Justin’s note: In yesterday’s Dispatch, I told you what Trump’s proposed tariffs on aluminum and steel really mean for the economy—and why the U.S. could soon be in serious trouble. This is a huge deal… and a situation that could turn ugly quickly.

That’s why I’m sharing this new essay from Doug Casey’s longtime friend and colleague Bill Bonner, who has a lot more to say about what this news means for America…

By Bill Bonner, chairman, Bonner & Partners

The big news last week was Trump’s hasty decision to impose tariffs on aluminum and steel.

We were happy to see it.

We were looking for an example—undeniable, indisputable, and in-your-face, jackass—to illustrate how government actually works.

“The Donald” has just provided it.

Undisguised Dumbkins

It can be hard work digging in the rocky, ungrateful soil of public policy… scraping off the honey-dirt of wishful thinking, delusion, and fraud… to uncover the corruption and stupidity of what lies beneath them.

So we would like to thank Secretary of Commerce Wilbur Ross and the president’s trade advisor, Peter Navarro, for their contributions.

They have put the claptrap right on the surface. Rarely do we get to see public officials who are such undisguised dumbkins with so little guile… and such unvarnished crackpot theories.

They have made it easy for us. Thanks again.

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Here in Argentina, trade barriers have been a fact of life for a long time. A couple of years ago, we were unable to get tires for our tractor.

Argentina’s tire-making cronies were protected by tariffs. If you wanted to buy a tire, you had to pay for the locally made, inferior tire.

Unless, of course, they didn’t make the model you needed. Then, you were just out of luck.

Same thing for electronics.

Apparently, ex-president Cristina Fernández de Kirchner had some business buddies down in the south who made electronic components.

So imports of laptops, computers, smartphones, and other paraphernalia were restricted, ostensibly to give the nascent native manufacturers a chance to grow up and compete with Apple, Samsung, and Panasonic.

When you came into the country, you had to show exactly what iPhones, iPads, and portable computers you were carrying. Woe to you if you didn’t still have them when you left.

Diminishing Wealth

But that’s the sort of thing you expect in a “sh*thole” country—the naked use of government to transfer money from the ordinary person to the well-connected elite.

A modern, civilized country is usually more sophisticated about it.

Its economists realize that trade barriers lower output, ultimately diminishing the wealth available to a predatory elite.

Better to allow free trade to fatten the pig, they reason, before carving the ham.

In the event before us, Mr. Ross brought a group of steel and aluminum industry executives to the White House at 11 a.m. on Thursday.

These cronies bitched and moaned, no doubt, about how the Canadians were playing unfair… or how the Mexicans had lower costs… or how the Europeans made better metals.

Donald J. Trump, a fighter, grabbed a microphone. The sun had scarcely reached its zenith before he had set off a trade war, claiming it was easy to win one. Then he added, comically, on Twitter:

We must protect our country and our workers. Our steel industry is in bad shape. IF YOU DON’T HAVE STEEL, YOU DON’T HAVE A COUNTRY!

Never addressed was the real issue: How come Americans buy more things from overseas than they sell?

If he had bothered to look more carefully, Trump would have noticed that it has nothing to do with trade deals or the lack of trade barriers.

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EZ Credit Paradise

Until the 1970s, America was the world’s leading exporter. Then, in a few years, it became the world’s leading importer. From having the biggest trade surplus, it soon had the biggest deficit.

Why? Did Americans suddenly forget how to make things? Did our businessmen and entrepreneurs lose interest in making money? Were they incapable of making a good deal?

What really happened was that the money system changed. In 1971, the Nixon administration created a new dollar by removing the last vestiges of gold backing.

Instead of making stuff at home, the U.S. began taking it from abroad, and paying for it with its new credit money.

Instead of being a manufacturing powerhouse, it became a consumer’s EZ credit paradise. And instead of favoring real jobs with good wages on Main Street, the economy was distorted by over-empowered PhDs at the Fed, overpaid scalawags on Wall Street, and hoggish scoundrels in both parties wallowing in an overblown, overreaching, and over-indebted swamp in Washington.

But the president won’t bother to think about it. And the Deep State wouldn’t permit him to do anything about it even if he did.

The real purpose of government is, always and everywhere, to enable the few to exploit the many. The money system is a clever way of doing so; Mr. Trump’s trade barriers, like the man himself, are much less subtle.

The modern world of industry, commerce, and investment works on win-win software. Only government—with its battles, wars, taxes, tariffs, do-this commands, and don’t-do-that prohibitions—continues to operate on pre-civilized programming. It is a throwback, an institution with a prehensile tail.

A trade war is just as phony as a war on drugs, a war on crime, or a war on terror. None are worth fighting. And none are winnable. It is meant to reward the elite at others’ expense. Nothing more.

There are about 200,000 jobs in the U.S. aluminum and steel industries. Add to that a few thousand significant owners. And most important, a few hundred serious cronies. As Reuters reports, there you have your winners:

Stock prices of U.S. steel and aluminum makers rose on Thursday after President Donald Trump announced hefty tariffs on metal imports to protect them from foreign competition, but many other companies saw stock price falls as they may face higher prices for raw materials which will force them to raise prices for consumers.

A proposed tariff of 25% on steel imports and 10% on aluminum boosted the stock prices of steel makers, but industrial companies, aircraft manufacturers, auto makers saw their stocks fall.


Among steel makers, AK Steel Holding Corp shares jumped 9.5%, U.S. Steel Corp rose 5.7%, while Nucor Corp and Steel Dynamics Inc. each gained more than 4%.

High Price to Pay

But this is a win-lose deal. And a lot more people use steel and aluminum than make them.

There are the obvious first-effect losers. U.S. automakers, for example, use an average of 3,000 pounds of steel in every car. The extra cost will force Detroit to raise prices. And here we encounter the second-effect losers: the residual, high-paid autoworker jobs.

The result would be roughly the same if The Donald had imposed a tax on oil.

Almost all industrial activity in the U.S. relies on energy and primary metals. Raise the costs of steel, aluminum, or energy and you make it harder to compete.

Needless to say, inflicting further damage on American manufacturing will not make America great again.

And there are the third-effect losers, too: practically the entire population of the U.S., who will pay more for everything from aluminum beer cans to steel garden tools.

A high price to pay just to make a few cronies richer… but worth every penny if it helps us understand government better.


Bill Bonner
Chairman, Bonner & Partners

Justin’s note: As Bill says, these tariffs won’t make America great again. But there’s something else you need to be concerned about… something far more sinister that’s happening behind the scenes.

What Bill recently uncovered, lurking beneath the mainstream media’s headlines, isn’t something you’ll find anywhere else. Click here to learn more.

Reader Mailbag

Today, a ton of feedback on Doug Casey’s new interview on arming teachers

As always, Doug Casey is spot-on with his thinking and willingness to state his mind. This day’s discussion about guns, the right to protect oneself, and the real issues that are totally disconnected with guns is yet another example of his excellent ability to see through the maze and to provide suggestions for a solution. Great work, Doug!

– Joel

This is the most stupid argument in favor of guns. Look at yourselves in the mirror. Other countries have a much lower death rate with minimal guns. In schools, do you think a teacher has a chance versus an assault rifle? You people are like the guy who gets a headache from banging his head against a brick wall and continues to take an aspirin to relieve the pain.

– Blake

Teachers and guns is not a good solution due to the fact that teachers are underpaid. As a youth, I went to school in low-income neighborhoods all the way through high school, and before entering any school, you would go through metal detectors and weapon sniffing dogs. At that time, no one complained about it because the crime rate in schools was lowered dramatically.

Every public school should have at least a team of officers commissioned. Let’s look at the Bronx, where metal detectors are still being used and officers are stationed at the schools all the time.

– Tyrone

As a man who believes in evolution, Mr. Casey must find it odd that evolution seems to lead to socialism/communism. It must have struck him as peculiar that humans evolved from freedom to voluntary captivity—we evolved into an “animal” that desired the state to take care of us. And it’s not just the lower class; Warren Buffett, Ted Turner, Oprah Winfrey, and Bono all desire a more socialistic existence. Hmmm, something doesn’t quite make sense does it, Doug?

There is, of course, a much better explanation. But the atheist mind can never find truth. But to Doug’s credit, he almost got it right when he said, “I’m not sure this can be reversed until we have a genuine crisis.” The fact is that the coming crisis is not going to fix anything. It will simply make it worse. After Trump, the United States will degrade in line with the rest of the western world. Just look up—to Canada. That’s your future.

– Kosta

I think he hit part of the nail on the head, but he also missed part. Back in the ’80s, our parents made us take responsibly for the things that we did. We were not allowed to pass the blame to someone else. That is where the problem lies. We have to make people responsible for their actions.

– Dale

Doug absolutely nailed it with his usual inimitable version of what the real problem is with school shootings, society, and government! He’s a master thinker!

– Chuck

I agree with everything that Doug expressed about gun violence in our society and, more specifically, in our schools. Let me refer Doug to a book: Anatomy of an Epidemic written by Robert Whitaker. The book concerns the cultural degradation of our society. This book was referred to me by a psychiatric nurse, in fact, who was on the verge of losing her job at the local "behavioral clinic"! Enjoy your reading.

– Lois

I have seen a lot in the news advocating arming teachers in school. I think this would be very dangerous for the teachers! If I were a shooter planning to shoot up a school and knew teachers were armed, who would be the first people I would shoot? With no warning, the teachers would be dead!

The same applies to armed uniformed guards. Armed guards must be in plain clothes and appear like maintenance workers or teachers; otherwise, they are the first targets. Don't tell shooters who has the guns. Just let the world know the school is armed.

– John

Lastly, we’re featuring a good question from Amanda O., a subscriber of The Casey Report. It’s in regard to Dr. John Hunt’s recent essay “Health Insurance Is the Problem, Not the Solution”…

I was curious on what he (Dr. Hunt) has to say on lawsuits for malpractice and the high costs of health/medical insurance? Once upon a time, these massive lawsuits did not exist as they do today. My guess is somewhere around 1960s to 1970s, the “sue everybody for big money” mindset rolled out, and I think that is also some of the catalyst behind the receipt of medical services being so darn hyper-inflated. I just want to know Dr. Hunt's position on this piece of the equation… because malpractice insurance is costly and has to be passed on, as it would in any business.

– Amanda

John Hunt: Defensive medicine contributes to excessive and unnecessary utilization of medical care, particularly laboratory and radiology expenses. After all, doctors have little objection to spending an insurance company’s money, even if it only minimally improves their odds of getting a diagnosis right. However, if the patient bore the financial consequences of that defensive medicine, the patient would care enough to try to discourage the doctor from ordering such tests, even if that meant accepting liability for his own decisions (what a concept!). Likewise, most doctors care about preserving their patients’ finances, too.

Overall, absent a third-party payer, both the patient and doctor have motivation to minimize defensive medicine. But with third-party payment, neither the doctor nor the patient is so motivated. Your point is well taken that liability insurance can be very expensive in certain fields, like obstetrics, and certainly contributes to the service costs. The egregious publicized jury awards are often the result of a courtroom drama where the plaintiff’s attorney is a better actor and convinces a gullible jury to dig deep into pockets of the liability insurance company (another third-party payer situation) for the benefit of the injured innocent child. That’s an easy sell. But would a jury dig so deep into the pockets of a hardworking and caring obstetrician?

I wouldn’t trust legislation to “fix” the malpractice problem by capping awards. But perhaps governments should look into determining what prior legislation they have foolishly enacted that has contributed to this situation.

As always, if you have any questions or suggestions for the Dispatch, send them to us right here.