Donald Trump (National Socialist) - Part 2

Donald Trump took two more steps down the road to national socialism today. (See: https://shulmaven.blogspot.com/2025/09/donald-trump-national-socialist.html ) First, his Justice Department announced a criminal investigation of Fed Chair Jay Powell to further his attempt to control the central bank. In March 1933 Hitler appointed Hjalmar Schacht to lead the Reichsbank to reinforce his control over the economy and to secretly fund the military as part of his first 100 days.

 

Second, his Department of Labor put out a slogan on social media calling for “One Homeland, One People, One Heritage.”  This slogan brings to mind the Nazi slogan “Ein Volk, Ein Reich, Ein Fuhrer,” which means “one people, one nation, one leader.”  Whether the Department of Labor knew its historical antecedents or not, it is a troubling sign. All the while the Department of Homeland Security is over-reaching, to put it mildly, in rounding up illegal immigrants. To anyone with a historical memory, it is not a pretty sight.

Venezuela: Too Early to Tell

Much has been written about the rendition of Venezuelan President Nicolas Maduro to the United States to stand trial on drug trafficking and arms smuggling charges. We have had predictable reactions from the Right hailing it as successful operation to remove an anti-American  dictator and from the Left attacking it as a throwback to the Yanqui Imperialism of the early 20^th Century that will lead to a quagmire.

 

To me, it is far early to tell how it will turn out. What we do know is that Maduro was an evil dictator who tortured and murdered his people with abandon and the country has a heavy presence of Russian, Chinese, Iranian, and Cuban forces. Thus, Venezuela represented a threat to U.S. security. Whether the threat is imminent or not is an open question. We also know that Venezuela possesses the largest oil reserves in the world, but much of it consists of tar sands which is costly to produce and that the oil fields are operating in a dilapidated condition causing oil production to drop from three million barrels a day to just under a million barrels a day over the past 20 years.

 

We are far from being reassured by Trump talking about oil and not talking about a return to democracy. Indeed, the entire security apparatus of the Maduro state remains intact. We do not know to what degree Vice President and now President Delcy Rodriguez will cooperate with Trump. She has given off very mixed signals, and we don’t know where the army will end up. We can surmise that given the intelligence that was available to the U.S military, it is likely that someone on the inside is working for us. Who that person or persons are, and their future role will be critical in the days ahead.

 

Trump is opting for stability over democracy. That may work in the short run, but if there aren’t any plans for elections after six months this whole adventure could go south very quickly. It is obvious that the Democratic Opposition would win an election; they did so under Maduro’s control. The question is whether or not the Maduro security apparatus will allow an election to take place and if it does take place will they allow the winner to be seated. Before rushing to judgement let’s give it some time for events to play out.

 

Outside of Venezuela both China and Russia are looking on. They too can make similar moves in the Taiwan straits or the Baltic States, respectively.

My Review of David McWilliams' "The History of Money"

Money Makes the World go Round

 

Irish economist David McWilliams has written a very informative and entertaining book on the history of money with loads of anecdotes. McWilliams views money as one of the great innovations of human beings just behind fire and the wheel. Why? Money facilitates intra-community and inter-community transactions to the benefit of society as a whole. As the great economist Paul Samuelson noted that money is a social contrivance. McWilliams argues that puts human interactions into overdrive as the lust for it propels economic progress.

 

He takes us back in time to the Sumerian Civilization of 2000 BCE where a handful of grain equaled a shekel and where there were lending transactions calling for the payment of interest all the way up today’s quantitative easing of central banks. The first real breakthrough occurred around 1500 BCE where in Lydia the first gold coins were produced. Later Greek and Roman coinage unify the Mediterranean region as one giant free trade zone.

 

McWilliams history is not dry. He introduces us to Johannes Guttenberg of printing press fame who was quite the scoundrel. One of the original users of his new technology was the Catholic Church where the printing press automated the production of indulgences which brought in great wealth. Calligraphy was out and printing was in. He also tells us that much of the church land in Europe came from the foreclosing of mortgages of the nobility. We also witness John Law’s Mississippi Bubble in France which cratered the economy and made banking a scandalous profession where the name bank was not used for years.

 

There is also an interesting vignette on James Joyce, who while living in Trieste owned a movie theater and later owned one in Dublin. The great writer was from immune from the temptations of money.

 

Gold plays a key role in the history of money. It was widely used for centuries as the coin of the realm. For example, the Florin gold piece of the Florence Republic was widely circulated for three hundred years. However, over time gold backed paper notes were used in place of physical gold thereby creating the gold standard.

 

McWilliams is a critic of the gold standard because it places the economy in a straitjacket by limiting the supply of money which, in his opinion, slows economic progress. When money is easy, but not too easy to cause inflation, the way is open for all kinds of invention and innovation. He believes that the gold standard stifled innovation and thus progress making him a strong proponent of the central bank managed (fiat) currencies we have today. Of course, fiat currencies require a high degree of trust in the issuing authority. Without that its value craters.

 

Here, I think, he goes too far. Economist Robert Gordon makes a convincing case that the bulk of economic progress that we have today arose from 1870-1940 where for almost all of that period the gold standard reigned supreme. (See: Shulmaven: My Amazon Review of Robert J. Gordon's "The Rise and Fall of American Growth" ) Think automobiles, electricity, telephones, indoor plumbing, aircraft and radio, for example. I would note that in 1879 the year the U.S. returned to the gold standard both the incandescent light bulb and the telephone were invented and over in Germany the internal combustion engine was invented and in the 1880’s the U.S experienced a record railroad building boom. It is hard to make the case that the gold standard stifled progress. What did in the gold standard were the huge distortions caused by the financing of World War I and the subsequent battles over reparations and inter-war debts.

 

McWilliams argues that money subjugated the people under colonial rule from 1600- 1960. That was certainly true of Belgium’s barbarism in the Congo caused by the need for rubber to make bicycle tires at the turn of the 20^th Century. Those tires were invented by the Irishman John Dunlop. However, Latin America was liberated in the early 1800’s and long-term economic growth in that entire region was hardly stellar.

 

McWilliams has the U.S. leaving the gold standard in 1936; it was, in fact, 1933. He has the United States returning to the gold standard in 1873; it was 1879. In 1873 the U.S. started the process of returning to the gold standard but wasn’t fully realized until the fulfillment of the Resumption of Specie Act in 1879. My quibbles aside, McWilliams has written a very lively book on what makes the world go round.

My Review of A. Wess Mitchell's "Great Power Diplomacy"

 The Art of the Deal

 

Diplomat/historian A. Wess Mitchell has offered us a long history of diplomacy starting with Sparta’s conflict with Athens in 400 BCE up to the Nixon/Kissinger opening of China in the 1970’s. Instead of the direct application of force Mitchell views active diplomacy as a way of getting the best out of a weak hand and as a way to strengthen a strong hand in the game of nations.

 

His case studies also include Byzantium’s struggle against the Huns and Persia, Venice making peace with Milan to engage the Ottoman’s, Austria’s many struggles in Central Europe, France’s grand strategy in the 1600’s, Bismarck’s in the 1800’s and Britain’s at the turn of the 20^th Century. Above all to Mitchell, interests triumph over ideology requiring a nation to play the hand with the cards it is dealt.

 

Especially interesting to me was Austria’s Prince Kaunitz, Metternich’s predecessor, using Louis XIV’s mistress Madame Pompadour as a go between to establish an alliance with France against Frederick the Great’s Prussia. A few years later we see Austria, guided by Metternich making an alliance with Prussia to stave off France. Indeed, interests are far more permanent than alliances. Also fascinating are the machinations of France’s Cardinal Richelieu making an alliance with Protestant Sweden against Catholic Austria. Mind you this is against the backdrop of huge religious strife in Europe.

 

Mitchell discusses at length Britain’s realization that by 1900 it was overstretched and had to reduce its global commitments. Mitchell follows Lord Landsdowne as he makes deals with Japan limiting its involvement in the Western Pacific, with Russia in Central Asia and with the Untied States in the America’s. All of this was necessary to gird the nation for the war that would come with Germany. If there is one message in the book is that core interests take precedence over peripheral interests. This blog previously reviewed Kori Schaki’s work on the same topic. (See: Shulmaven: My Amazon Review of Kori Schake's "Safe Passage: The Transition from British to American Hegemony" )

 

Another lesson of the book is the importance of mobilizing effective coalitions and isolating the enemy. The worst thing that can happen is to be isolated against a strong enemy. Opponents have to be constrained and if they can’t be constrained by the threat of force, bribery sometimes works as in the case of Byzantium buying off the Huns. But bribery should not be confused with appeasement of a direct rival. In the case mentioned Persia was the direct rival and the bribes enabled Byzantium to hold its own.

 

In reading Mitchell’s book, one has to shudder just to think about Trump’s foreign policy. Instead of making alliances, he is destroying them and making America more isolated while Russia and China are moving in the fill in the vacuum, not a pleasant sight. ( See: Shulmaven: Some Thoughts on Trump's National Security Strategy ) One would hope that at least a few Trump staffers would sneak away to read this valuable volume on foreign policy.

 

2026: A Year of Turbulence

  “ When the music stops, in terms of liquidity, things will be complicated. But as long as the music is playing, you’ve got to get up and dance. We’re still dancing.”

                          Chuck Prince, Citigroup CEO, July 2007

 

Before discussing the outlook for 2026, I would like to review what we got wrong and what we got right about 2025. (See: https://shulmaven.blogspot.com/2024/12/2025-revenge-of-bond-vigilantes.html )

 

·       Yet again we were wrong about the stock market. Instead of the S&P 500 trading in a 6400-5500 range stocks traded between 6900- 4900 and closing at the top of the range. We thought stocks would end the year lower.

·       We were right about inflation running at 3% annual rate. The year-over-year change in the CPI of 2.7% reported for November will be revised higher to correct data errors.

·       We were right about tariffs and the mass deportations of illegal/undocumented immigrants.

·       We were wrong about the 10-Year U.S. Treasury yield exceeding 5%. The yield peaked early at 4.79% and trended lower towards 4%.

·       We were mostly correct about the passage of the Trump tax cuts thinking that the 2017 cuts would be extended and the SALT deduction would increase to $20,000, it turned out to be $40,000 with an income cap. We were wrong about other aspects of the Trump tax package that passed. (i.e., no tax on tips and overtime)

·       We were wrong about Congress taking down two Trump cabinet appointees.

·       We were right about Israel attacking Iran’s nuclear infrastructure.

·       We were right about France being on the road to becoming the new Greece.

 

Because I am a glutton for punishment here are my thoughts about 2026.

 

·       Inflation will run hotter than what the market expects. It will end the year at a 4% run rate. The combination of fiscal stimulus, monetary ease and AI capital spending will propel inflation higher. 3% will be the new 2%.

·       The yield on the 30-year U.S. Treasury bond will approach 5.5% causing both the Treasury and the new Trump Fed to institute a policy of yield curve control. It has already started with the Fed buying $40 billion of T-Bills a month through April and the Treasury swapping long term bonds for T-Bills.

·       Gold will surge past $5,000/ounce.

·       Stocks will trade in a broad 7500-5500 trading range and close down by more than 10%. The $310 of S&P 500 estimated earnings will not be enough to levitate stock prices. Put simply, the time to dance will soon be over.

·       NVDIA margins will take a big hit late in the year as competition forces price cutting. (See: https://shulmaven.blogspot.com/2025/12/the-economic-obsolescence-to-nvidia-gpus.html )

·       The Democrats will seize control of the House gaining anywhere between 15-40 seats and could very well take the Senate. Just to note the last time one party controlled all three branches of government was 2003-2006 inclusive and before that it was 1977-1980 inclusive. Americans like divided government. I would also point out that in wave elections partisan redistricting actually hurts rather than helps. ( See: https://shulmaven.blogspot.com/2018/07/gerrymandering-wont-save-republicans-in.html )

·       The Minnesota Medicaid scandal will reach into the offices of Governor Tim Walz and Congresswoman Ilhan Omar.

·       Israel will again attack Iran’s nuke and missile infrastructure.

·       Khamenei will meet his virgins in the sky and Maduro will be out.

 

As usual I end with I am often wrong, but never in doubt.

Some Thoughts on Trump's National Security Strategy

Earlier this week the Trump Administration released its updated National Security Strategy. (See: https://www.whitehouse.gov/wp-content/uploads/2025/12/2025-National-Security-Strategy.pdf ) Needless to say that given the howls that went up, it was far from being universally applauded, especially in Europe. Europe is rightly concerned that the era of having a NATO umbrella over the continent is over. However, given earlier commentaries coming from Vice President Vance, in particular, the document should not come as a surprise. Trump’s policy of selling out allies and cozying up to adversaries is all there in black and white.

I have three preliminary thoughts on the strategy. First, it is harkening back to the America First of 1939-1941. It focuses in on hemispheric security to the exclusion of Europe and just has America First leader Charles Lindbergh was open to a modus vivendi with Nazi Germany, here we have America open to a condominium with Putin’s Russia. It certainly does not bode well for Ukraine and for that matter Israel. Further, the strategy puts policy muscle behind Trump’s Caribbean buildup against Venezuela. To the Trump Administration Latin America is now part of an American economic zone.

Second, there is the strong smell of Yalta in the document. Instead of Roosevelt and Stalin dividing up Europe, we now have Trump, Putin and especially Xi dividing up the world into spheres of interest. The glue holding the deal together is economic self-interest. Where Taiwan fits into this over the longer term is very ambiguous.

Third, there are some hard policy realities behind the document. Europe has the ability to defend itself against Russia; it only lacks the will. Russia remains bogged down in Ukraine after more than three years of war indicating it is not as strong as once thought. If Ukraine can hold its own against Russia, so too can a much larger Europe.

What perhaps pissed off Europe the most was that the document called out its “civilization decline.” Unfortunately, that is the reality, and Europe has to recognize that advanced welfare states cannot run a policy of open borders without severe consequences. Simply put, in a generation Europe will not be the Europe of history. Net net, the policy calls for the U.S. to be an offshore balancer with respect to the world outside of Latin America. (See: https://shulmaven.blogspot.com/2025/08/my-review-of-andrew-lamberts-no-more.html )

My Review of Volker Ullrich's "Fateful Hours: The Collapse of the Weimar Republic, 1918-1933"

The Slow Descent into an Abyss

German historian and Hitler biographer Volker Ullrich ( See: Shulmaven: My Amazon Review of Volker Ullrich's "Hitler: Downfall, 1939-1945 , Shulmaven: My Amazon Review of Volker Ullrich's "Hitler: Ascent, 1889-1939", and Shulmaven: My Amazon Review of Volker Ullrich's "Germany 1923: Hyper Inflation, Hitler's Putsch and...." ) has chronicled the rise and then the slow collapse of the Weimar Republic, 1918-1933. ( See: Shulmaven: My Amazon Review of Frank McDonough's "The Weimar Years: Rise and Fall 1918-1933" and  Shulmaven: My Amazon Review of Benjamin Carter Hett's "The Death of Democracy: Hitler's Rise to Power and the Downfall of the Weimar Republic"   )  Like others Ullrich does not believe that the collapse was inevitable and neither was the rise of Hitler. There was much human agency involved as well as three untimely deaths.

The first and most dramatic was the political assignation of foreign minister Walter Rathenau in 1922. Rathenau had just shocked Europe with the Rapallo Treaty with the Soviet Union and was working on solving the reparations crisis. He was perhaps the only German statesman that the Allies trusted enough to make a deal on reparations. With his death the road was open to the reparations crisis of 1923 which brought on the occupation of the Ruhr and the hyper-inflation of 1923, a shock that Germany would not really recover from.

The second two would die of natural causes. President Friedrich Ebert died in 1925 paving the way for Paul von Hindenburg and  former prime minister and foreign minister Gustav Stresemann in 1929.  Although Stresemann was the leader of the right wing German National People's Party, he firmly supported the Weimar Constitution and he showed his mettle in Ruhr/inflation crisis of 1923. He was, perhaps, the only politician in Germany who could have taken on Hitler. 

Ullrich believes that, at the outset, Weimar did not do enough to reform German society, especially after the general strike of 1920 put down the Kapp putsch. Whether the Social Democrats had the will and the power to do it is an open question. Indeed, they relied on the Frei Corps to put down a communist revolt in 1919. Of course, had they succeeded, history would have taken a different turn.

To Ullrich the election of the authoritarian Hindenburg represented the hinge of German history. It was Hindenburg along with the machinations of prime ministers Franz von Papen and Kurt von Schleicher that enabled Hitler to come to power in 1933. They though Hitler could be controlled, but they were immediately disabused of that notion.

In my mind Ullrich doesn’t spend enough time on the socialist/communist split. Had those two leftwing parties held together they had the votes to stop Hitler. Instead, the communists went to bed with the Nazi’s in 1931-32 helping to bring down the Bruning government. They did this just when Heinrich Bruning’s policies were on the brink of success at the Lausanne Conference, which suspended reparations payments.

To sum up, Weimar was dealt with a bad hand that it played well for a while, but at the end of the day it wasn’t quite enough. Ullrich warns that today in the West we have a far better hand, but it remains to be seen whether the forces of the populist Right will be contained. We ignore his warning at our peril.