"Doug Casey on Trump’s $5,000 Checks
and Buying Votes With Printed Money"
by International Man
"International Man: President Trump wants to send every adult American a $5,000 “dividend” if Republicans keep control of Congress. JD Vance went on Fox and defended the idea. We’re talking about roughly $1.3 trillion. What do you make of this?
Doug Casey: The US government, especially since it’s been led by Trump, is like a drunk gambler on tilt. Money means nothing; it’s become an abstract concept. Back in the 60s, a senator named Everett Dirksen joked: “A billion here, a billion there, and pretty soon you’re talking about real money.” Now we’re talking about trillions. It won’t be long before Trump has to ask his science advisor, assuming he has one, what comes after a trillion.
It’s not the first time that an absurd thing like this has been proposed. In 1972, George McGovern, the Democrat running against Nixon, sincerely proposed giving a thousand dollars to every American, in today’s dollars, that’s the equivalent of about $8000. The proposition made him into something of a laughingstock. But the US was a different country then in many ways.
Today, I suspect Americans overwhelmingly approve of the concept. The middle class can rationalize it as a tax refund, welcoming the money to pay down their staggering debt load. The lower levels of society would use it to buy alcohol, marijuana, cocaine, and trinkets.
I doubt there would be any serious discussion based on economic or philosophical grounds. Boobus americanus sees it as “our” money. “Hey, the government has trillions. Most of it goes to rich guys and foreigners. It’s about time I saw some of that cash!”
International Man: The administration calls it a “dividend,” as though Americans were shareholders receiving profits from a successful enterprise. Isn’t it really just another transfer payment, welfare, financed by debt and money creation?
Doug Casey: Exactly. The US government runs a $2 trillion deficit and carries over $40 trillion in debt; it’s terminally and irretrievably bankrupt. Do you remember when Trump said that his disastrous tariffs would allow the government to eliminate the income tax? Or that DOGE was going to send everyone a check? The public has a short memory.
Trump made this $5000 offer as an overt bribe to naive Americans in order to win the midterm elections this November. He’s said as much. Who knows what he can get away with, but my understanding is that Congress will have to approve this handout. It’s very unlikely to happen. But, seeing that they’re almost certain to lose in November, the Republicans might somehow push it through. Yes, I know it’s a crazy thought. But insane things happen all the time within the DC Beltway.
Trump understands that without some “deus ex machina” he’s going to lose in the midterms. Then, with the Democrats in charge of both houses, impeachment proceedings would begin immediately, among many other things. I don’t know if they’ll succeed in impeaching and convicting him. But I’m willing to bet that Trump will not complete his term in office for any number of reasons - death, disability, the 25th Amendment, or simply quitting so that Vance can pardon him and his crew.
However, the fact that Vance is going along with Trump’s mad plans may kill his chances of being a candidate in 28. I don’t know who the Republicans will run, but they’ll all be viewed - correctly - as Trump sycophants.
Meanwhile, the Democrats only have people like Newsom, Kamala, and AOC - thoroughly loathsome socialists and opportunists. The government and politics are much more important than ever before in American history, but the quality of the people running for office is probably at the lowest level in history. This augurs very poorly. And that’s not counting what will happen if - when - the markets and the economy collapse, or World War 3 starts in earnest, or something like a civil war materializes.
At a minimum, Trump doesn’t seem to understand that adding $1.3 trillion of cash to the economy will supercharge inflation. Maybe we’ll muddle through. We always have. Or maybe AI will conjure up a dystopian sci-fi outcome for us.
International Man: Trump and Vance argue that tariff revenue could help pay for the checks. Can a government really create a genuine dividend by taxing Americans indirectly and then handing some of the money back to them?
Doug Casey: The idea is absurd. Tariffs are paid by citizens, not foreign exporters. They ultimately come out of the economy through higher prices and reduced trade. Tariffs result in a lower standard of living, more revenue in the hands of the government, and less in the hands of the people. The fact Trump wasn’t met with howls of laughter and boos when he floated the concept tells me that the economic understanding and the moral character of U.S. citizens has reached a new low.
Trump’s tariffs aren’t being used as a substitute for other taxes, but in addition to other taxes. I know Trump thinks that tariffs will reinvigorate manufacturing in the US, but he’s wrong. The way to bring manufacturing back to the US is to make it the best country in the world to start a business. That means radically reducing regulations, bureaucracy, and red tape, radically reducing taxes, eliminating welfare, and instituting a sound currency. Unfortunately, none of that’s going to happen for many reasons that we can’t discuss here.
Furthermore, the arbitrary and aggressive way that Trump is applying his tariffs is making active enemies around the world. Foreigners will reciprocate and punish Americans in any way they can, as the Canadians are doing.
People don’t realize how serious this can be. The War Between the States from 1861 to 1865 was not, contrary to popular belief, about slavery. Tariffs were the largest single driver of Southern secession. Although slavery was hotly debated in both the North and the South, the South seceded mainly because tariffs were raised to almost 50 percent. At that time, tariffs covered about 90% of the U.S. government budget, and the South paid about 85% of those tariffs with its imports from Europe. It made no sense for the South to stay in the Union. But it seemed to make a lot of economic sense for the Union to force it to remain.
Of course, conditions are totally different now. But the U.S., like the world at large, has become very unstable. Trump is playing with fire by creating chaos with his whims.
International Man: This seems like an important escalation, with politicians openly promising thousands of dollars in cash shortly before an election. Where does that lead once voters come to expect direct payments from Washington?
Doug Casey: De Tocqueville said: “The American Republic will endure until the day Congress discovers that it can bribe the public with the public’s money.” I’d say that day has arrived.
This is genuine Bread and Circuses stuff. Trump’s $5000 “dividend” is an overture to a guaranteed annual income. The state already controls most aspects of citizens’ lives through its taxes, regulations, and money creation. Direct payments from the government put another nail in the coffin. The idea of America is being buried before our eyes.
Those who believe that the Republicans will save the day if they win in November are worse than naive. I’d say they’re stupid. I define stupidity as an unwitting tendency to self-destruction. Like Trump, the Republican Party has no guiding morality or principles. Their only redeeming characteristic is that they’re not as bad as the Democrats. But maybe they’re even worse because, by pretending to be capitalists, they give capitalism a bad name.
International Man: Suppose Washington does inject another $1.3 trillion into an economy with inflation already running hot. What happens next, and how can investors prepare?
Doug Casey: The fate of the dollar is basically sealed. Inflation is going to go much higher, along with interest rates. The bond market is in big trouble. If you have any bonds, you should dump them. The extra funny money might prop up the stock market for a while, but it’s already at ultra-bubble levels. When it eventually crashes, the government will be forced to “step in” and create even more debased fiat currency."
No comments:
Post a Comment