Red Rain

The dots appear to contradict one another…puzzling observers. How to connect them?

Inflation over the last five years has been double the Fed’s target. Why then, does it cut its key lending rate? The Wall Street Journal:

The Federal Reserve approved a quarter-point interest rate cut Wednesday, the first in nine months, with officials judging that recent labor-market softness outweighed setbacks on inflation.

A narrow majority of officials penciled in at least two additional cuts this year, implying consecutive moves at the Fed’s two remaining meetings in October and December.

Meanwhile, tariffs were supposed to be to encourage industries to manufacture more in the US — thus bringing high wage jobs back to the USA.

But in the immigration raid at Hyundai’s plant in Georgia, the US seemed to go out of its way to advertise America as a bad place to do business. It could have simply sent a polite message, ordering the South Koreans back home. Instead, it revealed a a country where you must have ‘your papers in order’…or you risk getting handcuffed, shackled, and exiled.

And so far, America’s trade deficit with the rest of the world has only grown wider. This year, it’s running at $93 billion per month…31% ahead of last year. And the latest news does not exactly suggest a manufacturing renaissance. Money Talks News:

Trump Tariffs Crush US Manufacturing for 6th Straight Month

U.S. manufacturing contracts for sixth consecutive month as Trump’s tariffs create business chaos worse than the Great Recession.

And why continue to run big budget deficits…when you’re already up against a wall of $37 trillion in debt? Congress put a new budget ceiling in place just three months ago; US debt has gone up $1.3 trillion since. And in the last 12 months, the interest on the national debt alone totes to $1.2 trillion.

The same question might be posed about the Big, Beautiful Budget Abomination, BBBA. What sense did it make to increase spending when you are already facing a funding crisis?

Also perplexing is America’s choice of public officials. The plushiest job in US foreign affairs is right here in France, as US ambassador. It’s the post once held by Thomas Jefferson and Benjamin Franklin. Who has the job today?

Charles Kushner, who was convicted of eighteen counts of illegal campaign contributions, tax evasion and witness tampering, in which he tried to blackmail his brother-in-law by getting a prostitute to seduce him while he filmed the encounter. Chris Christie said it was one of the ‘most loathsome and disgusting crimes’ he ever prosecuted. What’s more, Kushner doesn’t speak a word of French and observers say that in Paris he is more interested in promoting Israel’s interests rather than those of the US…

Pete Hegseth is another question mark. The critical requirement for the DOD job should be steady nerves and good judgement. Hegseth has neither. Adultery, public drunkenness…he once threw an axe at a Flag Day ceremony, and seriously injured a young soldier from West Point.

Also strange, for a nation whose goal is to remain the world’s hegemon, is for it to drive potential challengers into each other’s arms, inviting them to gang up on him. America had no single, worthy enemy. Why push Russia, China, and India closer together, so that now, it may have met its match?

The biggest source of US power, however, is not its military, but it’s money. As long as the dollar remains the cornerstone of international commerce, the US remains the world’s great Caesar.

But when the histories of this period are finally written, they will probably identify the biggest mistake of the Trump Team as encouraging foreigners to forsake the dollar. Under the threat of sanctions, tariffs, and bombs, the world is learning to do business not with, but around, the US…and to fill its vaults with gold, not with dollars. CNBC:

ETF flows top $820B as gold funds surge on record highs

Why so many policy decisions that seem harmful to US interests? The only thing that makes sense of it is ‘historical necessity.’ Things that gotta happen, gotta happen. History has her own imperatives. And one of them is to bring the outlier nation — the US — back into line.

This will be accompanied, no doubt, by all the usual claptrap, confusion and pain. New money — probably a gold-backed stablecoin — will replace the dollar. New weapons will fill foreign arsenals. New trading patterns will direct goods and services in new directions.

Among other things, a whole new genre of entertainment will appear, in which the US is the bad guy. Nikkei.com:

War movie made by Vietnam’s military a box office blockbuster

Film grosses more than twice Hollywood hits during period of ‘peak patriotism’

“Mua Do” (“Red Rain”) depicts a bloody battle between Communist forces and the American-backed South Vietnamese army during the Vietnam War. The battle, fought in the country’s central province of Quang Tri, earned the grim nickname “the meat grinder” because of the many people who died there. According to reports in the Vietnamese media, more than 10,000 soldiers were killed on both sides.

This all seems so obvious and inevitable — the decline of ‘the West…the rise of the East’ is almost a cliché.

Which makes us wonder: What else will happen?