Dear Reader,
First, I want to let you know today is National Laugh Day. They always say laughter is the best medicine, so keep that in mind and try to laugh today.
On a separate note, Treasury Secretary Scott Bessent has continued his press tour trying to get out there and explain to Americans the dire financial situation the U.S. finds itself in.
The way I see it, there’s good news/bad news. Here it is:
Bessent says the White House is heading off a “guaranteed financial crisis.”
Isn’t that the truth?!
Here’s an excerpt from his Meet the Press interview that a lot of readers have asked me about…
“What I could guarantee is we would have had a financial crisis. I’ve studied it, I’ve taught it, and if we had kept up these spending levels everything was unsustainable. We are resetting… we are putting things on a sustainable path.”
He’s talking about crack one of the five cracks I talk about the U.S. facing in Midnight in America.
We started talking about this in July…
We published a book and thought about putting it on Amazon, etc. but decided to keep it just for our customers – VIPs who’ve paid us a lot of money to get this information. Because it’s millions of dollars’ (and dozens of gray hairs’) worth of experience!
It is our treasure map.
But since we put out Midnight in America for our members, when most of the country was blinded by the euphoria of AI, that has (finally) receded, or at least people are starting to see the other side of the argument.
They’re starting to see some of the cracks we’ve been talking about…
Starting to see and starting to raise the alarm on the risks, which is why the market has come down.
Tariffs really speak to crack number five, which is China.
You could look at Trump’s tariffs basically like a great reversal from letting China into the World Trade Organization in 2000, and China sucking 15 million manufacturing jobs from the United States, Britain, France, Germany, etc.
We’ve seen a hollowing out of the middle class of these Western countries, which has given rise to this anger and populist movement.
That’s crack number five.
We’ve discussed the China threat and the many military dimensions of China over the past few years.
Which is what Trump is preparing for now.
So the market has finally sold off.
And we seem to have hit a correction bottom.
We’ll see. It’s a leg. It seems to have some support.
What happens psychologically now is market participants are in a “wait and see” mood.
They’re saying, let’s see what happens…
If risks subside in the short-term, the market would go up.
If risks increase, the market will continue down.
Everything – whether it’s tariffs, debt – it’s all tied to the five cracks we talked about in Midnight in America.
Vis-à-vis China, it’s like we’ve created a Frankenstein monster. The guys that ran our government through that thought, we’ll make China rich! Then they’ll become democratic.
You know what?
These bozos didn’t grow up in a neighborhood like I did, in Queens, where a power competition happens in the schoolyard.
You didn’t just hope somebody turned nice.
It’s not the way the world works.
These guys grew up in Ivy League towers reading nonsense theories.
They don’t understand how real global power competition works.
They can’t have read history – this has just been shocking to me.
But we’re at a new level here where the markets are contemplating risk and reward.
People are finally coming around to what we’ve been talking about since last summer – they’re seeing the split-screen…
Investors understand there’s reward – deregulation, etc., etc….
But have finally come around to see that there’s risk, too.
Right now, Trump and Bessent are faced with a couple of choices – one, you have to cut spending – we can’t keep spending this amount of money or there will be, in the Treasury Secretary’s own words, “a guaranteed financial crisis.”
So they can cut entitlements, or they can cut 25% of the federal government employees.
They’ve chosen the latter.
Economists have argued for a while that the government has sucked in all these employees, creating a tight labor market so folks like me, and many of our readers – independent business owners – have had a hard time hiring workers.
So, this is a good thing.
We’ll move this 25% of the workforce off the public books and push them into the labor market, which will also help with inflation.
There’s a lot of dynamics at play here and a lot of them are interrelated.
This is like an ant farm…
It’s an ecosystem.
Everything’s connected in ways that are very interesting for a student of history in human nature and psychology, which is what we must be if we’re going to be smart participants in the financial markets.
“The Buck Stops Here,”
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