ECONOMIC SHOCK AND AWE: The Carnage Begins!

In claiming 2024 would be the “Year of Chaos,” I clearly was a little ahead of time, but not much. Now we see the chaos blowing up economic disruptions all over the globe. It could turn out to be good because there are a lot of embedded bad ideas and bad people that need to be busted up in a nation that is rapidly spiraling into a debt vortex. It could also turn into the worst economic disaster in US history as the great leviathan that is the United States is ripped open by its own people. And we got to see all of that on display today with front-row seats in an endless rampage of headlines that I could not even keep up with. I’ve been writing feverishly since 5:00 in the morning, with a blizzard having shut down work, which allowed me to devote my time to this.

As the Trump Tariffs hit like the equivalent of George Bush’s “shock and awe” in Iraq this morning, Mexico and Canada began immediate retaliation, as I had warned in the last couple weeks we could expect. The Dow plunged 600 points in early morning trade in response, and oil prices surged because of how the tariffs would impact Canadian oil. Then Mexico immediately capitulated and said that, instead of retaliating, it would rush 10,000 troops to the border as Trump demanded to prevent smuggling and immigration. The Dow recovered while still in morning trade, and oil prices plummeted.

Canada, on the other hand, appeared to be staying with firm retaliation, immediately imposing its own 25% tariffs on the US, while Europe threatened a trade war in response if Trump did the same thing to the EU that he just did to US friends, Canada and Mexico, with whom he had reached a trade agreement that was supposed to last until 2026, showing that his word may not mean much on those agreements if he finds more to get mad about down the road.

China got hit with another 10% tariff on top of the 25% that already hangs over many Chinese products. China immediately capitulated by saying it would begin negotiations.

Denmark reminded the US that Greenland is not for sale, but said a deal could easily be struck for more US military presence in Greenland to bolster NATO.

Musk the Grand Master

Simultaneously, Elon Musk swept in as Trump’s henchman in the early morning to immediately shut down entire branches of the US government and portions of all branches of government. He slammed the doors closed at USAID, or the people at USAID slammed them closed on Musk; but he and Trump threatened to bust them open with the US Marshall, and Trump said, “Try us.” Then Elon programmed their website out of existence for the present time, saying the whole institution is so corrupt and antithetical to US interests and used by the CIA to create regime changes that it must be destroyed entirely. Trump agreed that might be the case.

The man who is reportedly worth over $450 billion, is establishing himself as a Washington power player—the likes of which there is little historical precedent.

"I do think that there are multiple examples, but Elon Musk is bigger than all the previous business leaders in government put together," said one source close to Trump's transition.

Because all of Trump’s and Musk’s actions have huge economic impact, it’s hard to decide whether to list the headlines under Politics or Economics, so you will find plenty under each because there are so many to go around today. One thing is certainly clear, Trump has already become more than just “czar for a day.” He has completely seized control of the entire government. Headlines note how the Republican-led congress has acquiesced to being stripped of all power in order to let Trump do the dirty work of busting things up.

Other headlines report that this is all certain to end up as a showdown in the Supreme Court; but, until Trump’s Supreme Court takes action, many parts of government are now simply shut down, never mind that the president may not have the power to shut down operations mandated and funded by congress, which has always controlled the purse strings. For now, it no longer controls them. In fact, congress was set to pass a spending bill with full Republican support to avoid a government shutdown until Elon warned today, among his vast sweep of actions, that any member of congress signing House Speaker Mike Johnson’s bill should be thrown out of office in two years. Suddenly, support began cracking up, and names fell away from the total support that had been pledged only minutes before.

Even President Trump, in a post of his own, warned Americans that they will certainly feel pain from his present actions, but promised it will be worth it in the end. We are going through a dramatic shift that has to happen to purge the evils that encircle and entwine the nation, he said, but will emerge in a new golden age. Anyone who has followed ideas of the Fourth Truning, knows these epoch changes don’t happened that easily.

What happens if it doesn’t go as Trump promises?

What if this goes like the lockdowns Trump approved under Covid that, after just one month, created economic damage that lasted for a few years? Many things rebounded quickly when the lockdowns were ended. A good number of businesses, however, ceased to exist forever. Real estate surged like never before then froze over like never before. Commercial real estate was virtually destroyed as an investment asset. Employment crashed deeper and quicker than at anytime in history, then skyrocketed faster than anytime in history. Yet, it still did not rise as much as it had fallen. Even today, the labor force participation rate remains well below the trend it had been on. Labor metrics were broken and haven’t functioned meaningfully since. Inflation went through the roof and then got largely beaten down by the Fed, but that took two years, and it didn’t ever get beaten down all the way and is now slowly rising again. Meanwhile, everyone paid the price of beating it down in the form of much higher financing costs on their credit cards, on US public debt, on mortgages and on business credit.

All of that resulted from about a month of lockdowns that were ill-conceived and quickly reversed, but the supply-line backups from the breakage lasted many months, and the recovery costs trillions of dollars in newly printed money that ran the US debt up at that most astronomical pace in history to reach a zenith of a trillion dollars in new debt every 100 days. We are still paying that price. Trump may intend to shut that debt escalation down by shutting down government, but the wreckage from another shutdown this time can easily be just as severe of an earthquake as the one he set in motion when he allowed the Covid shutdowns and then started many of these massively expensive lockdown-bailout programs during the final year of his first term.

The damage that can happen when you just suddenly hand the keys of government offices and computer passcodes over to your billionaire henchman and seize government operations without even studying what you are terminating are inestimable. Elon and the Donald are taking a broad axe to the entire government and ordering immediate 10-25% layoffs across the board. Government agencies today are announcing immediate or shortly-forthcoming major layoffs.

Some of those named today like the Department of Education, the Environmental Protection Agency, USAID, and the FBI, do need major curbing of their programs and powers. However, when you don’t do it with a scalpel but with a lawn mower, the damage you are creating is likely to be a bloody slaughter. We will only find out in the months ahead how many people who were under witness protection were killed because their protectors were fired in the top-down major cuts or quit when their paychecks didn’t process. We will find out down the road how many more air-traffic control towers became understaffed due to today’s Treasury takeover shutting off government paychecks. What key people who process Social Security paychecks just got locked out of computers so that perhaps none of the elderly get the check they need on a month-to-month basis to keep the heat on in the dead of winter? (And, yes, they are entitled to that money because it is their money that was taken forcibly away from them on a pledge of its return for decades.) What Medicare and Medicaid programs will suddenly shut off because certain low-level drones didn’t show up for work to process claims? Some Medicare and Medicaid systems did shut down for part of the day today. What people who are the ones who know how to turn these things back on will never show up again in anger over being terminated? What military operations that perhaps shouldn’t be happening may shut down in various parts of the world in a more deadly manner due to immediate logistics disruptions in both the private sector and government sector due to lack of government pay? How many unnecessary deaths might happen because of how they suddenly ground to a halt because Elon didn’t realize that shutting off the USAID computer systems and seizing control of Treasury computers would disrupt operations right at critical moments? Sure, some of those battles should never have been started in many cases, but this can easily turn out to be a worse disaster than the withdrawal from Afghanistan because there is a smart and orderly way to wind down those kinds of military operations, and there is a completely dangerous way of just shutting off components they relied on without even knowing the military relied on those components and without warning, as may have happened today when vast systems were shut down without warning.

The risk here, as Trump assures his supporter to stay with the program, in spite of the pain he warns them they definitely will feel, is the same as the risk I pointed out when the Fed kept insisting the pain of inflation was transitory. That belief led the Fed to stay with policy that was creating an inflation disaster until the disaster could not be avoided. There is the risk now that Trump and his supporters will believe the pain of today’s sudden actions will be transitory just like inflation was supposed to be transitory and just like Trump believed the pain of lockdowns would be. He may end some of these actions in a month just like those lockdowns only to find out slowly that it is not transitory, and that today’s actions keep inflicting damage for so long that it becomes nearly irreparable, as happened with those major disrupted supply lines that never reformed as they had been. Trump & Co. may start so many chain reactions that they don’t even know about that the US will be avalanching into the worst depression of all time before they finally see what they’ve initiated and stop doing what they are doing, and the avalanches will have only just begun.

Who knows how nations that are suddenly being strong-armed today will respond with counter-measures and how this kind of sudden smackdown may sour relations for years to come. Nations may switch to European and Chinese and Japanese and Canadian and Mexican and Indian products and change their supply chains for good, deciding that the US is just too volatile to do business with. Even if you do not follow through, once you are seen as an unreliable party to do business with, your relationships will suffer. US businesses pulled away from China permanently in response to China’s lockdowns during Covid, and businesses all over the world could do that with the US, maybe not entirely, but in a way that permanently diminishes US market share. You act in ham-fisted ways, you risk getting walloped back with the whole pig.

With Canadians now jeering the US national anthem at sporting events and stripping all US alcohol off the shelves, in spite of how much they love alcohol, along with a good number of other products today, an anti-US sentiment is settling over markets among Canadian citizens, and that might just continue to carry a bad smell if it is given time to fester in a stew of more activities of this kind.

Canada is also considering non-tariff measures, potentially relating to critical minerals, energy procurement and other partnerships, Trudeau said…. Trudeau encouraged Canadians to buy Canadian products and vacation at home rather than in the U.S…. "We didn't ask for this but we will not back down," he said.

Sure, those removals don’t mean much by themselves, but if the US, acting in these ways, disses enough consumers in enough countries, a good number of international consumers may just move away from all US products, as much as they can, for good out of anti-American sentiment. This, after all, is just the first week or so of Trump’s activities, and with Trump’s actions likely to continue bigly for a long time, the level of resentment toward the US that can build up could become significant in the months’ ahead. People don’t like being arrogantly rough-housed, and once they move on from you, they don’t always easily come back. Sometimes they’re just done with you and your arrogant or bullying ways.

Everyone loses in trade wars, so where to find protection

While Jim Rickards says this is a win-win deal in the end where Trump will make the world a better place, but not without a big recession that was already in the making first, Bill Bonner begs to disagree. Like the Wall Street Journal, which published a big piece calling this the stupidest trade war ever, Bonner calls it a lose-lose war. All sides are certain to lose in his opinion:

The idea of punishing trade is silly…. There are win-win deals. There are win-lose deals. And there are lose-lose deals. Mr. Trump has found one -- a deal so bad that a poll of ‘39 of the nation’s leading economists’ found not a single one who approved of it. The Wall Street Journal called it ‘the dumbest trade war in history.’

Well, OK, but I find a lot of economists are dumb … especially about economics where they are the last ones to be able to tell you when markets will be troubled or the economy will go into a recession. They often cannot see a recession when they are standing in the middle of one. They couldn’t shoot a duck that was standing on the end of their duck blind. All the same …

Everybody knows that, at the very least, tariffs will raise prices and make Americans poorer. They will be stuck with inferior products at high prices made by bad industries with good lobbyists. That’s already happening in the auto sector.

In this regard, Trump is merely following the Biden administration, which imposed a 100% tariff on Chinese-made electric cars. Even with a 100% tariff, the Biden bunch worried that the cars might still be attractive to US consumers… so they added more restrictions, effectively banning the lower priced/higher quality cars from the US market. Now, Americans pay twice as much for a similar car.

And that is the way trade wars typically do go, I’ve warned all along that tariffs are taxes American consumers ultimately pay, not the Chinese or other nationalities that export to the US. The importers pay the tariff directly and pass the cost along in the cost of goods sold.

Team Biden argued that China’s cars should be kept out for ‘national security’ reasons. The Emergency Economic Powers Act of 1977 apparently gave him the authority. But where’s the ‘emergency’ on the steppes of Saskatchewan? Where’s the national security risk in Ottawa?

Being an enemy of the US empire is dangerous. But being a friend is not much better. Trump is threatening to take Greenland from our Danish allies…and the Panama Canal from our Central American friends.

Friends and enemies alike are now looking for alternatives to US consumers, US products and the US dollar. All have been politicized. Like tourists outfitted with explosive vests, who wants them?

You can push other people around all you want, I suppose, but that doesn’t mean they won’t push back. Eventually, they just start doing peacefully quiet deals with other people they like to do business with a lot better because they don’t love your rough-housing:

In December the EU inked ‘the largest trade deal in history’ with the Mercosur nations of South America. Thailand did a deal with several European nations. Brussels is negotiating with Malaysia. China has done nine new trade deals since 2017. Even India, normally reluctant to enter trade agreements, is now in talks with the EU….

On Friday morning, investors wondered if the president would really do such an imbecilic thing. Maybe it was a negotiating tactic, they asked. But negotiating for what? Nobody seemed to know. Did he really expect foreign nations to solve Americans’ drug addictions…or secure its borders?

Well, now they know. He did it. Mexico almost immediately caved in to Trump’s strong arm.

But the cost isn’t just with foreigners. The Dow recovered strongly through the morning and turned briefly positive, but then that glimmer of hope burned out and it ended negative again. The S&P did worse, the Nasdaq worse still. You can thump and bump things around a lot as a rough negotiating tactic, but eventually you break something when your policies/tactics all look like a raging bull in a china shop.

What we do know is that with so much chaos and uncertainty sweeping the world, investors are looking for safety. Gold glitters, says Dan. The price per ounce went over $2,850 last week.

As a matter of fact, other news stories in the last few days say gold is such an attractive safe haven from the chaos that even JPMorgan and the Bank of England are looking to get a lot more of it to meet their trade needs.

Rickards, on the other hand, sees the other side of the coin:

The U.S. runs a trade deficit along with a budget deficit and is in debt to the world. Those days are over. Asians, Africans and Latin Americans can still sell goods to the U.S. but they’ll have to manufacture those goods in the U.S. to get over high tariff walls. The result is good paying jobs in America.

With higher earnings, Americans can save more. Foreign investment in the U.S. will also rise as foreign manufacturers build here to avoid tariffs. Eventually, higher savings and higher investment will close the production gap and reduce the trade deficit. Among other consequences, look for a stronger dollar as the world scrambles for dollars to invest here. That makes the rest of the world cheaper for U.S. consumers and reduces inflation also. It’s a win-win-win policy.

I’m not so sure. Trump has a lot of confidence in selling things to willing believers, including oil from serpents, such as his real-estate college and some choice casino deals that went bust bigly and badly, and I remember how badly the lockdowns in Trump’s last term hurt things, in spite of his confidence in Fauci, et. al., whom he paraded publicly as experts to be listened to all year. I remember what a bad idea his warp-drive vaccine turned out to be. I remember how the bailouts he promoted and approved during and after the lockdowns benefited the richest corporations more than the rest. Many small businesses were not smart enough (nor had lawyers enough) to even figure out how to apply. I remember how all that low interest and wholesale money-printing that Trump kept demanding from the Fed cost the average guy for the rest of his life in prices that may never return to normal because all inflation now compounds on top of that major pole-vault in prices that already happened, making the Fed’s future 2%, if it ever gets back to that target, 2% of a much larger number each year than it would have been … forever.

Rickards still sees an already built-in stock market crash and recession (the same that I’ve been talking about) happening in the near term. I’m just not confident based on how Trump’s plans turned out last time around, that the much more drastic moves being taken today are going to turn out any better than those earlier Trumpian plans like the replacement of Obamacare where all I did was lose the insurance plan I liked best and watch my employer pay more for less while Trump failed to undo that as he confidently said would be “so easy, just you wait and see.” He may break a lot of china before he figures out the damage that keeps getting reported from some of these garganutuan moves isn’t transitory.

Today, “It Is Mass Carnage As Trump And Musk Ruthlessly Gut Corrupt Government Agency After Corrupt Government Agency.” One staunch conservative writer assesses the damage this way:

The largest and most bloated bureaucracy in the history of the world has been thrown into a state of complete and utter chaos. I have no idea how all of this is going to end, but it sure is entertaining to watch. President Trump is firing people left and right, and Elon Musk is storming around Washington D.C. like a bull in a china shop. I think that the words “shock and awe” don’t even begin to describe what we are witnessing. Nobody has ever dared to go into these ultra-powerful government agencies and start turning the tables over. When I decided to write this article, I was feeling quite overwhelmed, because there is just so much going on right now. This is going to be a very long article….

That’s how I feel today, too. Suddenly, mass chaos arrived in a single day. It is such a huge sweep of hopefully creative destruction all at once that I can’t write quickly enough to fully capture the essence of it, and this article is running long. I’m not personally too hopeful about the “creative” part. It could be this massive assault is what is needed, but the risk that it goes no better than those other Trump-scale disasters is even greater than it was back then. Everything is up for grabs in the moves we saw sweep across the government all at once over the weekend and especially today.

Bullet points about the bullet-train wreck

I don’t believe any of these people are smart enough to know how this possible train wreck is going to settle out. The run-on effects can continue months or even years after the changes are pulled back IF they are pulled back. Consider just a bullet list in summary of the events that happened since Friday:

• Elon Musk has been given full access to the US Treasury by Trump’s new Treasurer. Six-trillion dollars moves through the system annually. Some of it is payments to terrorist that should be shut down. All payments have, reportedly, been rubber-stamped by Treasury staff in the past for years. Now the new people accessing such payments are being rubber stamped. Is that better? A huge number payments were shut down.

• Musk & Men (and Women but that didn’t have the same alliteration) have the ability to turn off Social Security and Medicare payments in addition to all federal employee paychecks, contractor payments, grant recipient payments and tax refunds. Will they make no major mistakes with inexperience in the department and so much power?

• Musk took over the Office of Personnel Management, the US government’s HR department. They kicked out the top leaders and moved in sofa beds to the primary offices so Musk Management could work night and day with full access to everything. The goal appears to be to shut off as many salaries and benefits as Trump and Musk deem appropriate, quickly and efficiently. (The legal battles will last for years.) Trump has indicated a 70% cut in personnel at the Office of Personnel Management would be appropriate. All work that is not statutorily required has been stopped in just one day. Anyone who raised concerns about access to sensitive systems was put on leave or “retired” early.

• The USAID building is locked, computers off or locked out to many, the website is down, kaboom! Top staff have all been fired. DOGE personnel wanted access to classified information … and they got it on the president’s orders. You can try accessing the site here: www.usaid.gov to see for yourself. (As of publication of this article, it is still down.) Former senator Mark Rubio said today that the office had been moved to his administration as the new secretary of state. Democrats claim the move of USAID to the Dept. of State is illegal and unconstitutional. Without a doubt, a lot of bad happens through this agency that needs to end, but will the carte-blanche security clearances prove any better, or will they be a disaster? “Speaking to reporters at the White House on Monday, Trump alleged the agency run by ‘radical left lunatics’ was getting away with ‘tremendous fraud,’ but did not provide names or details.” On X, Musk wrote that USAID is "evil", a "criminal organisation" and a "radical-left political psy op.” In a live stream on X early Monday, he also said, "You've got to basically get rid of the whole thing. It's beyond repair. ... We're shutting it down."

• One report said some of Musk’s helpers, who had no top-security vetting or clearances, had computer access granted by mistake to many of the nation’s top-secret documents (as can happen when you rampage in rapidly without thinking your way through carefully). Anyone who tried to slow their access down was summarily fired. Will none of these helpers sell secrets that have already moved out on their computers, including everyone’s social-security number, given they will be worth millions to the right buyers?

• EPA notified over a 1,100 employees that they are on probation and may be fired. The same message will be sent to other agency workforces, a White House official said. Across the US government, the latest data shows there are more than 220,000 employees on probation.

• At least eight senior FBI executives have been terminated. More than twenty heads of field offices were also fired in retaliation for “lawfare.” They may all have deserved to go, but what secrets do they take out the door with them? What investigations or operations that should have been happening suddenly came unplugged when the core was pulled? “88 is the number of FBI agents and top managers who ACTUALLY were walked out of their offices today, including those at the Washington Field Office, Palm Beach, and Miami FBI offices. That number also includes special agents in charge of various field offices around the country.”

• On Saturday morning, Trump ordered airstrikes on an Islamic State leader in Somalia and posted video of the explosions online just for fun as he dashed off to a game of golf.

• Trump issued orders that all federal employees who choose to keep working from home and don’t report to the office for work from now on will be fired. “We think a very substantial number of people will not show up to work, and therefore our government will get smaller and more efficient,” Trump added. “And that’s what we’ve been looking to do for many, many decades, frankly.” '

When you have no idea who will be fired simply because they don’t show up at the office, it is impossible to know how their instant termination will shut down numerous programs in the government where some of them performed essential jobs. You don’t know if it will be 20,000 who don’t report for duty or 200,000. Not showing up is, after all, their choice. They may be sick of you already. We might be better off without them, but that kind of shutdown is bound to be chaotic with no idea of what the damage will be further downstream, which means there can be no plan to contain it or minimize it. You find out as you go and plan solutions on the fly like putting out thousands of brush fires during a severe Santa Anna wind.

I knew it was going to be bad but I didn’t think it was going to be this bad.

I think that statement by one lawyer is the sentiment of many federal employees right now. We can probably say “good riddance” to many of them, too, but there seems to be little control or thought to how this is happening—just “fail to show up to work tomorrow, and you’re fired.” That means you don’t know if it will be your best or your worst employees who quit because often the best can readily find a job elsewhere if they get ticked off at your treatment or your new conditions. It might be some of the most critical people who know they are critical who say, “To hell with this!” That means you cannot possibly even know what you are breaking because you are simply pressuring anyone who wants to quit to get lost. That’s a bit haphazard!

The opportunity of sweeping changes for the positive with so much huge activity is here. So is the opportunity for massive mistakes or colossal corruption. Expect plenty of eggs to get broken in this mad scramble, leaving plenty of shells in your omelette and many possible disruptions to your eating as you pick the pieces out of your teeth.

Canada caved

They said they would not back down then immediately did. No sooner had Trump done all of this today than he turned right around and suspended his Canadian tariffs on the same day he imposed them, just as he did with Mexico. So, perhaps the tariff leverage worked. It did nothing for trade, but Canada, like Mexico suddenly pledged to toughen up its border. (They are sending beavers hauling small trees now to the border to create a border wall to prevent American expatriates from taking over Canada. Some of those expats are begging Canada to annex their state and make it into the new province of Californada. OK, that part was fake news.)

One might wonder whether all Trump really wanted was a tougher border stance, and he used a massive club to get it (speak loudly and carry a huge club); or did he become scared of the collateral damage his tariffs instantly created as retaliatory tariffs rapidly revealed what a widening spiral of economic deconstruction he had set into motion?

“Canada is implementing our $1.3 billion border plan — reinforcing the border with new choppers, technology and personnel, enhanced coordination with our American partners, and increased resources to stop the flow of fentanyl,” the prime minister wrote. “Nearly 10,000 frontline personnel are and will be working on protecting the border….”

“I am very pleased with this initial outcome, and the Tariffs announced on Saturday will be paused for a 30 day period to see whether or not a final Economic deal with Canada can be structured,” Trump wrote. “FAIRNESS FOR ALL!”

Border deals struck with two nations in one day with trade deals promised to be worked out in a month. That is a massive accomplishment. Is that the art of the deal?

Economic chaos for a day, and then on to the golden age?

Well, let’s not get ahead of ourselves. Here’s one example of how easily inadvertent harm can come from just the talk about tariff wars as negotiating tactics as well as from the wholesale shutdowns of government systems:

Maryland Congressman Johnny Olszewski cited reports that prison guards in Syria responsible for containing thousands of Islamic State fighters nearly walked off the job after the earlier freeze on US aid.

"This is real life, this is dangerous and this is serious," he said.

Elsewhere such things may have already happened and just haven’t been reported yet because no one could keep up with the news today, and news travels more slowly out of some parts of the world, especially through agencies that don’t want to admit big failures. Then there is this kind of risk:

"Elon Musk makes billions of dollars based off of his business with China, and China is cheering at this action today," claimed Senator Chris Murphy of Connecticut.

Given wide-open access to top-secret documents, who knows what Elon or some others who work for him might be enticed to sell? Maybe that’s why he could care less if he’s paid. Musk is unpaid for all the work he is doing for the US government, but who needs pay with top secrets to sell? I’m not saying Musk would do that; but I don’t know that this unelected tycoon wouldn’t do that or that he wouldn’t, at least, use the information he gains to leverage his own companies’ successes when selling satellite systems to China or Russia or Moldavia or ….

A clearer example of how inadvertent major destruction can come about just from talking about all this stuff in a cavalier way, prior to any of it being carried out this weekend, is showing up in the stock market. The largest numbers of shorts in market history have accumulated over the last couple of weeks, placed by hedge funds now betting on the market to crash. This either resolves in a massive crash and some extremely rich (George-Soros style) hedge funds, or the biggest short-covering rally in history as the hedge funds are forced to cover their extreme positions by purchasing many of those stocks at higher prices, ending with a lot of crushed hedge funds. Either way, something is getting busted. If the shorts win, the stock market crashes almost into oblivion. That looks something like this, which may mean YOU lose, depending on where you’re invested:

Hedge funds are making a multi-billion-dollar gamble against the US economy, betting Donald Trump's presidency will result in a massive market crash that could devastate 401(k)s, pensions, and household savings across America.

The point is that, when you start making the kind of absolutely colossal czar moves that Trump is making with the Republican congress just stepping out of his way and taking all the governors off the economic engines, the world biggest casino, known as the New York Stock Exchange, starts making some major rogue moves that are outside of your control. Then the AI algorithms take over faster than you can think to divine the most profitable response for the single outfit that owns each AI, even if it is at the risk of all other outfits. Only all the other outfits have their own AI bots doing the same thing … quickly … like this:

Data from Goldman Sachs has sent shockwaves through financial circles, revealing a dramatic surge in 'short' positions against US stocks - a move that signals a belief the market is headed for a precipitous crash.

Throughout January, investors placed 10 times more bets on American stocks falling than on their continued rise, a staggering shift that reflects growing unease over Wall Street's future under Trump's leadership.

Everyone was talking about the Trump rally, but the Trump rally may just be a lot of short covering until the market turns in terror and starts stampeding downhill, which is when the shorts become an accelerant to the downfall. The AIs may just be getting their positions set, even intentionally and secretly setting up the big crash.

The timing of such financial revolt is no coincidence and comes just as the world witnessed a $600 billion wipeout in major US tech stocks earlier this week, driven by fears over Chinese AI rival DeepSeek, which disrupted the once-unshakable dominance of America's technology sector….

Hedge funds are now betting against the very economy they once championed.

That is what happens when traders start to see the scale and sweep and apparent recklessness of the risks the president is willing to take with the total US economy and government. In fact, one article today even suggested that a setup behind the scenes to profit off a crash was intentional. Hedge fund millionaires will become billionaires, and one or two billionaires may become the United States’ first Trumpian trillionaires, but mom and pop will go broke with no retirement left in their self-managed 401Ks or IRAs, just as their Social Security payments get accidentally turned off because many of the people in charge of them are suddenly AWOL.

The rapid shift in sentiment has raised red flags among financial analysts and sent alarm bells ringing on Capitol Hill.

Not loudly enough.

'The increase in short bets against U.S. stocks likely reflects concerns about macroeconomic uncertainty,' warned Bruno Schneller, managing partner at Erlen Capital Management to the Daily Telegraph.

UBS analysts echoed the unease, with Karim Cherif, head of alternative investments, stating: 'As the new year unfolds, uncertainties persist regarding Trump's policies, the global economic trajectory, and central bank actions.'

Even Elliott Management, one of the world's most influential hedge funds with over $70 billion in assets, has sounded the alarm.

According to the Financial Times, Elliott executives believe Trump's policies are fueling speculative bubbles that could 'wreak havoc' if markets crash.

The message from Wall Street is clear: the market is on the edge of a precipice, and the fallout could be catastrophic.

Notice how much they are starting to sound like my prediction at the top of the year that went to my paying subscribers in a Deeper Dive. Suddenly all the big boys are running to my lonely side of the boat, and I have more company than I want. I don’t want to run against traffic to the other side. So time to jump off into a dinghy because the whole world has gone dingy anyway.

If a stock market collapse materializes, the very Americans who backed Trump's economic promises could find themselves on the losing end of a financial catastrophe.

Another article by that staunch conservative I mentioned puts it this way today:

“Are They Positioning Themselves For A Pre-Determined Scenario In Which There Will Be A Massive Stock Market Crash?”

Oh, I think so.

What we are witnessing at this moment is truly strange. We are being told that hedge funds are “making a multi-billion-dollar gamble” that there will be a “massive market crash.”

Well, as I say, I’m not so glad they are all running over to my side of the boat that I want to be leaning on the gunnels when they all flash over to my side.

I think I see a gold-plated dinghy in the water below. Jump!

JPMorgan Chase & Co. will deliver gold bullion valued at more than $4 billion against futures contracts in New York in February, at a time when surging prices and the threat of import tariffs are fueling a worldwide dash to ship metal to the US.

I may have made my call for the Year of Chaos a bit early, saying I expected it to really get going in the final quarter of 2024, but it wasn’t that much early. Just off by one quarter. Suddenly, it is chaos everywhere. Will it be creative chaos? I don’t even know that “creative chaos” makes sense.

History rhymes again

If you are still of the opinion that nothing could be more glorious than the destruction of the empire’s crooked government and the implosion of the lunatic stock market, I understand your feelings. Still, I think the wrecking-ball approach to your own nation might go badly. If you think tariffs don’t end badly, however, or that you won’t get burned in the conflagration of an exploding empire, take a look at history:

The Great Depression Lesson About ‘Trade Wars’

President Donald Trump has argued that “trade wars are good and easy to win.”

That comment demonstrated Trump’s foresight and insight and the steady handle he has on these things as a great leader. The trade war Trump started with China never ended in his last term. It disrupted supply chains for years, contributed to inflation that came once the broken supply chains diminished supply in the face of money printing, morphed into a more severe economic war with China throughout Biden’s term, which Trump had also promised if China didn’t capitulate, and now is getting increased to an even higher level by Trump again. So, that is how “easy” they are to win. Six years later, it is only worse. That causes me not to take his word on all of this. He’s a lot like another bright light from the past:

The thinking among Congress and President Herbert Hoover was that by raising taxes on thousands of imports no matter what country they came from, the act would protect American farmers and secure the nation’s economy. But experts disagreed.

Like Hoover, Trump had to quickly put together a farm relief bill when he first imposed tariffs, too, because China responded by putting its own tariffs on US pork and a lot of grains so that Chinese businesses stopped buying from America. Americans paid for that relief, too. China did not contribute to Trump’s Farm Fund.

Likewise, back in the Great Depression:

Other countries responded to the United States tariffs by putting up their restrictions on international trade, which just made it harder for the United States to pull itself out of its depression. Imports became largely unaffordable and people who had lost their jobs could only afford to buy domestic products. Global trade tanked 65 percent….

In effect, the Smoot-Hawley Tariff Act “prolonged [the depression] and possibly deepened it around the world, not just in the United States but for other countries….”

The world spent decades after the Great Depression days ratcheting down their tariffs step by step, and the tariffs were never good for anyone. Over time, the premise emerged that …

negotiating deals with other countries to reduce tariffs promotes economic growth.

What a surprise revelation! Well, you can’t blame those guys back in the Great Depression. They were new at it—pioneers. But we have their example, so what is our excuse? As I’ve said many times, “We never learn.”

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I hope that anyone who has not responded to my poll about creating a new publication will do so at the bottom of the following article: “AMERICAN EMPIRE (Part Two): Holy War.” As it stands now, I would say there is not much interest. That’s fine if that is the true level of interest because I don’t want to waste my time; but I also know it often takes two or three appeals to finally get people to respond. I want any uninterested people to respond as well as any interested ones in order to get a true measure. There is no desired result other than a clear assessment of my readers’ interests.

Economania (national & global economic collapse plus market news)

Bonner: Lose-Lose Deals

Rickards: A U.S. Recession is Coming (but "win-win")

‘The Purge’: It Is Mass Carnage As Trump And Musk Ruthlessly Gut Corrupt Government Agency After Corrupt Government Agency

Are They Positioning Themselves For A Pre-Determined Scenario In Which There Will Be A Massive Stock Market Crash?

Hedge funds' massive bet on stock market crash raises alarm for 401(k)s - and risks ire of Trump

Dow initially drops more than 600 points after U.S. hits key trade partners with tariffs but recover when Mexico rushes to a deal with Trump

Dow futures tumble, oil surges after Trump tariffs end ‘self-delusion in markets’

Bond traders warn of inflation shock as US yield curve flattens

Oil prices climb after U.S. tariffs spark supply disruption fears

China Reportedly Preparing Trade Talks With Trump After Weekend Tariff Shock

Market Reaction To Tariffs Seems About Right (For Now)

WSJ: The Dumbest Trade War Fallout Begins

The Great Depression Lesson About ‘Trade Wars’

Microsoft Cuts Low Performers With Brusque Termination Letters, firing employees not meeting productivity standards. Will lose benefits instantly.

Barclays outage continues as customers fuming and bank responds in update

The Hidden Dangers of AI in Finance

China’s ‘artificial sun’ fuels Western fears it has lost race to energy holy grail

Money Matters (monetary policy, metals, cryptos, currency wars & CBDCs)

JPMorgan Plans $4 Billion US Gold Delivery Amid Tariff Fears

Inflation Factors (due to too much money chasing too few goods)

Car Prices Face $3,000 Increase as Tariffs Hit Auto Sector

Gas prices set to rise as Trump tariffs hit Canadian and Mexican oil

Political Pandemonium & Social Senescence (socio-political issues & events)

PRESIDENT WARNS AMERICANS WILL FEEL PAIN

Trump, Musk wage two-front war as donor does president’s ‘dirty work’

Musk Moves With Lightning Speed to Exert Control Over the Government

Elon Musk puts unprecedented outsize influence on display in government funding fight

Musk says USAID to shut down as employees told to stay home

USAID Officials Lock DOGE Out, Trump Hits Back This Morning with a ‘Find Out’ Response!

Musk On DOGE Cuts: "USAID A Ball Of Worms, No Apple. Must Get Rid Of Whole Thing"

Trump's Dismantling Of USAID Marks A Seismic, Historic Shift In America's Role In The World

Elon Musk seizes computer system, locks out senior government officials

Elon Musk flexes his political muscle, sending government on path to shutdown

Musk team given access to sensitive federal payment system

Trump launches a baffling trade war against Canada and Mexico

Mexico vows retaliation to Trump tariffs without detailing targets

Trump Imposes then Pauses Mexico Tariffs for a Month as Mexico Rushes to Deal, But His Threats Spooked Almost Everyone

Trump says he agreed to “immediately pause” anticipated tariffs on Mexico for one month

Mexico, US reach deal that puts Trump tariffs on hold

EU warns Trump it will ‘respond firmly’ to tariffs

Trump says Canada will 'cease to exist' without subsidy and US has 'unlimited energy'

Canada announces retaliatory tariffs on long-time ally US

Canada strips US alcohol from shelves in tariff fight-back

Ontario Rips Up $100 Million Starlink Contract In Response To Trump's Trade War Chaos

CEO Of Canada's 2nd Largest Company Supports Trump Tariffs, Slams Trudeau

Trump pauses tariffs on Canada imports for 30 days after doing the same for Mexico

Fans at Toronto Raptors game continue new trend of booing US national anthem at pro sporting events in Canada

EPA Tells More Than 1,000 They Could Be Fired 'Immediately'

SEC now required to seek permission from political leadership before probes

Ed Dept employees placed on leave for attending diversity training

Large demonstration opposing crackdown in downtown LA

Trump Kicks Aside Congress With Sweeping Claims of Presidential Power

Trump’s spending freeze sets up a future possible Supreme Court showdown over presidential power

ALL FOR SHOW? Arrested migrants released back into USA

Donald Trump lashes out in 'DEI' rant and blasts Black Hawk pilot for 'flying too high'

OMG: James O’Keefe to Drop Undercover Video of DHS Official Revealing Plans by DHS Employees to Defy Kristi Noem’s Deportation Orders

“CIA’s Strongbox” Agency of Shady Regime-Changes in the Trump’s Sights: USAid Website Blocked and hundreds of Layoffs

Lawsuit Alleges FAA Denied 1,000 People Air Traffic Controller Jobs To Meet Diversity Hiring Targets

Globalism & Deep Domination (undemocratic government & censorship)

Tony Blair Pushes UK Govt to Use Bill Gates’ Digital ID System to “Flush Out” Dissidents

Calamity, Catastrophe & Climate Craziness

Emergency crews deployed on Santorini as an earthquake swarm worries Greek experts (Largely sunken island believed by some to be the Lost City of Atlantis)

Greece Prepares for Quake as Hundreds of Tremors Shake Islands

Off-the-Beat News & Just Plain Offbeat News

Elon Musk backs mission to Mars to investigate remarkable 'square structure' seen on the red planet as Joe Rogan brands bizarre feature 'wild'

Doomer Humor

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