives. Like pigs rolling around in their waste, this is where they find comfort. The recent election of Zohran Mamdani, an ardent socialist, as Mayor of New York, bears this out. On rare occasions, however, when the failings of big government have stacked up to utmost misery, people will finally get it through their thick skulls that more government is not the solution; that, rather, it has been the problem all along. Argentina, after a near century of big government madness, has happened upon one of these rare occasions. The public has finally awakened from its collectivist hangover. In fact, this was recently reaffirmed by the outcome of the Country’s midterm election. In today’s guest article, Joel Bowman, our man on the scene in Buenos Aires, Argentina, updates us on the latest happenings with President Javier Milei’s ongoing experiment with libertarianism. After giving it a read, please head over to his website and subscribe to his newsletter so you can continue to follow what’s going on in real time. Enjoy! MN Gordon P.S. We have no financial arrangement with Bowman and do not profit from publishing his work. We merely find his observations and writing to be valuable and believe that you will too. --

Chainsaw First

A nation awakens from its collectivist hallucination… “An hallucination continues for as long as it is not contested.” ~ Elias Canetti, Auto-da-Fé (1935)

Joel Bowman with today’s Note From the End of the World: Buenos Aires, Argentina...

Limited government... balanced budgets... free markets... Zero-deficits... plummeting inflation... lower taxes... Laissez-Faire... individual rights... live and let live... Turns out these “loco” concepts... and plenty more besides... actually resonate with decent, honest, real world people. Who’d have thunk? As patient readers are no doubt aware, the great libertarian experiment continues apace down here at the End of the World. Having witnessed almost two years of Javier Milei’s “Chainsaw First” economic policies, during which the self-described anarcho-capitalist slashed the putrefied state from halo to culo, Argentine voters handed his La Libertad Avanza (LLA) party a thumping mandate in the midterm elections this past weekend. (Catch up on the Peronist post-mortem in Monday’s Note.) But wait! How ever could this be?

Concept Inflation

After all, isn’t Milei a “far-right” lunatic... a fascist who wants to close hospitals and shutter universities and trip-up cripples in the lunch queue... an “authoritarian” whose policies have resulted in misery, poverty and widespread societal collapse? In a word: no. Only a directionally-challenged mainstream journalist could fail to see the gaping difference between a limited government libertarian and what they reflexively call “far right authoritarianism.” (Because for them, of course, there is no such thing as “left wing authoritarianism.”) And yet, what kind of cart-before-horse authoritarian derogates political power away from the state? What brand of “far right” (or “far left”) dictator holds free and open elections... promotes individual liberty over centralized authority... recognizes private property as sacrosanct... dismantles the propaganda arms of state media... and, perhaps above all, rejects the very notion of a state managed economy in favor of free and voluntary markets? The answer, of course, is not a very good one! Indeed, what might history’s actual dictators, who at least went to the trouble of stomping their jackboots on the face of humanity, have to say about such careless concept inflation? Joseph Stalin presided over ruthless political purges, ran forced labor camps (gulags), engineered famines (notably in the Ukraine), and held mass public executions. By the time he died, at the ripe old age of 74, Stalin’s iron-fisted regime had buried between 15-20 million of his soviet comrades. Mao Zedong, meanwhile, spent over a quarter of a century starving, torturing and murdering his political enemies. Between his Great Leap Forward, the Cultural Revolution and his notorious political purges, like the “Campaign to Suppress Counterrevolutionaries” (1950-53) and the “Anti-Rightist Campaign” (1957-59), the Chairman is thought to have caused the death of some 70 million Chinese workers, peasants and pesky intellectuals. Then there’s Pol Pot, who was evidently absent from class when his schoolmates studied the failed agrarian reform programs of Stalin’s Soviets and Mao’s CCP. By attempting to erase “modern society” altogether, Pot wiped out almost a quarter of the entire Cambodian population. Suddenly, shuttering federally-funded DEI programs and closing wasteful and demonstrably corrupt government bureaus is tantamount to – what? – mass starvation... political purges... actual genocide? What an age of overfed problems we suffer, dear reader, when a “fascist” is the guy who cuts the line at Starbucks. Such is a kind of oppression our ancestors could only dream of.

Real Growth

Meanwhile, as petty insults and breathless name-calling die a slow death, an incredulous populace, fed up with media “narrative” and popular press propaganda, look again to the real world for their truths. And there, before their very own eyes, they see cracks and fissures beginning to appear in the edifice. Previously unexamined “truths,” proclaimed from on high by a modern day cabal of rogues and knaves, that curious gallery of media “elites,” academic halfwits, corporate stooges and celebrity sock puppets, are suddenly called into question. Here in Argentina, at the outset of Milei’s experiment in everyday smaller and smaller government, members of the voting public were bombarded with endless doomsday predictions. The economy would “collapse” without robust, counter-cyclical public spending... greedy capitalists, forever putting “profits before people,” would come to “eat the poor”... and the forsaken proletariat would be driven further into beggary as private industry ground to a halt... ... and on, and on, ad nauseam. And yet, to the delight of hard working citizens... and the dismay of thick-skulled media... no such catastrophe has come to pass. Quite the contrary... The latest data from INDEC (Argentina’s National Institute of Statistics), released just this week, shows that real salaries – in both the public and private sector – continue to outpace inflation. On average, salaries rose by 3.2% for the month of August, more than one full percentage point above inflation (which came in at 1.9% for the same month). With the sole exception of March, salaries have risen faster than inflation every single month this year, indicating robust economic growth even as Milei’s “zero deficit” promise means budgets remain balanced. Since the beginning of 2025, salaries are up 27.6%, handily beating inflation, at 19.5%.

Private > Public

Astute readers will note that, continuing a growing trend, the strongest real wage growth shows up in the “sector privado no registrado.” (Private, unregistered sector.) These are jobs in the “informal” market – often part time or seasonal and with more volatile wages – which tend to “firm up” during periods of sustained economic growth... such as the country is now enjoying. What does that mean, exactly, for the man on the street? When Milei unsheathed the chainsaw and slashed the number of government ministries in half last year, axing 55,000 “gnocchis” along the way (with plenty more pink slips promised), many “experts” claimed he would tank the economy... as if real prosperity ever depended on tax-and-spend public redistribution programs, like the mythical ouroboros feasting on its own tail. In reality, to the extent that the labor force has migrated from the public to the private sector, the economy has flourished. Guided by superior market information – supply, demand, momentum, velocity, trend, price, volume, etc. – the economy is in the process of transforming from an ossified organ of the state, a vestigial instrument of misguided, collectivist policy, into a dynamic powerhouse, now the fastest growing economy in the entire western hemisphere. What to do, then, when the policies that inspired such a dramatic transformation are heralded by the long-enduring public? More free markets, not less. More dynamic enterprises, not fewer. And deeper and deeper cuts, guaranteed. So a nation wakes, as if from a collective hallucination... and sees before it a future brimming with potential and prosperity. VLLC! Next week, we take a look at a plan scheduled to go before congress in December that aims to migrate 100,000+ jobs from the public to the private sector. How will it work? Can it even be done? Stay tuned for more Notes From the End of the World... Cheers, Joel Bowman founder of Notes from the End of the World P.S. For all of Bowman’s latest musings head over to his website. While you’re there, subscribe to his newsletter for all his latest findings as they’re reported in real time.

Waiting for a Punchline that Never Comes

MN Gordon — Fri, 07 Nov 2025 09:05:12 +0000

“When you masturbate with the hand of fate expect the worst because life is a JOKE!” – Charlie Vurmin (Artwork by Charlie Vurmin. Source: Institute of Sociometry)

Hard Luck Chuck

Some actions in life are so terrible they’re impossible to reverse. There are no second chances. There are no do overs. The wreckage is lasting. Charles Twain Clemans, also known as Charlie Vurmin, was a disreputable early '90s Pacific Beach punk in San Diego, California, and a member of the small-time beach gang, the P.B. Vurmin. Our circles briefly overlapped through the eclectic, and sometimes destructive world of skateboarding. While sessioning a famous grade-school playground skate spot in suburban San Diego one afternoon, Chuck made a lasting impression on us, and everyone there – a large collection of skaters, punkers, and derelicts – by publicly defecating on the concrete embankment in broad daylight. Socially deviant behavior. A guy running around with a few loose screws. What could possibly go wrong? Not long after, on October 2, 1995, Chuck got in a fistfight at a backyard kegger on Felspar Street. He went home. The right thing to do would have been to take a cold shower, sleep it off, and then go to his job the next morning as a silk screener for a prominent skateboard clothing company. Instead, he went completely mad. Under the pernicious influence of booze and illicit drugs, he returned to the party with his gun and shot four people. Luckily, no one was killed. Chuck was arrested that night. He was later sentenced to a 28-year California State Prison stint with no possibility of parole. Over the decades that followed he reformed and served out the last years of his time at the Norconian, a former luxury hotel and current minimum-security state prison, which sits behind twenty-foot-high chain link and concertina wire fences, in Norco, California, in Southern California’s Inland Empire.

Life’s a Joke

We recount the tale of hard luck Chuck with intent and purpose. Not so much to dwell on what he did to get locked up. But what he discovered after several years of confined reflection and contemplation. Like any troubled soul who’s left to deal with the cold penalties of his insane actions, Chuck constantly slipped into what he called the “would’ve, could’ve, should’ve” syndrome. There, he obsessed on all the things he missed – his daughter growing up, not being there for his wife, day to day freedom he took for granted, and on and on. He even wrote a song about it. Chuck described this daydreaming like an itchy rash on his leg. He knew he was better off not to touch it. But the feeling was intoxicating when he did. So, too, this daydreaming was like being consumed by quicksand. The more he thought about what he didn’t have, the more he wasn’t able to appreciate what he did have. After several years daily contemplation, Chuck developed his “Life's a Joke” philosophy. He carefully penciled out this diagram in 1998 to show how the arrangement, relationships, and working parts all fit together.

(Diagram by Charlie Vurmin. Source: Institute of Sociometry)

Obviously, this isn’t a philosophy for a constructive life. But we suppose when you’ve wrecked your life by committing deranged acts of violence against others, it offers some relief from what’s otherwise, extreme disappointment. Having a guiding philosophy that minimizes life down to a joke perhaps makes the day-to-day pain somehow bearable.

Irreversible Wreckage

We don't know if hard luck Chuck is aware of what central banking is or how it works. But if he is, it's likely he would consider it to be a sick joke. It certainly falls within the “anything” and “everything” buckets of his life’s a joke philosophy. The Federal Reserve, after printing upwards of $5 trillion to paper over the self-inflicted destruction of the coronavirus lockdowns, is back at it. After reducing its balance sheet over the last three years, from $8.9 trillion to about $6.6 trillion, the Fed is quitting before the job is even halfway done. By this, the Fed’s balance sheet will never return to its pre-COVID level of $4 trillion. More than likely, the Fed will resume Quantitative Easing (QE), through balance sheet expansion, before this new easing cycle is over. First, the Fed will continue with rate cuts. Last week, for instance, the Fed cut the benchmark federal funds rate by another 25 basis points, bringing the target range down to 3.75 to 4 percent. This is a reckless act of monetary easing in the face of persistent, elevated rates of consumer price inflation. The ultimate long-term risk is the permanent loss of purchasing power for the currency. By running massive government deficits, financed by QE and artificially low rates, the Fed encourages runaway government debt and higher and more persistent inflation. Monetary easing may be intended to provide short-term relief, but its persistence has permanent long-term consequences. American workers, savers, and retirees suffer the consequences through permanently higher prices and the broad debasement of society. That’s the sick joke of the Fed’s money games. But where’s the punchline?

Waiting for a Punchline that Never Comes

Traditional comedy follows a predictable setup to punchline structure. First a premise is established, and an expectation is created. Then a surprising or funny conclusion delivers the laugh by disrupting the audience’s expectations created by the setup. It is very formulaic. In contrast, Steve Martin pioneered a non-traditional type of comedy where, by twisting with non-sequiturs, there is no punchline. Martin described the idea behind his comedic approach in a 2008 article in Smithsonian Magazine: “What if there were no punch lines? What if there were no indicators? What if I created tension and never released it? What if I headed for a climax, but all I delivered was an anticlimax? What would the audience do with all that tension? Theoretically, it would have to come out sometime. But if I kept denying them the formality of a punch line, the audience would eventually pick their own place to laugh, essentially out of desperation? In one of his final recorded dispatches from the Norconian in 2016, after years of reflection, Charlie Vurmin remarked: “At the surface, I still do adhere to my theory that ‘life’s a joke.’ I really do. I also pride myself on the acceptance that my opinions are always in flux. My opinions will never be fully refined and ready for shelving. So, currently my opinion is that my life really does seem to be a joke in that it’s a grueling drudgery of mundane routines. We are all balancing on a slippery slope and it seems that most life on Earth is this quick cycle (consume, reproduce, die…) and along the way, you should try to enjoy the show…. Maybe one day I’ll figure out my purpose and then life won’t seem like a joke.” The joke of Chuck’s life, as far as we can tell, follows the form of Steve Martin’s comedic styling. After all these years he’s still waiting for a punchline that never comes. Similarly, the Fed’s sick joke of dollar debasement and permanent inflation is without end…and without a punchline. Yet the joke’s on all of us. We pay the price – through our time, our talents, and our lives – for persistent dollar debasement and the permanent wreckage of financial bubbles and crippling debt. And that, my friends, is no laughing matter. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, “Utility Payment Wealth – Profit from Henry Ford’s Dream City Business Model.” If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Waiting for a Punchline that Never Comes to Economic Prism

Laptop Class on Notice

MN Gordon — Fri, 31 Oct 2025 08:05:07 +0000

Amazon was busy this week, sending out pink slips. When it’s all said and done, this massive round of layoffs could hit up to 30,000 employees. This amounts to about 10 percent of the entire corporate workforce. The reduction in force (RIF) is expected to spread across several departments, including Human Resources, Cloud Computing (AWS), and Advertising. Moreover, this is Amazon’s largest RIF since 2022, which eliminated around 27,000 jobs. The massive layoffs have several aims. First, to address the remaining excess of the pandemic hiring spree, when online shopping boomed and Amazon doubled its warehouse network. Second, CEO Andy Jassy says he wants to use Artificial Intelligence to “do more with less.” In other words, these layoffs aren't merely a reaction to typical economic headwinds – things like high prices or a slower market. Rather, they’re part of a structural shift for big corporations and will have permanent consequences for business, labor, and the economy. For example, massive layoffs like this at a company as enormous as Amazon are a signal that big businesses are tightening their belts. They’re looking for ways to cut expenses without hurting growth. At the same time, as tens of thousands of corporate jobs disappear, consumers will be compelled to reduce their spending. Amazon still has a market capitalization of over $2.3 trillion. These layoffs show that even the mega companies are working to conserve cash and increase efficiency by cutting jobs and replacing workers with AI. Specifically, the current strategy is to achieve growth without hiring.

Efficiency is the New Growth

Amazon is not alone in this “do more with less” strategy. In fact, RTX Corporation, an aerospace and defense company, recently noted that its sales rose without adding employees. Goldman Sachs recently sent a memo to staff stating they would “constrain head count growth” to get more efficient with AI. Even Walmart, the nation's largest private employer, plans to keep its head count flat for the next three years while growing sales. Same story with UPS. The package delivery company announced this week it’s slashing a massive 48,000 jobs – 34,000 from operations and 14,000 from management – in a major effort to cut costs. This huge workforce reduction, which helped UPS beat Q3 profit expectations, is part of a plan to save $3.5 billion in 2025. A big driver for the layoffs is a massive push towards automation and AI to make operations more efficient and less labor dependent. Here’s UPS Chief Financial Officer Brian Dykes on the features and benefits of AI and automation: “You need less variable capacity, fewer leased aircraft, fewer rented vehicles, fewer seasonal workers. That allows you to run a much more efficient network.” JPMorgan Chase's CFO Jeremy Barnum recently told investors that the bank now has a “very strong bias against having the reflective response” to hire more people. The first thought is no longer ‘hire,’ but ‘automate.’ Earlier in October, white-collar workers from Rivian Automotive, Molson Coors, Booz Allen Hamilton and General Motors received pink slips, or learned that they would come soon. The latest wave of generative AI is proving it can efficiently handle tasks in coding, marketing, customer support, and more. Thus, companies are using AI to staff fewer jobs. While AI is augmenting some roles, its primary corporate function right now is a swift reduction in payroll…

Job Eliminator

One of the key takeaways from Amazon’s layoffs is that the increased use of AI is not just for assisting, but for replacing. The layoffs are a direct result of Amazon's massive investment in AI, which is now explicitly framed as a job eliminator. In this regard, Amazon CEO Jassy already told employees that the increased use of generative AI will “reduce our total corporate workforce” in the next few years, calling it a “once-in-a-lifetime technological change.” Jassy is putting his money where his mouth is. For the second quarter of 2025, Amazon reported $31.4 billion on capital expenditures, with most of that dedicated to AI and cloud-computing investments. Yesterday (October 30), following market close, Amazon released its third quarter 2025 earnings results. Of note, AWS segment sales increased 20 percent year-over-year to $33 billion. Amazon has also been automating its warehouses using Blue Jay, an impressive system of robotic arms combined with AI systems, which will significantly reduce the need for warehouse laborers. Per the announcement from Amazon: “Visually, Blue Jay operates like a juggler who never drops a ball—only here, the “balls” are tens of thousands of items moving at high speed. It’s also like a conductor leading an orchestra, with every motion in harmony.” Blue Jay also doesn’t call in sick, take lunch breaks and vacation days, or require the company to contribute to an employee 401(k) match. This is but one example of the endless types of automated, worker replacement, AI applications that are being rolled out. Blue collar and white-collar workers alike should be worried. AI is coming for their jobs. But what choice do companies have. Now that the AI cat is out of the bag, its implementation and use are required to compete. Amazon’s value is now fundamentally tied to its AI aptitude. After reporting slower cloud growth than competitors earlier this year, its shares fell 7 percent. But this proved to just be a slight setback. As part of yesterday’s Q3 report, Amazon “added 3.8 gigawatts of power capacity in the past 12 months – more than any other cloud provider.” This sent the after-hours share price skyrocketing by over 13 percent the last we saw. Simply put, AI has moved from a shiny new tool to a serious factor when executives are making headcount decisions. The future is looking lean, and it’s being powered by algorithms!

Laptop Class on Notice

Amazon CEO Jassy’s aggressive push into generative AI means a slimmer corporate workforce is on the horizon. This is an all-encompassing push to replace human tasks with tools like AI agents built on services such as Amazon Bedrock. The impact is already being felt across Amazon’s white-collar departments. In Tech and AWS, the goal is to massively speed up development. AI is being deployed to write code, summarize information, and tackle research. The Bedrock platform itself allows developers to create powerful AI agents that execute complex workflows, essentially automating traditional software roles. In the process, white-collar jobs are eliminated. Human Resources – everyone’s least favorite department – is also a prime target. Layoffs have already hit the department as Amazon seeks to automate administrative work. Generative AI is now handling automated resume screening and shortlisting. AI-powered assistants are taking over common employee queries and training support, cutting the need for human administrators. AI is also taking over Advertising and Content creation. It can instantly write new marketing copy, draft social media posts, and create realistic images for campaigns. This transition proves that AI is rapidly automating the “laptop class” jobs that were once considered safe. When the industrial revolution took root, workers moved from the farm to the factory. When factory jobs were offshored over the last 40 years, the next generation of workers moved to the office. Now, with the burgeoning AI revolution taking over both factory and office jobs, where will these workers go? Is there room for them all on the government dole? Can AI somehow turn unemployment into funemployment? Certainly, as AI automates routine work, it will also create an entirely new set of jobs. Prompt Engineers, for instance, are needed to effectively communicate with AI. There’s also the need for AI Trainers to perfect the models. Perhaps a whole suite of new jobs will soon appear to fulfill the promise of AI. Yet for workers who received pink slips this week, those jobs better come soon. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Utility Payment Wealth - Profit from Henry Ford's Dream City Business Model." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Laptop Class on Notice to Economic Prism

Dollar Debasement as Permanent Policy

MN Gordon — Fri, 24 Oct 2025 08:05:08 +0000

Fed Chair Jerome Powell recently stated quantitative tightening is about to end. What’s more, this will happen well before the Fed’s balance sheet ever gets close to $4 trillion, which is where it was prior to the coronavirus money printing festival. If you recall, between 2020 and 2022 the Fed spiked its balance sheet to $8.9 trillion. To do so it created credit out of thin air and loaned it to the U.S. Treasury through purchases of Treasury securities. This process is known as quantitative easing. The Treasury used the debt infusions to send out round after round of stimmy checks, among other things. This drove consumer price inflation to 40-year highs. Any hope consumer prices would ever return to their pre-2020 level is gone. Over the last three years the Fed has brought its balance sheet down to about $6.6 trillion. Now it’s throwing in the towel before the job is even halfway done. Last week, while speaking at the National Association for Business Economics conference in Philadelphia, Powell said: “Our long-stated plan is to stop balance sheet runoff when reserves are somewhat above the level we judge consistent with ample reserves conditions. We may approach that point in coming months… “Normalizing the size of our balance sheet does not mean going back to the balance sheet we had before the pandemic. In the longer run, the size of our balance sheet is determined by the public's demand for our liabilities rather than our pandemic-related asset purchases.” The end of quantitative tightening will happen on the heels of Fed rate cuts. Then, it’s only a matter of time before the Fed returns to balance sheet expansion through quantitative easing. This time, however, a renewed balance sheet expansion will be kicking off from $6.6 trillion instead of $4 trillion. Thus, by the end of the decade consumer prices will be at levels that make today’s prices look cheap. What gives?

Kicking the Can

For central planners and big government statists, inflation is the ultimate short-term expedience. It’s the economic equivalent of hitting the snooze button. It feels great in the moment. But it only delays the inevitable chaos. In short, inflationary fiscal and monetary policies are incredibly hard to resist because they offer an easy way out of immediate problems. Central planners love the path of least resistance. When faced with unfavorable conditions, like a looming recession or a budget shortfall, the urge to print money, keep interest rates artificially low, or run budget deficits, is alluring. It provides a temporary fix to difficult problems. Inflation is always the central planner’s go to answer. It offers short-term relief in exchange for long-term devastation. By kicking the can down the road central planners can delay the pain until after they’ve exited their jobs. They put off the problem and leave it for the next guy to deal with. For example, say the economy is slowing and the unemployment rate is rising. Central planners could make the difficult choice to allow the market to adjust. They could also address underlying structural issues like excessive regulations and taxes. This approach typically takes time and hard work in the form of a recession or depression before the recovery occurs. It requires allowing things to get worse before they get better. This is painful and politically unpopular even though it supports long term health of the economy. The expedient approach, the way preferred by central planners, is to inject new money into the system – through artificially low interest rates or Fed asset purchases – to quickly stimulate demand. This supports struggling businesses and may delay a credit crisis. Politicians also get to keep their jobs.

Duct Tape

Inflation acts as a silent, invisible lubricant, temporarily greasing the gears of the economy. It allows the government to fund its projects, pay its debts, and bail out specific sectors without the politically painful necessity of raising taxes or making spending cuts. For private businesses, it makes borrowing cheaper, which encourages expansion and investment, even for projects that aren’t fundamentally sound. It allows both government and business to bypass the realities of their poor decisions and poor policies. Instead of having to accept and adjust to conditions where current spending is unsustainable, the government and the economy rely on the central bank to create additional money and credit. The central bank, in the case of the U.S. the Federal Reserve, enables the buildup of debt and inflation. These policies of dollar debasement are used to paper-over mistakes. Inflation becomes the duct tape applied to the economy’s structural cracks. Unfortunately, this doesn’t solve the problem. In fact, it allows the problem to grow larger and ultimately more destructive. At the same time, it distorts prices throughout the economy. For example, five years ago the Fed printed gobs of money in response to the self-inflicted damage of the coronavirus lockdowns. The economy is now dependent on that additional money supply. It cannot be reeled in without causing a credit crisis and a painful recession. This is why the Fed cannot return its balance sheet to $4 trillion. We’ve seen this happen several times this century. The Fed issued cheap credit to soften the consequences of the dot com crash in the early 2000s, and we ended up with a destructive housing bubble. The housing bubble crashed and the Fed, through quantitative easing and zero interest rate policy, puffed countless speculative bubbles, including stocks, houses, and cryptocurrencies.

Dollar Debasement as Permanent Policy

After each of these episodes, the Fed is unable to reset the economy on a firmer footing of stable money and real interest rates. Rather, it must keep printing or keep rates low, or the bubble will burst, and the economy will crash. Currently, the Fed must pursue inflation and continued dollar debasement to prevent a catastrophic crackup. These policies have been in place for well over 100 years. Over this time, it has resulted in a fundamental deterioration of economic life. Inflation, remember, is a tax on savings. It silently steals the purchasing power from every dollar held by workers and savers. It transfers wealth from the prudent to the politically connected or those with debt. In addition, when money is cheap and plentiful, businesses don’t allocate capital wisely. They invest in projects based on the easy availability of credit, not on genuine, sustainable demand. This creates bubbles, malinvestment, and ultimately, a less productive economy. In this respect, inflation scrambles the vital information – price signals – that tell businesses and entrepreneurs what to produce and consumers what to buy. When you don’t know if a price increase is due to real scarcity or just monetary expansion, rational decision-making breaks down. The pattern is clear: the Fed is once again choosing the expedient path of inflation. It’s abandoning the difficult work of fully normalizing its balance sheet and allowing the economy to adjust in kind. Yet we shouldn’t be surprised. Inflation is the central planner’s permanent strategy for temporarily masking structural issues through injections of new money. By prioritizing short-term political and economic relief, they ensure long-term devastation. Alas, we’re stepping into a future where, once again, today’s prices will look cheap. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Utility Payment Wealth - Profit from Henry Ford's Dream City Business Model." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Dollar Debasement as Permanent Policy to Economic Prism

The Great Gold Fever of the 2020s

MN Gordon — Fri, 17 Oct 2025 08:05:21 +0000

“The whole way I’m driving out, I’m thinking I’m going to pull out this freaking $100,000 nugget.” The remark was recently made by 50-year-old Mike Hewlett, a welder from California. With gold now over $4,300 per ounce, he’s traded his hobbies of snowboarding, skiing, and dirt biking, for prospecting. He’s hoping to make big bucks. In fact, Hewlett recently extracted a chunk of gold about half the size of his pinkie fingernail out of the dirt in the forested Mount Shasta area. “I was jumping all around like you see in cartoons and stuff,” he said. When he later weighed his find, he discovered it was worth $175. Sometimes in life there are endeavors where even the slimmest chance of a big score is reason enough to do it. The adventure – and the hope – are what make it worthwhile, regardless of if the ultimate payoff comes or not. Prospecting the well picked over mountains of California in the year 2025 is one of those endeavors. Nonetheless, Hewlett is not alone. Others have recently been bitten by the gold fever bug too. Cody Blanchard, for example, a sanitation worker from Sacramento, recently found pieces of quartz veined with gold that he located with a metal detector. According to Blanchard, “The thrill of that first gold find in the wild can’t be beat, and keeps people coming back. It’s like a heroin addiction.” But gold isn’t the only thing he’s found. Once, when prospecting with friends, Blanchard found old buttons from Levi’s jeans from the mid-1800s. They even had some old denim attached.

Picks and Shovels

Like past gold rushes, the real path to making money comes from selling picks and shovels. The new, 21st century gold rush also comes with 21st century online interest and influencer moneymaking opportunities. Chris Spangler, a 39-year-old healthcare administrator for the U.S. Navy, chronicles his family’s gold hunting journey on social media. He’s up to 430,000 followers. What’s more, the social-media presence has earned his family around $30,000, well above any gold they’ve found. Still, as gold’s price keeps rising, the accumulation of small finds and flakes become more valuable – at least in dollar terms. This is the grand illusion of dollar debasement. It makes the price of gold appear more valuable. In reality, its value has stayed the same while the dollar’s value has declined. This distinction is often overlooked by people who should know better. Warren Buffett calls gold a “pet rock.” He says it’s a non-productive asset that does not generate income or grow over time, unlike stocks or farmland. He prefers assets that create wealth and compound over time through earnings, dividends or rental income. JPMorgan Chase CEO Jamie Dimon recently said gold “could easily go to $5,000 or $10,000.” He also added that, “This is one of the few times in my life it’s semi-rational to have some in your portfolio.” If it’s semi-rational to have some gold now, when it’s over $4,300 per ounce, why wasn’t it fully rational to buy gold three years ago when it was under $1,700 per ounce? Or what about July 1999, when an ounce of gold cost just $253, was it rational to buy gold then? Buffett and Dimon, for good reasons, prefer government money to gold. They’ve both profited more than just about anyone from their fiat money dealings. Gold, however, reveals the flaws of a statist system that allows the wealthy to profit off the labors of everyone else, while the government trashes the currency.

Debasement or Speculation?

When the clock struck midnight on January 1, 2025, an ounce of gold was priced at $2,624. Today, it’s over $4,300. That’s a price increase, in dollar terms, of 64 percent. But is an ounce of gold really 64 percent more valuable. Despite what Buffett or Dimon think, gold’s value is found in its 5,000-year track record as a reliable store of value. Over centuries and millenniums, its value stays the same. Its recent price increase represents the dollar’s loss of value. Of course, this is mostly true most of the time. But like AI stocks or tulip bulbs, gold can periodically become an object of speculation. As its price increases, in response to mass dollar debasement, it attracts interest from speculators. These opportunists, with an eye on quick riches and a bite from the gold fever bug, can overdo it. They can bid up and chase gold’s price higher and higher, with the expectation they can sell later for an even higher price. The question, right now, is: How much of gold’s 64 percent increase so far this year is due to dollar devaluation and how much is due to gold speculation? The answer is not an easy one… Over the last several years, central banks have been some of the biggest buyers of gold. Specifically, the seizure of Russian reserve assets and the burgeoning trade war have prompted central banks to reduce their dollar reserves in exchange for gold. The World Gold Council’s 2025 Central Bank Gold Reserves Survey found: “Central banks have accumulated over 1,000t of gold in each of the last three years, up significantly from the 400-500t average over the preceding decade. This marked acceleration in the pace of accumulation has occurred against a backdrop of geopolitical and economic uncertainty, which has clouded the outlook for reserve managers and investors alike.” Increased buying by central banks puts an elevated floor beneath gold’s price. This would seem to be true so long as central banks are accumulating gold and not selling. With the abundance of geopolitical uncertainty, and the veracity of all currencies including the dollar being in question, it doesn’t appear central banks will start selling their gold anytime soon.

The Great Gold Fever of the 2020s

When looking at the price of gold relative to the Dow Jones Industrial Index (DJIA), via the Dow to gold ratio, we find that gold was most expensive in February of 1933 and January of 1980 when it took just 1.94 and 1.29 ounces of gold to buy the DJIA, respectively. Gold was cheapest in June 1999, when it took 41.98 ounces of gold to buy the DJIA. Currently, it takes about 10.5 ounces of gold to buy the DJIA. By this metric, gold is no longer cheap, but it is also not at the extreme price one would expect during a gold fever bubble. That would require gold’s price to spike to over $10,000 per ounce, the DJIA to decline by over 60 percent, or some combination of rising gold prices and falling stock prices. The fact is, some of gold’s price increase this year can be attributed to speculation, some can be attributed to central bank buying, and some can be attributed to dollar debasement. That said, in the short term, gold is technically overbought. One should anticipate an abrupt, yet healthy, selloff on the order of $500 to $700 per ounce in the coming weeks. We expect this to be similar to the selloff that occurred earlier this year between April and May, where gold fell from roughly $3,425 to $3,187 per ounce. There will then likely be a pause for several months before gold resumes its uptrend. This will serve to filter out the weak hands and Johnny-come-latelies who bought gold for the first time in 2025 and look at it as a short-term speculation. For gold to get to the extreme bubble stage there must be complete gold fever. We’re talking about the level of intense excitement, obsession, and greed, that hasn’t been witnessed in the gold market since the late 1970s. Gold, no doubt, is receiving greater interest than it was a year or two ago. But the final chapters of the great gold fever of the 2020s have yet to be written. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Utility Payment Wealth - Profit from Henry Ford's Dream City Business Model." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from The Great Gold Fever of the 2020s to Economic Prism

Big Brother is Watching

MN Gordon — Tue, 14 Oct 2025 08:05:34 +0000

Do you like being monitored? Do you like being surveilled? Do you like your digital footprints being tracked and stored by government contractors like Palantir for profit? What if innocent activities – like criticizing the government – could one day be used against you in an authoritarian society? What if that not-too-distant future is already here? Today we turn to Joel Bowman, founder and author of Notes from the End of the World, for edification. In this guest article, Big Brother is Watching, Mr. Bowman shares some alarming details about what our brethren across the pond, in the United Kingdom, are currently being subjected to. Here is the USA, Digital IDs are a no longer a question of “if”, but of “when”. Alas, in the UK, the “when” is “now”. Buckle up for Bowman’s insights below! After giving it a read, head over to his website and subscribe to his newsletter for all the latest findings as they’re reported in real time. Enjoy! MN Gordon P.S. We have no financial arrangement with Bowman and do not profit from publishing his work. We merely find his observations and writing to be valuable and believe that you will too. --

Big Brother is Watching

Digital IDs, total surveillance and the authoritarian state… “Every citizen, like every animal, is under continuous surveillance by the Thought Police, and under the constant threat of being vaporized for deviation from the Party line.” ~ George Orwell, 1984 (1948) Joel Bowman with today’s Note From the End of the World: Buenos Aires, Argentina... No matter where you go, there you are, standing at the End of the World. Casting a weary gaze across the legacy newscape – pitiless, shameless and awash in tales of war and of waste – your editor checks his sense of humor, does a quick family head count... and keeps his passports handy. While on the subject of ubiquitous government surveillance, Big Brother is not just at your door... he’s on the couch streaming Netflix, having already helped himself to some snacks and, naturally, the wifi password. (Bank accounts, social credit score, carbon footprint, etc., to follow shortly.) Here’s the latest, from bootlicking establishment bullhorn, Reuters: “Britain to introduce compulsory digital ID for workers “LONDON - The British government said on Friday it would require every employee to hold a digital identity document, Prime Minister Keir Starmer’s latest attempt to tackle illegal migration and reduce the threat from the populist Reform UK party.” Did His Majesty’s loyal subjects catch that? The primary “threat” to the middle and working class of the United Kingdom, to British culture and the general interests of the common people, comes not from tens of thousands of illegal immigrants pouring into the country annually... Nor does it stem from the fact that the majority of these people (~60%) come from just five countries – Afghanistan, Iran, Syria, Eritrea, and Sudan – countries that don’t exactly overlap, culturally... Nor does it come from the fact that Starmer’s own government, according to official border “control” documents, returns less than 4% of those who land in the country illegally... The real threat, to the UK and (no doubt) “to democracy itself,” comes from... an opposition party that dares mention these inconvenient truths!

Mandatory Choice

Said Keir “Two Tier” Starmer: “In the UK ... we have got a right-wing proposition that we have not had in this country before ... so the battle of our times is between patriotic national renewal ... versus something which is turning into a toxic divide.” And here he is again, “spelling it out” for the epsilons at home: Starmer says the digital IDs will be “free of charge,” which is how you know you can’t afford it. According to the Secretary of State for Culture, Media and Sport, Lisa Nandy, all British citizens will be required to have a digital ID... although it will be “entirely their choice” whether they want to use them. Got that, lowly subject? Just like Covid vaccine cards, the government’s digital dog tags are “mandatory,” such that you won’t be able to earn a living without one, but it’s totally your choice whether or not you want to use them. Asked whether the government would need to bother going through parliament – you know, all that pesky “check-and-balance” stuff – Nandy responded like the obedient, unquestioning automaton she is: “This is being done.” Of course, the public is right to be concerned over unprecedented immigration levels, both legal and illegal. It’s a big part of the reason the Reform Party is pegged to be Labour’s main opposition heading into the next election (and why they will no doubt be branded fascist, racist, bigoted, Islamaphobic, etc., etc., etc., from now until then…) When your editor moved to the UK, legally, back in the 1990s (to pursue a career as a rock ‘n’ roll star with the band Oasis... whom we’d never met), net immigration averaged “just” 100,000 per year. Today, that figure is over a million... and rising. (The five years pre-Covid averaged 600,000. After a brief dip during that first lockdown year, the number soon rebounded... to 900,000 in 2021... 1.2M in 2022... 1.3M in 2023...) But will the UK government’s digital monitoring, snooping and leering really do anything to stem the tide of illegal immigrants, 88% of whom arrive on the tiny island by small boats, which are apparently beyond the capability of the once formidable British Navy to handle? Or is there something more sinister afoot? After all, Germany already has a national digital ID. So too does France... and Italy... and Spain. Did sweeping government surveillance and digitally integrated biometric IDs help neutralize one of the “key pull factors” enticing illegals onto their fare shores? To respond in order: No. No. No. Aaaaand... No. With a quarter of a million illegal immigrants within its welcome mats borders as of 2024, Germany leads the continent in that dubious dishonor. It was followed, you will be shocked to discover, by France... Italy... the UK... and then Spain. Adjusted for population, tiny Slovenia, nestled in the armpit of the Adriatic, right up there between Italy and Croatia, suffers the highest illegal immigration population per capita anywhere on the continent. Good thing the Slovenian government began issuing biometric national identity cards in 2022 then, eh? Right before documented illegal crossings doubled, from 30,000 to over 60,000, the very next year. But then, if illegal immigration really is such a problem, as Starmer himself (now) freely admits, why not start by deporting the millions of illegal immigrants already in these countries? After all, it’s not as though the government doesn’t know where they are; one need only check the hotel addresses and free iPhone bills on the state welfare invoices... or simply follow the blaze of protests sweeping across the nation as frustrated locals, fed up with having their wives and daughters harassed in their own towns and public spaces, take to the once-safe streets to demand their country back.

Mission Creeps

There was a time when the Brits, upper lips firmly stiffened, had the common decency to reject the government’s cataloging, processing and harassing of innocent individuals. Crazy, but true. Before 1914, British citizens were able to travel freely around the European continent. When they did need a passport, to visit the Russian or Ottoman Empires, for example, they were little more than handwritten documents, often a single page, with a vague description of the bearer’s physical characteristics, height, hair, eye color, etc. Then came the outbreak of WWI, and the kind of “temporary wartime measures” that tend to last a lifetime... and beyond. In 1915, citing threats of foreign espionage, the UK government made that most Faustian of pacts, trading “liberty for the promise of security,” and issued a standardized passport booklet, which contained not only the bearer’s signature, but also a photograph. The requirements were seen as scandalous by the right-thinking British public, who were naturally outraged that they should be subjected to such an invasive, dehumanizing process. Members of Parliament and their toadies in the press assured their constituents that such impositions were merely “temporary measures,” and that they would be repealed in due course. Only, as is so often the case with the government’s “temporary measures,” due course never came. After WWI was over, the League of Nations convened a number of international passport conferences, with the resulting trend toward international standardization and the “one world system” we have today. And yet, still that feckless mantra of the Soft Cranium Brigade, “If you don’t have anything to hide, you don’t have anything to worry about” rings out around the world, from China to Singapore to Pakistan... Saudi Arabia to Qatar to Bahrain... Nigeria to Kenya to South Africa... where brainwashed citizens line up behind their dear leaders, confident they would never abuse their power, seemingly incurious as to why their delusional motto is never turned toward the government itself, notoriously secretive and forever assuring its citizens they’re on a “need to know” basis. “Privacy for we,” shady world leaders and WEF puppets cry in creepy unison, “total transparency for thee.” Hmm… what could go wrong? Stay tuned for more Notes From the End of the World... Cheers, Joel Bowman founder of Notes from the End of the World P.S. For all of Bowman’s latest musings, including his follow-up article, PM to People: Drop Dead, head over to his website. While you’re there, subscribe to his newsletter for all his latest findings as they’re reported in real time.

The Inevitable Collapse of the Bloated State

MN Gordon — Fri, 10 Oct 2025 08:05:37 +0000

At the time or this writing, the federal funding for the new fiscal year (FY 2026) has lapsed. The federal government bureaucracy is in partial shutdown. In Washington, D.C., and in federal offices across the nation, nearly a million people are either furloughed or clocking in for work without promise of a paycheck. Perhaps by the time you read this the shutdown will be over. Regardless, a return to the big government status quo and its relentless money sucking vortex isn’t something to be happy about – especially, if you’re a net taxpayer who values freedom. This week, Republican Senator John Kennedy cited wasteful spending left over from the Biden administration as the reason for the shutdown. Things like $3 million for circumcisions and vasectomies in Zambia, $500,000 for electric buses in Rwanda, and $3.6 million for pastry cooking classes and dance focus groups for male prostitutes in Haiti. He also noted $6 million for media organizations for the Palestinians, $833,000 for transgender people in Nepal, $300,000 for a pride parade in Lesotho, $882,000 for social media mentorship in Serbia, and $4.2 million for LGBTQI people in the Western Balkans and Uganda. Without question, this spending should be eliminated immediately. Still, this would do little to address Washington’s spending problem. The budget deficit for fiscal year 2025 will be over $2 trillion. The sum of the waste identified by Kennedy comes to $19.3 million. Thus, to balance the budget, an additional $1.99 trillion in spending will need to be cut. To be clear, the government shutdown is much more than political drama about funding focus groups for male prostitutes in Haiti. It’s a rich illustration of a fundamental economic and philosophical divide in our society. The mammoth gulf between the taxpayer and the tax consumer.

The Great Divide

In a democratic society, there are taxpayers and tax consumers. Taxpayers are those who pay more in taxes than they receive in government benefits. Tax consumers, on the other hand, are those who receive more in government benefits than they pay in taxes. Taxpayers – specifically, net taxpayers – contribute to the government’s coffers through payment of income taxes, payroll taxes, excise taxes and tariffs, and other fees and exaction. Their contributions are greater than the value of the government services, subsidies, and benefits they receive. These taxpayers are the engine of the economy. Entrepreneurs, small-business owners, and highly productive private sector workers. All fuel the Treasury with a net surplus. Tax consumers, by contrast, are people whose total benefits, wages, grants, or subsidies from the government exceed their total tax payments. Tax consumers, in addition to recipients of the welfare-warfare state administered bureaucracy, include the actual government bureaucrats. Many of these workers mean well. They opted for a career path of public service in return for steady pay, job security, generous health benefits, and guaranteed pensions. The prospects of a prolonged government shutdown are at odds with what they signed up for. These federal bureaucrats are at the heart of the system that is now shutdown. Suddenly, they’re subject to the uncertainty and anxiety all the rest of us live with every day. They are receiving an object lesson in the precariousness of a profession that, by its very nature, exists because of the generosity of taxpayers. When the money spigot, which relies on the net surplus extracted from taxpayers, is jammed by political deadlock, their security vanishes.

From Night-Watchman to Overgrown Leviathan

The very people tasked with administering the vast machinery of the state are now victims of its instability. The 2025 government shutdown, which began on October 1st and has furloughed approximately 800,000 federal employees, is currently costing taxpayers an estimated $400 million a day in back pay for workers who are effectively doing nothing. This mess, however, is simply the inevitable byproduct of an overgrown, overreaching government. It’s the signal of a bloated system seizing up. Moreover, it calls to question the proper role of government. In a country founded with principles committed to individual liberty and small government, the role of government was supposed to be that of a night-watchman state. Where government is strictly limited to the role of protecting individuals from coercion and violence. In practical terms, this allows for several legitimate functions of government. Things like police, courts, and military. Their purpose is to enforce the Non-Aggression Principle. That is, the idea that no person, including a government official, has the right to initiate force against another individual or their property. Taxpayers, as a class, are subject to violation of their rights. When the state takes money from the net taxpayer to fund a vast bureaucracy or to provide benefits to others, it is using coercion (the threat of fines, jail, or force) to seize private property. This is theft by another name, and it violates the individual’s right to the fruits of their labor. Agencies like the Department of Education, the Department of Energy, and many, many others, are completely unnecessary. Moreover, they’re colossal, inefficient redistributors of wealth and private life. Their work could be accomplished more efficiently, more ethically, and more responsibly, by private businesses, or local, voluntary community groups. The individual, the actual person who earned the money, should be the steward of their wealth. Not some politician or faceless bureaucrat. This is fundamental to a free society.

The Inevitable Collapse of the Bloated State

The government shutdown reveals the inherent weakness of a society built on compulsion. When the state is empowered to manage the lives of hundreds of millions of people through taking from some and giving to others, there is systemic instability. Passing another temporary funding bill and restoring the status quo only perpetuates the instability into a bigger crisis down the road. Congress should – but doesn’t – have the spine or fortitude to tackle the problem. They are politically incapable of starving the beast until it is small enough to perform its legitimate function. In the meantime, the chaos of every delayed airplane flight, every furloughed worker, every halted regulatory permit, and every closed national park, provides a data point that government is far too big, does far too much, has its grip on far too many parts of the economy. This was never the intent or role of government. And, in addition to trampling freedom and individual liberty, it’s bankrupting the nation. Ultimately, the wasteful spending cited by Senator Kennedy is a mere footnote to the fundamental crisis: a $2 trillion deficit and $37.8 trillion national debt, caused by an overreaching government that has abandoned its constitutional limits. The shutdown is a harsh reminder that a system dependent on the coerced wealth of net taxpayers to fund a massive bureaucracy is inherently unsustainable. Restoring stability requires more than political gamesmanship. It demands a philosophical return to the minimal, night-watchman state, ensuring individual liberty, fiscal solvency, and the end of the divide between those who pay and those who consume. Alas, the return to small government will not be guided by the politicians in Washington. It will be forced upon them with the inevitable collapse of the bloated state. In fact, the rise in gold’s price above $4,000 per ounce is signaling the collapse is already here. The politicians, no doubt, will be the last ones to realize it. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Utility Payment Wealth - Profit from Henry Ford's Dream City Business Model." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from The Inevitable Collapse of the Bloated State to Economic Prism

Keep Your Eyes on the Road

MN Gordon — Fri, 03 Oct 2025 08:05:47 +0000

The stock market, as measured by the S&P 500, continues to inflate. But this isn’t a sign of economic health. In fact, a scratch below the surface reveals an economy that is much weaker than advertised. Several decades ago, the stock market was viewed as a forward-looking animal. A place where investors considered expectations about future earnings and performance to make decisions affecting share prices. Those days are long gone. These days the stock market is purely speculative. There’s a large cohort of workers who blindly pour money into index funds every two weeks through their company sponsored retirement accounts. Others, under the spell of AI hype, believe we’re in the early stages of the greatest economic boom since the railroad. They trip over themselves to grab a piece of the mirage. Thus, share prices and index levels do not provide much meaningful information about the state of the economy. Warning signs are no longer found on Wall Street. To understand what’s happening and what’s coming next you must look elsewhere. For example, U.S. heavy truck sales – the nuts and bolts of the economy – are tanking. We’re not talking about a little dip. The numbers are flashing red. In August, heavy truck sales – the big Class 8 rigs that haul the vast majority of our stuff – plummeted by a whopping 20,000 units to an annualized rate of 422,000. That’s the lowest we’ve seen since January 2022. And if you look at the three-month moving average, which smooths out the monthly noise, it has slipped to 438,000 – a level not seen since the dark, days of the 2020 lockdowns.

National Slowdown

This isn’t just bad news for truck manufacturers. It is an unpleasant situation for the entire country. Why? Because heavy truck sales are one of the most reliable leading economic indicators there is. Who buys a brand-new, $150,000+ Class 8 truck? Companies that need to haul massive amounts of goods. These are companies that make and build stuff. Manufacturers, construction companies, and retailers. This kind of purchase isn’t an impulse buy. It's a massive capital expenditure based on a company’s forward-looking confidence in the economy. The decision to purchase heavy trucks is based on what’s happening in the physical world. Not the fictitious world of Wall Street. When a CEO signs off on a fleet of new trucks, it’s because he or she expects demand for their products to be so high over the next five to seven years that they need to increase the company’s logistics capacity. It’s an investment in future economic expansion. The reverse is also true, and this is why the decline in heavy truck sales is important. When sales drop off a cliff, it means existing trucking fleets are already underutilized. By this, there’s slowing freight demand and a weakening outlook for manufacturing and construction. Thus, CEOs hit the pause button on significant, long-term investment because they anticipate a slowdown in the movement, production, and sale of physical goods. Heavy trucks move the raw materials to the factories and the finished goods to the stores. Historically, a sharp decline in heavy truck sales has preceded nearly every major recession. When the gears of commerce grind to a halt – which is what a slump in trucking indicates – a slowdown is virtually guaranteed to spread across the whole economy. But it’s not just heavy truck sales that are lacking…

Front-Line Warning

This week the Institute for Supply Management (ISM) released its latest Purchasing Managers’ Index (PMI). The PMI is like a monthly report card for the U.S. economy. It looks at the health of the manufacturing or services sector. The PMI comes from the ISM, which is a group of professionals who handle procurement and supply chain items. These purchasing managers are the ones buying all the materials, parts, and services that companies need. So, they’re on the front lines of business activity and have the best view of what’s happening right now. Every month, the ISM surveys these purchasing managers. The questions are very simple: Did your new orders go up, down, or stay the same? What about production, employment, and inventories? The PMI is calculated by rolling up those “better,” “worse,” or “same” answers into a single, simple number between 0 and 100. A reading above 50 means the sector is generally expanding or growing compared to the previous month. More managers reported improvement than decline. A reading below 50 means the sector is contracting or shrinking. More managers reported a slowdown in business than growth. The further below 50 it drops, the faster the contraction. For months, the manufacturing PMI has been stuck in contraction territory (a reading below 50). Specifically, the PMI reading for September came in at 49.1. This aligns with the trucking slump, as manufacturers reduce their output and thus their need for freight transport. Moreover, the PMI is a leading economic indicator. A company doesn’t wait for a recession to be officially declared to stop buying raw materials. They sense a slowdown before it shows up in big government reports like GDP or unemployment figures. When purchasing managers start cutting back on orders, slowing production, and letting their hiring cool off, that’s a direct signal that an economic slowdown is likely coming.

Keep Your Eyes on the Road

Household and business debt are at record levels: $20.5 trillion and $21.9 trillion, respectively. A decade ago household debt was $14 trillion and business debt was $13.2 trillion. As of Q2 2025, credit card balances totaled $1.21 trillion outstanding, auto loan balances stood at $1.66 trillion, and student loan balances were at $1.64 trillion. The fact is, the U.S. economy still needs to reckon with the massive amounts of debt that resulted from the Federal Reserve’s actions during the government mandated lockdowns of 2020-21. For years, the Fed kept interest rates artificially low and dramatically expanded the money supply. Businesses and consumers loaded up on debt in kind. Of course, when economic activity slows down, debts pile up. After debt piles up, it goes bad. Individuals and businesses declare bankruptcy. Lenders take the losses. These are the sorts of disagreeable conditions that take place during recessions. Plunging heavy truck sales are a perfect signal of the coming liquidation phase. The excess inventory of trucks (and the slowdown in orders for new ones) reflects the over-expansion of the logistics and manufacturing sectors during the cheap-money boom. Businesses thought they needed massive capacity to keep up with the credit-fueled demand. Now, as the false demand has exhausted itself, they realize their capital – those expensive, under-utilized trucks – are a liability that must be reduced. The trucking decline won’t be the cause of the recession. Rather, it's an indication that the boom is turning to bust. What’s more, a new cycle of Fed rate cuts won’t stop it. However, it will fuel greater distortions throughout the economy. Currently, stock market investors are taking on major risk, pushing indexes and valuations to all-time highs. Yet the economy is weakening. So, forget the mania on Wall Street. The real story is on the highway and in the factory. When trucks stop rolling and purchasing managers hit the brakes, you've got your clearest warning. The inflated stock market is betting on a boom, but the physical economy is whispering bust. Keep your eyes on the road. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Utility Payment Wealth - Profit from Henry Ford's Dream City Business Model." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Keep Your Eyes on the Road to Economic Prism

Where's the Beef?

MN Gordon — Fri, 26 Sep 2025 08:05:33 +0000

The year was 1984. The fast-food landscape was dominated by two giants: McDonald’s and Burger King. But a third player, Wendy’s, was making its mark with a new advertising campaign. This would not only boost its sales but also embed a simple, three-word phrase into the American lexicon: “Where's the beef?” The campaign, created by the ad agency Dancer Fitzgerald Sample, centered on three elderly women. These old ladies were discerning fast-food critics. The star of the commercial was the feisty, bespectacled Clara Peller. In the now-classic commercial, the women are presented with a giant, pillowy bun from a fictional competitor. They ooh and aah over the size of the bun, but then, Clara, with her gravelly, no-nonsense voice, peers under the lid and exclaims in exasperation, “Where's the beef?” Obviously, the question was aimed at Wendy’s competitors. It suggested their burgers were all fluff and no substance. Wendy’s, in contrast, boasted of its larger, square patties that hung over the bun, proving they had plenty of beef. If you recall, the ad was an instant hit. Clara Peller, a retired manicurist who was 81 at the time, became an overnight sensation. Her raspy voice and indignant delivery resonated with a public that felt like they were constantly being sold promises that didn’t deliver. The phrase quickly transcended the ad and became a pervasive catchphrase. From T-shirts to bumper stickers. It also became part of regular conversations. People used it to question everything, from political promises to corporate claims. If an idea or proposal seemed to lack substance, you could simply ask, “Where's the beef?” and everyone knew exactly what you meant. The slogan’s success helped propel Wendy’s from a distant third to a major player in the fast-food wars.

Vaporware

One of the most notable uses of the phrase was in the 1984 U.S. presidential election. During a Democratic primary debate, presidential candidate Walter Mondale, in a brilliant move of political clowning, used the phrase to criticize his opponent, Gary Hart. Hart had been running on a platform of “new ideas.” But Mondale, echoing Clara Peller, famously quipped, “When I hear your new ideas, I’m reminded of that ad, ‘Where's the beef?’” The line landed with a thud, and helped Mondale secure the nomination. Mondale, however, was the one lacking in beef. Ronald Reagan subsequently KO’d him in the presidential election. The point is the slogan’s simplicity and directness tapped into a fundamental human feeling of being cheated or misled. It gave people a short, snappy way to express skepticism and demand more substance. The timeless appeal of “Where's the beef?” can be compared to a more modern term: “vaporware.” While “Where's the beef?” deals with a physical product, vaporware deals with a digital or technological one. The term, vaporware, which originated in the tech industry, refers to a product, typically software or hardware, that is announced to the public but is either never released or is released much later than promised and often with less functionality than advertised. It’s all sizzle and no steak. The parallels are striking. Both phrases are used to question the substance and value of something. A company that talks big about a revolutionary new gadget but never delivers is peddling vaporware. A politician who makes grand promises but never follows through is a prime target for a “Where's the beef?” inquiry. In both cases, the core issue is the same: the disconnect between what is advertised and what is actually delivered.

Aspirations vs. Resources

Vaporware is what happens when a tech company’s concepts, ideas and prototypes don’t become reality. Could it be that the Artificial Intelligence revolution is one great big vaporware – “Where’s the beef?” – scenario? A new report from Bain & Company, published on September 23, reveals a stunning reality. The world is on a collision course with a massive funding gap for AI. The report estimates that we need $2 trillion in annual revenue just to fund the computing power required to meet the anticipated AI demand by 2030. But here’s the problem. Even with all the efficiency gains and cost savings that AI is expected to generate, the world is still projected to be $800 billion short. In other words, there’s an annual deficit of nearly a trillion dollars. This represents the massive gap between aspirations and resources. This isn’t about whether we’ll have an abundance of cool AI apps to do our thinking and our work for us. Rather, it’s about whether the foundational infrastructure for the AI future can even be built. Without this funding, the ambitious AI projects we hear about – things like self-driving cars, personalized medicine, and humanoid robots – could stall out. They could become the next generation of vaporware. That is, the grand promises of a world-changing AI revolution may never be delivered because the underlying technology is starved of the necessary power. For example, you can have the blueprints for the most incredible skyscraper. One that will redefine the skyline and urban living standards. But without the steel and concrete needed for the foundation the entire project is merely a dream.

Where’s the Beef?

The Bain & Company report throws cold water on the hype. Investors may find that they’ve been swept up in sea of vaporware. Like most things, the unpleasant reality comes down to money. Remember, the true test of this technology lies in its economic viability. Will the market generate the revenue needed to support this monumental expansion? Or will the hype bubble burst, leaving a fragmented collection of impressive but ultimately unscalable solutions? Can the promise of AI ultimately deliver the revenue to close this $800 billion gap? The answer to this question will determine whether AI truly transforms our world or becomes the next big tech “Where’s the beef?” story. Without question, the promise of AI is immense. But the path to its full realization appears to be blocked by economic realities that will be difficult to overcome. Investors who have piled money into AI companies, hoping for a quick, exponential return, will be disappointed when they discover they’ve set their money on fire. All bubbles eventually burst. At this point, a simple question – Where’s the revenue? – may be all that’s needed for investors to come to their senses. Without the missing revenue stream to build out the power infrastructure needed for AI stocks to fulfill their destiny, the promised future may never materialize. For many investors, this could mean their returns fall far short of expectations. Worse, their investments may never become profitable. Unless AI companies quickly find a way to monetize their technology at a grand scale, the AI revolution is doomed. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Utility Payment Wealth - Profit from Henry Ford's Dream City Business Model." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from Where's the Beef? to Economic Prism

On Black Swans and White Lies

MN Gordon — Fri, 19 Sep 2025 08:05:24 +0000

“If you hear a ‘prominent’ economist using the word ‘equilibrium,’ or ‘normal distribution,’ do not argue with him; just ignore him, or try to put a rat down his shirt.” – Nassim Taleb, The Black Swan

Facing the Unexpected

There was an old European belief that persisted for centuries. People were convinced that all swans were white. Their reasoning was founded in logic and supported by empirical evidence. Every single swan they'd ever seen was white. It was a universal truth. A rock-solid assumption based on all the available evidence. But then, in the late 17th century, a Dutch explorer found black swans in Australia. The one-time truth that all swans were white was instantly shattered. The existence of black swans showed how fragile knowledge and assumptions can be when faced with the unexpected. Nearly 20 years ago, in his book The Black Swan, author and options trader Nassim Taleb described a Black Swan as an event that comes as a complete and utter shock. Something that nobody saw coming, which has a massive, widespread impact. What’s more, after it happens, we look back and convince ourselves that it was totally predictable all along. Black Swan events have several qualifying characteristics. First, they are events that come as a surprise, that are unpredictable outliers. There’s no way to forecast them. They fall outside the scope of regular models and expectations. In addition, when Black Swan events happen, they have a major impact. They may have global ramifications that rewrite history and reshape the world as we know it. Lastly, Black Swan events are rationalized in hindsight. After the fact, people contrive narratives to explain what happened, making it seem like it was obvious and inevitable. This is what Taleb calls the “narrative fallacy” – our human need to make sense of a chaotic world by telling ourselves a neat, tidy story, even if it’s a lie. No doubt, history is full of Black Swan events. Here are a few recent classics…

War of the Nerds

On June 28, 1914, Gavrilo Princip, a Bosnian Serb student, assassinated Archduke Franz Ferdinand of Austria in Sarajevo. At the time, Europe was a latent powder keg. No one saw this single act leading to the massive conflagration of World War I. The major European powers believed their complex web of military and economic alliances would prevent a large-scale conflict. Instead, a series of domino-like reactions were triggered, leading to the war to end all wars. The assassination itself was merely the unpredictable catalyst that set off a chain of events with an extreme, paradigm-shifting impact. Yet this Black Swan event was not immediately understood. In fact, as late as three weeks after Ferdinand’s assassination the risks were still being dismissed by financial markets. Author Frederick J. Sheehan wrote a piece titled War of the Nerds, for the December 2006 edition of Marc Faber’s Gloom, Boom & Doom Report. Several years ago, the article was still posted at Sheehan’s now defunct AuContrarian website. By chance, before the site vanished, we preserved the following excerpt: “Every generation suffers its particular fantasies. So it was a century ago. Investors had grown so immune to the consequences of war that bond markets from London to Vienna didn’t flinch after the assassination that provoked World War I. “Three weeks later, in the summer of 1914, the fear premium amounted to a total of one basis point. Then, in quick order, European markets ceased to function. A notable feature of this paralysis is that nothing of substance had changed – war had not been declared by any of the parties, but by now, minds were hyperventilating.” Indeed, complacency toward risk can quickly change. The detachment among investors from a remote catastrophe can turn on a dime. As Sheehan observed, even without shots being fired, financial markets went from full functioning to completely immobile.

“Unthinking Attack on Reason”

The Soviet Union in the late 1980s appeared to be a strong, though struggling, superpower. But by the end of 1991, the USSR had vanished, shattering the post-WWII bipolar world order. The speed and relative lack of bloodshed in its collapse were a profound surprise. It redefined geopolitics. In hindsight, we talk about the economic stagnation, central planning failures, and internal pressure that inevitably led to its downfall. Yet few analysts or political scientists predicted its imminent and peaceful dissolution. Most assumed that any change would be gradual or violent. Prior to the actual Black Swan event, those few who did forecast the imminent collapse of the Soviet Union were criticized and dismissed. James Dale Davidson, co-writer of the newsletter Strategic Investment, became an object of ridicule on the Today Show. He was scorned for supposedly dangerous and slack thinking. Newsweek magazine dismissed Davidson’s forecast as “an unthinking attack on reason.” Financial markets are also subject to Black Swan events. For example, on October 19, 1987, the Dow Jones Industrial Average plummeted by 22.6 percent in a single day. This marks the largest one-day percentage decline in history. This event, known as "Black Monday," was a total shock. The market had been on a bull run for years, and while there were some warning signs of an asset bubble, no one expected such a dramatic and sudden collapse. Experts scrambled to explain it after the fact, citing everything from program trading to investor panic. Yet, like Davidson’s forecast of the collapse of the Soviet Union, there were investors who saw it coming. They may not have predicted the exact event. But they did expect and anticipate it in a way that allowed them to exploit it. Taleb personally profited from Black Monday to the tune of $35 to $40 million by taking a large position in out-of-the-money put options on Eurodollar futures. Still, he wasn’t the biggest winner…

On Black Swans and White Lies

When the dust settled at the end of the day on Black Monday, hedge fund manager Paul Tudor Jones had tripled the value of his fund while drawing a personal payday of an estimated $100 million. This was an almost unheard-of sum at the time. How did he do it? In short, Jones attained these massive returns by doing something counter to what most other investors were doing. Over the five years leading up to October 19, 1987, U.S. stocks had nearly tripled. Most investors assumed the rapid price rise would continue without interruption. But Jones, having an appreciation of irregular, but inevitable, stock market cycles, had been predicting that the market was going to crash. What’s more, Jones had the courage and conviction to massively short stocks. So, when the Dow plunged 22 percent, he tripled his investor’s money and, in the process, pocketed $100 million for himself. As individual investors there are many lessons we can learn from Taleb and Jones. Black Swan events may be unpredictable, but the white lie is that they cannot be expected or anticipated. They happen. We should be ready for them. Moreover, we should appreciate the irregular, but inevitable, cycles of the economy and the stock market, and allocate a portion of our holdings to assets that don’t correlate with the overall stock market. This is a strategy that is accessible and available to everyone. And it is a strategy that can be used to secure outsized – asymmetric – gains when the stock market inevitably crashes. Positioning assets to profit from inflection points is fundamental to the Prism Investing Framework. Right now, the stock market, as measured by the S&P 500, is near an all-time high. Valuations are at historic extremes. Nonetheless, bubbles can last for a very long time. And as monetary expansion accelerates (the FOMC cut the federal funds rate this week by 25 basis points) the bubble could continue inflating. Still, one must recognize, the stock market’s continued rise in the weeks and months ahead because of monetary expansion will be in nominal terms. In real inflation adjusted terms, stocks will fall, as the dollar declines against goods and precious metals. Holding gold is essential in this environment. At the same time, maintaining cash reserves to buy assets at fire-sale prices following the inevitable market crash is also wise. You may not like it. But you can’t stop it. There’s a Black Swan event coming. At the very least, you should be prepared for it. [Editor’s note: Join the Economic Prism mailing list and get a free copy of an important special report called, "Utility Payment Wealth - Profit from Henry Ford's Dream City Business Model." If you want a special trial deal to check out MN Gordon’s Wealth Prism Letter, you can grab that here.] Sincerely, MN Gordon for Economic Prism Return from On Black Swans and White Lies to Economic Prism

The Unvirtuous Cycle of Rate Cuts

MN Gordon — Fri, 12 Sep 2025 08:05:34 +0000

President Trump wants rate cuts. Stock market investors do too. As do home buyers. Their reasons are slightly different. But they all generally believe rate cuts to be the path to greater riches and glory. Trump wants cheaper credit for several reasons. First, he wants cheaper credit so the Treasury can better finance the U.S. government’s massive $37.5 trillion pile of debt. The 2025 fiscal year ends September 30. Through August, the federal government has run a budget deficit of $1.97 trillion. About half of this – $933 billion – was merely to cover the interest on the debt. If interest rates were to drop by a percentage point or two the annual debt interest could fall by several hundred billion. This may buy a little time for the U.S. government’s fiscal reckoning. But it really wouldn’t change anything. The U.S. government is on target to run a budget deficit of $2.2 trillion for FY 2025. Lower interest rates, and thus a lower net interest payment, would only reduce the deficit to around $2 trillion – a difference of just over a half percent of the total $37.5 trillion of outstanding debt. In other words, it would do exactly diddly-squat for the nation’s finances. Trump also wants rate cuts because he thinks it will boost the economy. The big idea is that lower borrowing costs stimulate business activity. For example, a business owner may be enticed by lower interest rates to borrow money to expand operations. This could mean buying new equipment, opening a new location, or investing in new technology. Lower interest rates can also provide a boost to consumers. Lower borrowing costs for mortgages, car loans, and credit cards mean that monthly payments go down. This leaves consumers with more disposable income to spend on other things, like dining, shopping, or taking vacations.

Virtuous Cycle

The increase in consumer spending creates more demand for goods and services. To keep up with this demand, businesses need to hire more people. The cycle is pretty simple. When people spend more, businesses earn more. When businesses earn more, they're more likely to hire, which in turn leads to lower unemployment rates and a larger tax base. Lower interest rates also create a psychological boost. When people see the Federal Reserve taking action to support the economy, it can make them feel more optimistic about the future. This increase in confidence can lead to more spending and investing, which further fuels economic activity. For businesses, this confidence can be a green light to take on new projects and greater risks. They’re more willing to hire new employees or invest in research and development when they feel good about the economy’s direction. Economists sometimes refer to this as a virtuous cycle where lower rates lead to more borrowing and spending, which creates more jobs and boosts confidence, leading to even more spending and growth. The virtuous cycle is a chain reaction where a positive event creates a cascade of other positive outcomes. As lower interest rates spur spending and job growth, increased consumer confidence drives even more economic activity. This self-reinforcing loop may create an upward spiral of prosperity. Lower borrowing costs also mean more cash stays in the company, which can be used to grow the business, increase profits, raise the dividend, or buy back their own stock. These actions are all seen as positive by investors and can make a company’s stock more attractive.

Anticipation

The value of a stock is essentially the present value of all its future profits. To figure that out, analysts use a discount rate to account for the fact that a dollar tomorrow is worth less than a dollar today. The discount rate is tied to interest rates. When interest rates are lower, the discount rate also falls. This means that a company’s future profits are worth more in today’s dollars. So, even if a company's earnings don’t change, lower interest rates make the stock appear more valuable. When interest rates are high, you can get a decent return by putting your money in lower risk investments like government bonds or high-yield savings accounts. But when interest rates fall, the returns on those safer investments drop. This makes the stock market look much more appealing in comparison. Investors who are looking for a better return as interest rates fall will shift their capital from bonds to stocks. This increases demand for stocks and pushes their share prices higher. Stocks, at the moment, are extremely overvalued. They’re riskier than they were in August of 1929 and March of 2000. But that doesn’t mean they won’t become even riskier. Investors are currently geeking out over the Fed’s forthcoming rate cut following next week’s Federal Open Market Committee (FOMC) meeting. They’re pushing stocks higher in anticipation. As investors flock to stocks seeking higher returns, the increased demand drives prices higher, creating a self-fulfilling prophecy. So, with all the virtues of lower interest rates, why not just set them at zero?

The Unvirtuous Cycle of Rate Cuts

John Locke tackled this question over 330 years ago. If you missed it, he penned a still relevant essay in 1691 called “Some Considerations of the Consequences of the Lowering of Interest, and Raising the Value of Money.” Locke was intensely focused on interest rates. During his time, there was a push to lower the legal interest rate, much like the Fed lowers rates today, to try and stimulate the economy. Locke cautioned against this. He argued that the interest rate isn’t just an arbitrary number the government can impose. Instead, it’s a direct reflection of the value of money itself. For example, when you lend money, you’re giving up the ability to use that money for a period of time. So, the interest you charge is like rent for that temporary use of your capital. When the government artificially lowers this rate, it distorts the market. By pumping money and credit central bankers drive up prices of consumer goods, property, stocks, and everything else. Locke understood that the value of money isn’t fixed like the weight of a physical object. Its value is dynamic and tied to both the supply and demand of money and the productivity of trade. If there’s a large amount of money in circulation (high supply) and not much demand for it, its value tends to decrease. That's often a recipe for inflation. Conversely, if money is scarce, its value increases. For Locke, the true wealth of a nation wasn’t simply measured by its money reserves, but by its productive capacity – its ability to create goods and services and engage in trade. Money, in his view, was primarily a tool to facilitate this exchange. When you interfere with this tool – by manipulating interest rates or the perceived value of money – you risk disrupting the entire economic engine. Moreover, attempting to correct the trade imbalances caused by manipulating interest rates on the back end, like Trump is trying to do with his import tariffs, doesn’t solve the problem. Rather, it further disrupts the economic engine and limits the ability to create goods and services and engage in trade. As Locke discerned, economic forces are incredibly powerful. You can’t simply legislate them away or ignore them. Trying to artificially control things like interest rates without understanding the underlying economic realities leads to an unvirtuous cycle full of unintended, and often unpleasant, consequences. Over the last 112 years this has resulted in a steadily declining dollar and massive debt and deficits. This week gold, in anticipation of further dollar devaluation, exceeded $3,600 per ounce. Yet there’s still more to come… The professional schemers in Congress and at the Fed have a steady supply of dollar devaluation tricks up their sleeve. And as the dollar loses value, the dollar price of gold will continue to rise in kind. [Editor’s note: Unlock a resilient portfolio. Discover why gold thrives in market downturns, and how small investments can lead to big returns. Get your free gold investment guide today!] Sincerely, MN Gordon for Economic Prism Return from The Unvirtuous Cycle of Fed Rate Cuts to Economic Prism

Invasive Species

MN Gordon — Tue, 09 Sep 2025 08:05:45 +0000

The growth of government from day to day is often subtle. A new law here. Another regulation there. The imposition of an added fee. All with the best of intentions. But over a decade – or a century – like the introduction of an invasive specie to an unsuspecting habitat, the small additions of government take over the entire landscape. The citizenry is left to contend with – and pay for – the wreckage of overgrown government. Adding to government, however, is much simpler than subtracting from it. In fact, it is a rare day when a government takes it upon itself to shrink its scope and reach. Yet this is exactly what is happening in Argentina. Joel Bowman, founder and author of Notes from the End of the World, has been tracking the progress of what he calls the Greatest Political Experiment of Our Age. Today we check-in with Mr. Bowman from his interim perch in Villa la Angostura, for his exclusive boots on the ground perspective. From this remote locale, Bowman encounters Invasive Species and delivers the latest findings of Javier Milei’s chainsaw campaign to eradicate them from the administrative state. The results, thus far, are proving to be mutually beneficial to both personal freedom and economic prosperity. After giving it a read, if you haven’t already done so, please head over to Bowman’s website and subscribe to his newsletter. This will ensure you receive all his latest findings as they’re reported in real time. Enjoy! MN Gordon P.S. We have no financial arrangement with Bowman and do not profit from publishing his work. We merely find his observations and writing to be valuable and believe that you will too. --

Invasive Species

Cutting Big Government down to size… By Joel Bowman, founder of Notes from the End of the World

(A light dusting of snow covers the front deck this morning. Photo: Anya)

“The more corrupt the state, the more numerous the laws.” -Tacitus, The Annals of Imperial Rome (c. 110–120 AD) Joel Bowman with today’s Note From the End of the World: Villa la Angostura, Argentina... “This is my heaven, where I plan to live and to die.” The sun glistened off the water as our family clamored aboard the modest vessel. Nicolás, our captain for the day (and the boat’s owner-operator), spoke with the passion of a man who has discovered a deeper meaning in life. “When we came here from Buenos Aires, 35 years ago, I knew right away that this would be our new home. My wife and I, we raised our three children here in peace and tranquility, in harmony with nature.” Setting off from Bahia Manzano, a sheltered cove with clear and glassy waters, Nico guided the boat around a lush peninsula, with petite hotels and boutique cabins dotted among the trees.

(Petite hotels and lodgings, as seen from the Nahuel Huapi Lake. Photo: Anya)

“The pines are actually an invasive species,” Nico informed us. “They were introduced back in the 1930s as part of a national afforestation program, designed to establish and grow a local timber industry. But the pines grew fast, and they soon began taking over the native growth. “The plan was a total failure, thanks to high transport costs, corruption and general mismanagement... so naturally, the government expanded it, introducing more and more invasive species during the 1970s. “Now we have to manage them, like a pest. So we cut them back and plant native bushes, which help to regenerate the soil. It’s a constant battle, but unless we want our native trees to disappear altogether, it needs to be done.”

Deep Cuts

Meanwhile, back in the Big Smoke, Javier Milei’s motosierra continues hacking back the invasive species that is Big Government. According to the Minister of Deregulation Federico Sturzenegger, more than 53,000 government jobs have been axed since December, 2023. See for yourself...

(Source: Argentina’s Minister of Deregulation)

For those counting along at home, that’s ~31,000 centralized admin jobs, ~5,000 military and security personnel and ~17,000 state businesses, for a grand total of 53,345 pines felled nationwide. As Sturzenegger posted on his X account: KEEP THE CHAINSAW that allowed us to lift 12 million Argentinians out of poverty. While Kirchnerism tries to drag us back to the model of poverty and inflation, we move forward doing what's right: cutting useless spending so we can lower taxes for Argentinians. Thank you, President @JMilei, for the leadership. VLLC! And what has been the impact of these deep state cuts? According to the most recent figures, released late August, the long-strangulated Argentine economy continues to sprout new shoots... The latest, from La Derecha Diario: The National Institute of Statistics and Censuses (INDEC) reported that the Argentine economy is maintaining solid year-on-year growth, with a 6.4% increase in June compared to the same month of the previous year, according to data from the Monthly Economic Activity Estimator (EMAE). Twelve of the sectors that make up the EMAE recorded year-on-year increases in June, with financial intermediation standing out in particular, which grew by a remarkable 28.7%... Wholesale and retail trade and repairs, meanwhile, posted a year-on-year growth of 11.5%, being the activity with the greatest positive impact on the EMAE... The manufacturing industry also showed outstanding performance, with a 7.8% year-on-year increase, reflecting the reactivation of industrial production and the consolidation of value chains in key sectors. Other sectors that contributed significantly to growth include mining and quarrying (11%), construction (9.9%), net taxes on products (8.7%), and electricity, gas, and water services (8.6%). Of course, one swallow does not make a summer... and there is a lot that can change before the pending midterm elections, which will be held here on the 26th of October. We’ll keep our eye on the situation from the frontlines. Watch this space...

Snowdowners and Snowy Peaks

Back on the lake, Nico steered his boat north, past Playa La Escondida and the Rio Bonito, which streams down from the jagged snowy mountains that cut the horizon. The lakefront boasts some of the most expensive real estate anywhere in the country. “That’s Cumelén,” Nico pointed to the postcard coastline, studded with impressive mansions and home to the exclusive Cumelén Country Club. “There’s a nine-hole golf course and a clubhouse, and of course a private muelle, which residents can use for their yachts and sail boats. Most of the owners live in the capital. These are just their vacation homes.” We puttered around the corner in Nico’s little lancha, where he turned off the motor in a protected corner of the picturesque Bahia Kraft. Leaving his guests to wonder in silence at the surrounding beauty, our captain disappeared into the cabin below, emerging a few minutes later with a hearty picada of local cured meats and cheeses... and a round of Fernet and Cokes. “Most of us here don’t have a lot of money,” Nico said, handing the drinks around, “Not like these people, anyway. But we are more than happy. And in this life, that’s what really counts. Besides, being out here on the water, with a drink in your hand and the sun setting behind the mountains... that’s for everyone.” Stay tuned for more Notes From the End of the World... Cheers, Joel Bowman founder of Notes from the End of the World Return from Invasive Species to Economic Prism

How a Government Shutdown Can Restore American Independence

MN Gordon — Fri, 05 Sep 2025 08:05:37 +0000

“Give me liberty or give me death!” – Patrick Henry

Shutdown Season

The clock is ticking. Congress has until the end of the month to avert a partial government shutdown. Federal agencies, and their dependent employees, are counting on a last-minute deal to keep the money flowing to their coffers. Certainly, there have been government shutdowns in the past. In fact, since 1976 there have been 20 of them. Typically, they just last for a day or two. But the most recent partial government shutdown, which took place during President Trump’s 1st term – between December 22, 2018, and January 25, 2019 – lasted for 35 days. Government shutdowns, without question, can be highly disruptive. This is especially true in America in the year 2025 where a good part of the population is dependent on Washington in some form or another. Federal employees, contractors, businesses and individuals who rely on government services will quickly feel the pinch as federal dollars disappear. When it comes down to it, a government shutdown is a failure to pass a budget. Congress, having power of the purse is supposed to pass appropriations bills to fund federal agencies and programs. When the fiscal year ends on September 30th, if these bills haven’t been passed and signed into law by the President, government funding runs out. When this happens, federal agencies must stop all non-essential activities. This is a partial government shutdown, where all government services that aren't considered critical to public safety and national security are stopped. This all comes back to politics. Republicans hold a 219-212 majority in the House of Representatives and a 53-47 edge in the Senate. The chamber's rules require 60 votes to pass most bills. Thus, support from seven Democrats will be needed to pass a funding bill.

By Golly

Senators and Representatives are politicking. They want to shape the narrative so when there’s a shutdown the other party can be blamed. This week, for example, Senate Minority Leader Chuck Schumer wrote a letter to colleagues stating that, “The only way to avoid a shutdown is to work in a bipartisan way, with a bill that can get both Republican and Democratic votes in the Senate.” Schumer, of course, doesn’t want to avoid a shutdown. He wants to use the prospect of a shutdown to help the Democrats politically. One of the primary issues, as far as we can tell, is healthcare coverage. The One Big Beautiful Bill Act, signed into law on July 4, 2025, included cuts to Medicaid and Medicare. These cuts were needed to fund President Trump’s tax cuts. The Congressional Budget Office estimates these reductions could result in millions of Americans losing their health insurance coverage over the next decade. Democrats are looking to use the funding deadline to get their way. Senator Elizabeth Warren recently explained the strategery: “In September the Republicans are going to need to get a budget through to keep the government open and to do that they are going to need some Democratic votes. You want my vote – and I hope the votes of the rest of these Democrats – then by golly, you can restore healthcare for 10 million Americans!” The forthcoming budget impasse is a high-stakes gamble. Many lowly federal workers will be sacrificial pawns in the game. Whether a federal employee is furloughed or not comes down to whether they are essential or non-essential.

Ripple Effects

Essential employees are those whose jobs are deemed necessary to protect life and property. Military personnel, federal law enforcement officers, air traffic controllers, certain medical professionals, and the like. They continue to work, often without pay, until a funding bill is passed. Non-essential employees are workers who are furloughed or placed on mandatory unpaid leave. These are employees of useless administrative agencies like the Bureau of Land Management, the National Park Service, and countless others. They are not allowed to work. Federal contractors may also have their contracts suspended. Still, a government shutdown is more than just political fisticuffs by Washington bogtrotters. There are real, tangible effects on the lives of millions of Americans. When hundreds of thousands of federal employees are unable to spend their paychecks, it creates a ripple effect on local economies. Small businesses that rely on federal workers to consume their products or services struggle. Cafés next to federal buildings find their customers have disappeared from one day to the next. Delays in processing federal development permits can stall business expansion and investment. Data center projects on federal land, which are needed to support the burgeoning AI revolution, are put on ice. So too, the shutdown of non-essential services can affect a wide range of public programs. This means delays in processing applications for Social Security benefits or veterans’ claims. National parks and museums may close, impacting tourism and local businesses. A shutdown also has political ramifications. The party perceived as being responsible for the shutdown may suffer during the next election. And when the shutdown ends, there’s a ramp up period while things return to normal.

How a Government Shutdown Can Restore American Independence

A government shutdown can also impact financial markets. While the political drama unfolds in Washington, traders, investors, and analysts closely watch for signs of market instability. Typically, stock market investors consider a government shutdown to be short term noise. Unlike a debt-ceiling standoff, which threatens the government’s ability to pay its bills, a shutdown does not directly impact the Treasury’s ability to service its debt. This is why the stock market doesn’t usually panic. The S&P 500 has generally been flat during past shutdowns. The average return of the S&P 500 during the 20 government shutdowns that have occurred since 1976 is 0.04 percent. Moreover, during the 35-day government shutdown in 2018-19, where approximately 800,000 federal workers were furloughed or required to work without pay, the S&P 500 rose 10.3 percent. That doesn’t mean there won’t be a panic this time around. Stocks, at this very moment, are riskier than they’ve ever been. They’re even more risky than they were on March 10, 2000, at the peak of the dot com mania. If you recall, over the following 30-months the NASDAQ crashed 78 percent. The S&P 500 also lost nearly 50 percent over this time. The stock market, right now, is a bubble searching for a pin. The prospect of a government shutdown may deliver just the prick that’s needed to let out all the frenzied gas that has built up over the last decade. A bear market is long overdue. Now is as good a time as any to get on with it. Likewise, here at the Economic Prism we believe a government shutdown’s precisely what’s needed for the health and wellness of all Americans. Quite frankly, there’s no reason such a massive cross section of the economy should have ever been made dependent on the government to start with. In truth, the U.S. government is beyond broke. Without money printing and inflation, it cannot meet the obligations it has committed to. A shutdown – a lengthy one – may just be what is needed to shrink the size of government and restore some independence back to the American people. But let’s not kid ourselves. Americans, circa 2025, prefer comfort and safety to liberty and independence. In standard fashion, the political hacks in Congress will come to an agreement at the 11th hour. Some sort of continuing resolution to keep the lights on will be reached… …and America will continue down the ugly road towards the complete overturning of society. We anticipate the crisis moment will be triggered sometime before the next presidential election. [Editor’s note: Have you ever heard of Henry Ford's dream city of the South? Chances are you haven’t. That’s why I've recently published an important special report called, "Utility Payment Wealth - Profit from Henry Ford's Dream City Business Model." If discovering how this little-known aspect of American history can make you rich is of interest to you, then I encourage you to pick up a copy. It will cost you less than a penny.] Sincerely, MN Gordon for Economic Prism Return from How a Government Shutdown Can Restore American Independence to Economic Prism

Here Comes the September Swoon

MN Gordon — Fri, 29 Aug 2025 08:05:55 +0000

“As a dog returns to its vomit, so a fool repeats his folly.” – Proverbs 26:11

You’re Fired!

Government bureaucrats thought they had it made. High paying jobs that are practically guaranteed for life. Great retirement benefits. A certain air of importance. Now they’re walking on eggshells. Tiptoeing around. Trying to stay out of President Donald Trump’s crosshairs. Several weeks ago, Trump fired Bureau of Labor Statistics commissioner Erika McEntarfer. If you recall, he blew a gasket following revisions to the May and June jobs report, which adjusted total jobs created from 291,000 to 33,000. He said the numbers were rigged for political reasons and gave McEntarfer a pink slip. This week, it was Federal Reserve Governor Lisa Cook’s turn to get the boot. Cook had apparently taken liberties on several mortgage applications in 2021. She claimed two places as principal residences – in Ann Arbor, and Atlanta – to get better mortgage terms. Trump said this fraud is sufficient cause to remove Cook from her position. Cook disagrees. She has lawyered up. McEntarfer and Cook, from our perspective, are the lucky ones. Their jobs shouldn’t exist to begin with. Producing bogus data and price fixing interest rates are endeavors which cause more harm than good. Thanks to Trump, they now both have the opportunity to find gainful employment doing real, useful work. Jobs like fixing leaky faucets or packing meat that provide a real benefit to society. They should be happy that they no longer must waste their lives doing garbage work. Trump, for his part, will likely replace Cook with someone that’s one hundred percent favorable to his cause. Someone who is willing to cut rates, pump credit, and do his or her part to assist the Treasury in financing the U.S. government’s massive deficit. Now, after getting hammered on by Trump for many months, it appears that Fed Chair Jerome Powell is finally coming around…

Transitory Inflation?

In case you missed it, the annual central banking powwow in Jackson Hole came and went last week. Fed Chair Powell, in what may be his final appearance in Jackson Hole as the world’s most important central banker, delivered a speech on Friday, August 22. There he strongly hinted that the Fed is ready to pull the trigger on a rate cut as soon as the September Federal Open Market Committee (FOMC) meeting. Powell’s message was that the balance of economic risk is shifting. All year, the Fed has been holding the federal funds rate steady (currently between 4.25 and 4.5 percent). Over this time, inflation has ticked stubbornly higher while the labor market has cooled down, thus setting the stage for an episode of stagflation. The Fed’s attention since Trump came into office has been focused on limiting inflation. Powell’s remarks suggest the Fed is now more worried about the economy sputtering than prices spiraling out of control. According to Powell, it’s a “challenging situation” where, in the near term, “risks to inflation are tilted to the upside, and risks to employment to the downside.” What exactly does that mean? On the inflation side, Powell noted that the effects of higher tariffs across trading partners “are now clearly visible,” pushing up prices for consumers. However, he downplayed the long-term threat, stating, “A reasonable base case is that the effects will be relatively short-lived—a one-time shift in the price level. Of course, ‘one-time’ does not mean ‘all at once.’” This is all conjecture and guesswork. The logic seems to be that if the price increases from tariffs are just a temporary, one-off ‘transitory’ event, the Fed doesn’t need to slam on the brakes with higher rates. It can afford to focus on the other half of their dual mandate: maximum employment. Maybe so. But if you recall the last time Powell said inflation was transitory – in 2021 and 2022 – he sat on his hand while consumer prices spiraled to a 40 year high. Will he be wrong again?

Downside Risks to Employment

Powell spent part of his speech discussing the labor market. While the unemployment rate remains low, around 4.2 percent, recent jobs data, including McEntarfer’s downward revisions to previous months, has been signaling a slowdown in hiring. Powell described the current state of the jobs market as a “curious kind of balance” resulting from both supply and demand for workers slowing. He then delivered the line that really got the markets buzzing: “This unusual situation suggests that downside risks to employment are rising. And if those risks materialize, they can do so quickly in the form of sharply higher layoffs and rising unemployment.” The words “downside risks to employment are rising” are about as close as a Fed Chair gets to explicitly stating a rate cut is coming. Hence, the major stock market indexes spiked up last Friday to close out the week. So, what does this all mean for the September 16 and 17 FOMC meeting? Before the speech, the odds of a September rate cut of 25 basis points were already relatively high. After Powell’s comments, that probability skyrocketed, with market futures now pricing in the move as an almost certain outcome. Some estimates put the probability at nearly 90 percent. The markets believe Powell’s Jackson Hole speech was, in effect, laying the groundwork for a September cut. By cutting rates now, and making borrowing cheaper for consumers and businesses, Powell is hoping to get ahead of a cooling labor market. Unless there’s a strong August jobs report or a dramatic inflation surge, you can be certain there will be a 25 basis point interest rate cut when the FOMC meets next month. What to make of it?

Here Comes the September Swoon

Powell’s dovish pivot in Jackson Hole was enough to send markets rallying. Investors, anticipating a rate cut at the upcoming September 16 and 17 FOMC meeting, have been “buying the rumor” by bidding up stocks. The “sell the news” stage of the trade will come later and depends on several factors. The market’s reaction has already priced in a significant likelihood of a rate cut. The good news is already baked into stock prices. So, the magnitude of the cut is critical. If the Fed overdelivers, with a 50 basis point rate cut, speculators will celebrate with more buying. But if there’s just a 25 basis point rate cut, followed by a somewhat hawkish Fed statement, there could be a wave of selling. Powell’s speech was careful to say that the decision is not on a preset course. That it will depend on incoming data. Hence, investors and speculators will be closely watching new inflation and employment reports leading up to the September meeting. If these data points surprise to the upside, the Fed could be forced to hold off on a cut, leaving investors who bought into the rumor exposed to a selloff. Regardless of the outcome, many may sell to lock in profits immediately after the FOMC meeting to avoid being caught on the wrong side of the trade. In short, you can expect there to be wild price springs over the next three weeks… …and don’t forget, September has historically been the worst month for the U.S. stock market, with the S&P 500 averaging negative returns since 1926. By this, conditions are ripe for a September swoon. Prepare accordingly. [Editor’s note: Navigating these wild market swings can be tough. But what if you had a clear framework to help you? We created the Prism Investing Framework for just this reason. It helps you see the whole picture – from macroeconomics to individual stocks – so you can make smart moves and avoid the pitfalls. Ready to see the world through a new lens?] Sincerely, MN Gordon for Economic Prism Return from Here Comes the September Swoon to Economic Prism