Daily Reckoning

Over the weekend, I showed my kids a modern classic: The Dark Knight Rises (2008). Remember the scene where Batman interrogates the Joker? Batman gruffly demands to know, “why do you want to kill me?” The madman replies, “I don’t want to kill you! What would I do without you? Go back to ripping off mob dealers? No, no, NO! No. You… you… complete me.” Something clicked in my mind, and the dialogue reminded me of our relationship with China.

Last week the Supreme Court issued an arcane, procedural order that looks narrow but holds the potential to explode in the future like a buried bomb beneath the national roadbed. Typical headline on “Ballroom” issue. Credit Associated Press. I’m talking about President Trump’s so-called “Ballroom,” or more accurately the ballroom-and-buried-bunker complex that the Orange Man is building adjacent to the White House.

Reuters: Japan’s benchmark 30-year bond yield hit the 3% level for the first time since 1996 on Tuesday amid a broad-based global bond sell-off MarketWatch: From the UK to Japan, bond yields are jumping as US bonds tumble Sometimes, the most obvious problems are the easiest to solve. An alcoholic has problems. His wife doesn’t understand him. His boss doesn’t like him. He needs a new car. His head aches and his friends desert him. But his major problem: he drinks too much. This is very easy to correct.

What does the future of war look like? Drones will play a huge role, clearly. We’ve covered this angle extensively over the past 2 years. But there’s another class of asymmetric weapons we need to talk about. Missiles. Especially when used in combination with large numbers of drones, missiles are a game-changer on today’s battlefield. Let’s examine the evidence. New Evidence Before the war between Russia and Ukraine, we didn’t know what role missiles would play in a modern war.

While teaching one of my graduate classes this summer, an interesting and incendiary topic came up. Students argued that Generation Z, the most recent up-and-comers, were at a massive disadvantage when it comes to earning power. My colleague vehemently disagreed with them, and a near brawl ensued. Sure, there’s a lot of whining going on, but I thought the kids had a point. How on earth can they afford anything with the way costs have spiraled out of control in New York City?

We all feel the pinch of high food prices right now, but don’t blame the farmers. They are getting hit hard. From a recent American Farm Bureau Federation analysis: Farmers growing the nation’s major row crops will collectively lose $32 billion in 2027, up from an estimated $31 billion in 2026… That’s a crazy statistic. The industry will lose $31 billion this year and $32 billion next year. And it’s due to record high input prices.

The earliest forms of money included salt and grain. Both were universally desirable. But there were serious flaws with these “currencies”. Salt would dissolve in water. Grain spoiled. And they weren’t valuable enough. So these items worked for crude barter, but that’s about it. Around 5,000 years ago, when men began to mine and process metals, copper became money. Rings, bars, and even crude early coins. Early on, copper was highly valuable because it could be made into knives, axes, and other tools.

We begin this week’s perambulations with a stroll into the future. So far…the Bubble in the US is broader than any in history. It has been inflating everything it touched for the last 30 years. All bubbles pop, of course. How they pop is the confusing whirlwind we enter today. But don’t worry. Even in the worst crash, real wealth doesn’t disappear, it just changes hands. When the stock market goes down, those with stocks have less paper wealth…and less of a claim on real wealth.

It’s September 1st and we’re ten days out from 9/11 + 25 years. Next week, on Friday, September 11th, we’ll say something suitable for the occasion. But in the runup, I’ve been pondering the meaning – and power – of historical milestones, especially now that we’ve reached a quarter-century post-event, aka the “silver anniversary.” Let’s dig in… Reflection and Recollection The tradition of silver at 25 years began in the 1500s, in German mining towns.

On Friday, Fed Chair Kevin Warsh spooked precious metals with his “hawkish” commentary. Both gold and silver fell around 3% following the Fed’s press conference. Warsh talked tough about inflation, leading to fears of interest rate hikes. According to many financial commentators, interest rate hikes are bad for precious metals. After all, there’s no yield on bullion. So the modern view says that when yields go up, it makes bonds and CDs more attractive, and gold and silver less so.