In today’s issue:

  • The US has taken Donald J. Trump back
  • There are tides in the affairs of politics
  • Big Government means big spending

Yes, I know I’ve been untrue
And I have hurt you through and through
But please have mercy on this heart of mine
Take me back and try me one more time

—Ernest Tubb

Finally, the election fever has broken. The sun still shines. The world still turns. Beer still goes flat.

The nation has taken Donald J. Trump back. It will give him another try.

Last week came an opinion from Rana Foroohar in the Financial Times. It’s not too late, she says. We can still make America great again. All we need to do is to identify the problems and make the right choices. Just as we did in the 1890s.

Both countries [Britain and the US] were ultimately able to pass sweeping reforms that improved workers’ rights and labour standards, increased access to education, enfranchised new groups of voters and so on.  The national renewal of Victorian Britain and Progressive-era America reflect this point. In both cases, political and business figures, activists, trade unions and various grassroots movements were part of a robust national discussion about reform. I’d argue that this factor is also present in the US today where, despite political polarisation, there is a rich bottom-up debate about how the country should change.

Oh my.

Ms. Foroohar completely misunderstands what happened. She thinks that anti-trust legislation… labor protections… giving women the vote — the conscious efforts of well-meaning citizens in the late 19th century — pulled the country out of a funk.

What really happened, we believe, was just the opposite. The 1880s were the most successful years in America’s history… with more wealth and more freedom than we had before or since. But then, prosperity and success turned Americans’ heads. They came to believe that they could force other people to do things that would make a better world. They passed new laws. They wrote new rules. They hired G-men…government men… to enforce the ruling elites’ decrees.

“There are tides in the affairs of men,” wrote Shakespeare. Just as there are ‘Primary Trends’ in markets… there are tides in politics, too… powerful currents that have a life of their own. These deep currents are not driven by what people want or what they think; instead, like an unrelenting river, they carve the valleys, shape the stones, and erode the shorelines of human thought.

And now… in what direction does the water flow? Whatever it is, the president is elected to follow, not to lead. He drifts with the Primary Political Trend; he doesn’t create it.

For all the arguments about whose economy — Trump’s or Biden’s — was better, the truth is, presidents don’t really affect near-term results very much. Whatever trend was underway when the new president entered the White House is the same trend we’re likely to have when the president leaves.

Year after year, administration after administration… ever since Jimmy Carter left the White House, federal power has increased. Budgets got bigger. Deficits got larger too. The three biggest spenders in US history (in terms of the percentage of debt added) were Roosevelt, Wilson and Reagan, in that order. Roosevelt had a war to deal with. Wilson found a war he could get into. And Reagan thought he was in a life-or-death struggle with communism. No matter what their thoughts… they all did the same thing — expanding the reach of the Federal government.

Reagan was obviously mistaken. By 1991, communism — a creed based largely on fantasy economic theory — had collapsed. At that point, the US could have enjoyed a massive “Peace Dividend.” For the next 33 years, America faced no real military challenge.

But by the ‘90s, it was too late. The current was too strong. There was no choice. Big Government was triumphant. And Big Government means big spending, big budgets, big deficits, big debt… and knucklehead, big-shot delusions.

And now, happy days are here again. Mr. Trump – whose first administration added more new government debt/year than any other in history – can get back to work.

Stay tuned.

Regards,

Bill Bonner
Contributing Editor, Fortune & Freedom

PS Note from the editor: Over on this side of the pond, the team at The Fleet Street Letter are warning that one surprise government borrowing announcement could punish the stock market… pension funds… and house prices. When the panic starts, one group of people could get much wealthier. Find out how you could be one of them.