America’s wars have often preceded good times economically—an “it’s darkest before the dawn” kind of thing. Paul Volcker’s war on inflation in the early 1980s is another example of this phenomenon: two years of hardship followed by 40 years of boom times.
This week in Hard Asset Insights, Morgan Lewis suggests that we might be in for another such bout of hard times before seeing good times again. Of course, the good times might not pan out, but the hard times seem to be upon us and we certainly hope the good will follow.
The hard times haven’t been something the Trump administration is anxious to communicate. That’s unfortunate. Perhaps it’s necessary. Americans are so steeped in compassion and empathy that they’ve become snowflakes who melt at 33°F—meaning the slightest non-soothing word. (We definitely need some more tungsten Americans who can hang in there to 6,192°F. And whether you love him or hate him, Trump certainly seems to be one of these.)
Ronald Reagan, too, soaked his revolution in endless affirmations of the unmitigated goodness of the American people. That shoe is a pretty close fit for many Americans. Others—well, let’s just say that those who have childish sensibilities also, figuratively, have a childish footprint.
In contrast to Trump, reforming President Javier Milei of Argentina was careful to make the matter clear to his people: “This is going to hurt.” He wasn’t kidding, but the Argentine economy is showing distinct signs of recovery. Mature minds there understood that pain often precedes gain, and they bore with the president through the hard times.
Despite its lack of favor in America, such honesty impresses this author. Truth is better than platitudes or feel-good assurances that omit critical information. It would be better if we were prepared for what is likely to be the very rough road ahead.
Key Takeaways:
- King analyzes president
- A sad day for world order
- The future might be bright, but the present’s looking rough
- Is the government taking a page from the McAlvany companies?
The McAlvany Weekly Commentary: The WWII Monetary Order Is Over
David interviews Bill King this week. Bill is the publisher of one of David’s most highly regarded publications, The King Report. You can find Bill’s bio here. They begin talking about Trump’s efforts to dismantle the administrative state—the deep state. Bill notes that “These are stupendous changes. If you say, ‘Well, this is going to be good in the long run,’ that’s true. But if you start dismantling hundreds of thousands of workers, you’re going to have a recession.” As a part of that summary, he notes that the illegal immigrants are receiving welfare benefits, part of which they spend as elements of the consumer economy. He also notes other parts of government spending that will be affected by DOGE, which will negatively affect the economy. Bill then looks at the stock market, which he notes is priced for perfection. Looking at recent price action, he sees that the market’s strength is not good right now. He then analyzes the efficacy of Trump’s cabinet and appointees. The interview then moves to the bond market and what it does in the economy and how it could be affected. He also covers the Fed rationale for letting inflation run hot, the amount of graft and corruption DOGE might be able to ferret out, and the 30,000-ft view of the stock market.
Credit Bubble Bulletin: Oval Office and the World
Doug devotes his weekly column to the failed meeting between Volodymyr Zelensky, Donald Trump, and JD Vance. “It seems too much to expect the wartime President of Ukraine—a nation that has suffered the loss of hundreds of thousands of its citizens, total destruction of scores of cities and villages, unspeakable war crimes, and is now in preparation for incredibly fraught negotiations with Putin—not to demonstrate strength and resolve. I listened to the entire Oval Office event, replaying the final toxic exchange. He didn’t kneel. He didn’t succumb to current heads of state protocol of phony charm and flattery. But it is dangerously unfair to claim that President Zelenskyy was disrespectful to the United States.” Doug finds that conservative pundit and politico commentary misses the point. “My overarching concern with the Trump administration was on full display today: They have a way—seemingly a wanting—to divide and polarize, albeit our nation or the world. An unstable world is even more dangerously fractured after today, and it is unjust to blame President Zelenskyy.”
Hard Asset Insights: Pain Before Gain?
Morgan turns our attention this week to seriously weakening economic data. His title for this week’s missive gives hope for the future, but the the economy is currently looking increasingly peaked. After presenting several telling data points, he concludes that, “the economy seems to be suddenly seizing up. The Atlanta Fed GDPNow first quarter 2025 real GDP estimate as of Friday had fallen from a positive 4.1% expectation down to a negative 1.5% contraction in just four very short weeks.” The culprit is clear: “The prime suspect for the very sudden weakening in the U.S. economy is the impact of aggressive DOGE cuts to government spending that amounts to roughly 25% of U.S. GDP. These DOGE cuts are likely long-term healthy, but they’re short-term painful. They might even threaten a plunge into recession.” Morgan also discussed the new America First Investment Policy executive order and its likely impact. As Morgan says, all these actions might bode well for the future, but they bode ill for the present—and we’re beginning to see exactly that. If one wanted to sum all the current happenings in a word, one might choose “volatile.” That being the case, investors will want to avail themselves of the single investment that has calmed volatile waters for millennia—gold. Such is not partisan analysis. It’s time-tested and proven.
Golden Rule Radio: Markets Face Pullback
Rob and Miles anchor the program this week. Miles’s chart recap finds the precious metals down, the S&P down, and the dollar down slightly. Seeing such uniformity in declension, Miles channels Cuba Gooding, Jr.: “Show me the money!” Actually he phrases it a bit less assertively, “so where did the money go?” Rob notes that it didn’t go into bitcoin, which is down sharply. Rob then discusses the government’s intended Sovereign Wealth Fund, which will contain assets—speaking of channeling—that look curiously like some of the assets preferred by McAlvany Wealth Management. This will offer investors a stake in real things instead of, for example, having their three-month T-bills converted into 30-year Treasury bonds—as was proposed some time ago as a way to get out from under the government’s refinance burden. The hosts then return to precious metals picture, and put recent action in context. Unsurprisingly, their sanguine view of the metals’ future remains fixed. If anything, it gets stronger with time.
