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"Net interest on public debt grew by 11%, or $114 billion, to a total of $1.1 trillion in fiscal year 2026, according to a report published yesterday by the Congressional Budget Office. The chart above shows government spending consistently larger than tax revenues going back 50 years."
"More Money, More War, More Power"
by Bill Bonner
Paris, France - "This is our favorite season in Paris. Yesterday, we walked up the Blvd. Raspail, a light drizzle on our face...and the large leaves of the plane trees wet and slippery beneath our feet. By four o’clock in the afternoon, it was already sinking into gentle darkness. But the shops were lit up, beckoning to passers-by. It was like an impressionist painting, with the bright lights reflected on rain-slick streets.
For many years we’ve owned a bookshop on the Blvd. Raspail, specializing in ancient history and classical, Greek, and Roman literature. The windows there, too, were well lit...showing the latest oeuvres, highlighted by a special, illustrated edition of Ulysses. We stopped in to say hello and then we continued to our rendezvous.
“Paris doesn’t seem to be on fire,” we said to our companion at a small café, just to open the conversation. “No, it’s mostly over at the Place de la Republique and not that impressive.” “Aren’t there going to be more demonstrations today?” “Oh no...they take place on the weekend.” “How about tomorrow; it’s a holiday?” “Are you kidding? The protestors are going to take the day off.”
Back in the USA...Yes, this is where it gets interesting. We draw upon the Washington Post for intel: “I don’t think my Democratic colleagues are going to give any more money to defense unless we agree to give the same or larger amount to domestic spending,” [Sen.] Kennedy told reporters.
Whoa...whoa...whoa...Were his eyes taped shut last week? Was his TV turned off? Didn’t he get the news? The voters want less inflation and less war...not more. But here is the august senator from the Bayou State eager to get together with the Democrats to defy the public by going even further in the direction ‘The People’ have just declared they don’t want to go.
The two problems that stuck in voters’ craws were obvious...and, apparently, easy to fix - inflation and war. The attack on Iran could have been called off. POTUS could have proclaimed victory and moved on.
Neither is inflation a curse of the gods. At least in the beginning, it’s a deliberate policy designed to shrink the burden of US debt...by shrinking the dollar, so that the feds can spend more of them. Instead of making war on the Iranians, Trump could have announced a campaign to wipe out inflation. It wouldn’t have to be a full or immediate success. But cutting deficits, reducing borrowing, and eliminating tariffs would at least be going in the right direction. Moneywise: "Without Trump’s tariffs, goods prices would have dipped, say New York Fed economists - as 71% of Americans say they’ve driven prices up"
Whatever the odds of victory in his war on inflation, the voting public would have been on his side. Instead, Trump threatened more war...and proposed to build an ‘Arc de Trump’ in Washington, a monument to victories that never happened to be built with money that was never earned.
And the news from yesterday tells us that if there were a war on price increases, the smart money would probably bet on inflation. Newsweek: "Price increases did not slow as much as was anticipated in October, according to the latest inflation report from the Department of Labor, with energy and several other consumer costs continuing to drive elevated inflation ahead of the midterm elections. According to Tuesday’s report from the Bureau of Labor Statistics (BLS), consumer prices rose 0.4 percent in October. Ahead of the release, the consensus among analysts had been only a 0.3 percent increase in the Consumer Price Index (CPI)."
Let’s see. Four tenths of one percent x 12 = 4.8%. To remind you, our guess is that the US is going to suffer a bout of hyperinflation, not just inflation. Our $40 trillion in debt makes steady-state, moderate inflation impossible. As the debt grows, so does the volume of ‘money.’ And so does the interest cost of carrying it, so that more borrowing (and printing) becomes necessary. At that point - about where we are now - the whole scam becomes unsustainable. The inflation tail wags; the poor dog gets smacked against the furniture. Talk about unhappy voters! Let them get a whiff of hyperinflation and then we’ll see some real discontent. But that is still in the future...perhaps years ahead.
You may be wondering if this has anything to do with the question we left you with yesterday. And yes, it does. Why would so many Republicans allow themselves to be swept away in the mid-term elections? Why couldn’t they shift to the ‘peace and prosperity’ policies the voters wanted? Fox: "Conservatives stunned by ‘catastrophic’ midterm blue tsunami, blame Trump’s Iran war, high gas prices."
The ready answer - because they are stupid - is too facile. We have no reason to think that they (with exceptions) are any dumber than anyone else. Like the rest of us, they just respond to the opportunities and threats in front of them. The fuller answer is that people come to think what they must think when they must think it. And both Republicans and Democrats must think that sticking with the formula they both love - more spending, more money, more war, more power - is the way to go. It may not be good for the country...or for its citizens. But those are abstract, remote concerns. More important, they believe it is good for themselves...Even if it risks a peasant revolt. More tomorrow."
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