Feared, Not Loved, by Robert Gore

One of the smarter things Donald Trump said during his campaign was that the stock market was in a “free money”-fueled bubble. He told Fox Business in early August that he was out of the stock market and “warned of ‘very scary scenarios’ ahead for investors” (“Trump says he ‘got out’ of stock market,” money.cnn.com).

The nominal national debt almost doubled during George W. Bush’s presidency and almost doubled again during Obama’s, to nearly $20 trillion. Estimates vary, but that $20 trillion is one-fifth to one-tenth of the US government’s unfunded medical and pension liabilities (the US GDP in 2015 was $17.914 trillion). Government, corporate, and personal debt in the US are all greater, in absolute amounts and as a percentage of the GDP, than they were before the last debt crisis began in 2008. The Federal Reserve’s balance sheet has expanded by roughly five times since that crisis.





Sometime during the next four years history’s greatest debt bubble will pop. While most watched the crash in equity futures on election night and the huge recovery and rally the following days, the truly noteworthy action has been in the bond market. The yield on the benchmark ten-year US Treasury note has jumped from 1.80% to 2.23%, or over 20 percent. Pondering Trump’s pledges to significantly increase military and infrastructure spending, cut taxes, and not touch entitlements, the market concluded that much more debt is on the way. Hence the mark-down in bond prices, the mark-up in interest rates, and an acceleration of the bear market that began in July.

If Trump is confronted with a financial and economic crash, he will have a choice. He can let it happen, or he can apply the usual nostrums—big increases in government spending, intervention, and debt, and further expansion of the Fed’s balance sheet—and keep America not great for the duration of his probable one term. In other words, he can be like Woodrow Wilson and Warren Harding, or he can be like Herbert Hoover.

Wilson and then Harding did nothing to stop a depression that started towards the end of Wilson’s term in 1920; interest rates were allowed to rise. They recognized that depressions have their uses. Unsustainable debt is rescheduled or repudiated, uncompetitive companies close, assets are repriced and move from less efficient to more efficient entrepreneurs and businesses, capital goods and labor are redeployed, and the way is cleared for economic and financial renewal. That one was severe, but it was over in eighteen months and set the stage for the Roaring Twenties (see “The Forgotten Depression,” James Grant, 2014).

Hoover, faced with a similar situation, followed all the policies contemporary Washington knows and loves. The New Deal—spending, public works, expanding the debt, and economic meddling—actually began during his administration. Roosevelt merely expanded it and threw in monetary depreciation, revaluing gold against the dollar. That’s why there was no Roaring Thirties, but those policies have been standard operating procedure ever since.

If Trump wants to upend eight decades of business as usual, he’ll not fight the impending, sorely needed wash out. Coming after so many doses of consequence-delaying, zombie-maintaining Keynesian snake oil, it will be severe and global, but if allowed to happen, not necessarily prolonged. Given the weakness of the last snake-oil promoted “recovery,” more of the same will not stop or even delay the pain. It will only keep politically favored zombies alive and increase the public’s already monumental anger at bail outs. Assistance should be confined to those—and there will be many—in truly dire economic straits.

If Trump follows the conventional course his presidency will fail. If he explains where the depression came from and why he has no choice but to let it happen, the economy will contract but emerge on a sounder footing, and he has a chance of presiding over a recovery. Either way, Trump, the most polarizing president-elect since Lincoln, is not destined to be loved. He should consider Niccolò Machiavelli’s sage advice in The Prince.

And here comes in the question whether it is better to be loved rather than feared, or feared rather than loved. It might perhaps be answered that we should wish to be both; but since love and fear can hardly exist together, if we must choose between them, it is far safer to be feared than loved. For of men it may generally be affirmed that they are thankless, fickle, false, studious to avoid danger, greedy of gain, devoted to you while you are able to confer benefits upon them, and ready, as I said before, while danger is distant to shed their blood, and sacrifice their property, their lives and their children for you; but in the hour of need they turn against you. The Prince, therefore, who without otherwise securing himself builds wholly on their professions is undone. For the friendships which we buy with a price, and do not gain by greatness and nobility of character, though they be fairly unearned are not made good, but fail us when we have occasion to use them.

Washington must fear Trump if he is to have any chance of a successful presidency. He was elected to put fear there; his supporters will desert him if he doesn’t. He will never be loved. One enters a nest of vipers with a blowtorch. The advice Trump is getting to make nice-nice with the vipers is dangerous twaddle. If he accepts business as usual, he’s done before he starts. While everything he does must be procedurally correct and comport with the law, he has to make Washington sweat.

If you’ve ever been audited by the IRS, you know cold-sweat fear. It’s time to put the shoe on the other foot. The federal government spends almost $4 trillion a year. Past spending and current budgets cry out for a comprehensive audit. Congress passed a law twenty-five years ago mandating an audit of the Defense Department; it has yet to comply. Trillions of dollars have been wasted over that time. A team of outside auditors should examine not just Defense, but the entire federal government. Make it a requirement before any agency or department can submit its next budget.

The auditors will find not just unaccounted-for spending and sloppy bookkeeping, but diversion of funds, corruption, and criminality. Whatever they uncover should be investigated. The beauty of audits is that anybody who objects to them sounds like a venal idiot, given the US government’s well-documented record of wasteful spending. Audits would allow Trump administration to the seize the initiative and put opponents and backstabbers on the defensive. And nobody can object to subsequent investigations if that’s where the audits point.

Speaking of investigations, nothing would provoke more fear and outrage among the ruling elite than if Trump fulfilled his second-debate pledge and appointed a special prosecutor for Hillary Clinton. Who knows where that might lead, including up to the departing president himself. Obama may issue a prospective pardon for the Clintons before he leaves office, but Trump should force his hand. If the Clintons are to be swept under the rug, put Obama’s fingerprints on the broom. Of course, if the Clintons have nothing to hide, no pardon will be required.

A final suggestion: as soon as possible Trump should end a US military intervention somewhere and terminate a government program, agency, or department, the bigger the better. Those would be dramatic departures from how Washington has operated for decades and save money in the coming era of fiscal austerity. Just the idea that something can actually be terminated will have the capital crowd shaking in their Guccis.

Until the swamp is drained, there is no prospect of making America great again.

how america became great—the novel

TGP_photo 2 FB




18 responses to “Feared, Not Loved, by Robert Gore

  1. Lets hope he is even bolder than that. If not then I hope we can have a total collapse so we can finally rid ourselves of the slimy IIKK we have been marinated in for 103 years. And yes I do know what I’m wishing for.
    Recently I was dying of pneumonia I had to kill it with powerful doses of antibiotics which in the process killed off my own natural ones and it was nearly 3 months before I was healthy again. Nothing we might have to go through would be worse than the slow death of our souls we are going through with liberalism stuck fast to our necks.
    The sharp pain of growth beats the dull ache of dying a piece at a time.

    Liked by 1 person

  2. “One enters a nest of vipers with a blowtorch.”
    I like this as the correct approach. This should get the temperature hot enough to fry some fear fat, drain the swamp, and toast marshmellows to celebrate( a big IF). Hope Trump follows this article’s path.


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  4. Robert Buckley II

    I couldn’t agree more with the premise of the article. However, I don’t know if Trump is the person who can communicate to the nation why he would be doing what Mr. Gore suggests. I found it hard to watch Trump in the debates or at his rallies because his speaking style does not come across as informed. Some of his prepared speeches were well done and I would come away with a better sense of the man.

    Personally, I am not trusting that Trump can drain the swamp on his own. I have thrown in with The Convention of States Project that has sparked a very large ( 2 million+) grassroots movement to convene an Article 5 convention of the States to amend the Constitution to limit the scope and power of the Federal Govt., limit spending and taxation and term limit congressmen and judges. This can be done without any approval from Congress or any other Federal official. I hope Trump succeeds but I’m not holding my breath.

    Liked by 1 person

  5. Here’s another one I finished and then thought might be a little too over-the-top, but after reading Obama On Pace To Increase The Debt By Stunning $2.4 Trillion This Year and Obama Sets New Record for Regulations – 81,640 Pages in 2016 . . . well, you make the call. All I can say is that spending two billion dollars on a website may be an indication of fundamental problems that are going to require action more vigorous than merely replacing Obama to resolve:
    Your strategic vision (“Washington must fear Trump”) is sound but I think your ‘audit everybody’ tactical approach is questionable. Too many fronts, too many enemies (i.e. broken rice bowls), not enough public support – or even attention (audits . . . financial investigations . . . budgetzzzzzzzz . . . ), ambiguous objectives / criteria for victory, inadequate weapons. As for that last, it’s not the IRS’s auditors that make you and I sweat, it’s who will show up if we tell the auditors to get lost. Federal bureaucracies are nowhere near so vulnerable in this regard: (“Congress passed a law twenty-five years ago mandating an audit of the Defense Department; it has yet to comply”).

    Better in my view to select one relatively limited, well-defined, high-value (‘high-value’ meaning in this context something destruction of which would in and of itself be substantially beneficial) target, then go full-tilt-Patton berserk on it. The climate / CAFE / eco-fanatic agency-academia-activist mafia mentioned earlier would be an excellent choice, not least because its members and fellow travelers already universally loathe Trump anyway, and its eradication would gain him many supporters among those now ambivalent towards him. Oh, and “must be procedurally correct and comport with the law”? Two words: Plausible deniability. This is not sport, not – even if granting in theory there actually is any such thing – civilized political bargaining. This is war.

    Unambiguous victory in such a battle would put a large and credible stick in Trump’s hand with which to conduct further negotiations. At that time, the other hand should hold an equally sizable carrot. Buying back the aforementioned iron rice bowls will in the long run cost much less than indefinitely filling them, particularly when the bowl-holder’s sinecure entails creating obstacles for those actually working to produce the rice. There should also be some degree of forgiveness for those who filled their bowls by less than strictly legal means; so long as you aren’t an overt sociopath, we don’t want you to go to jail, we just want you to go away – from the trough. Show the fist, then offer the hand – plomo o plata, so to speak. Call it ikdr’s corollary to the iron law of bureaucracy: If a few are shot (figuratively; America is not China – yet – however, if the bureaustatist cancer isn’t excised, it’s only a matter of time) the rest will be grateful to get off with just being fired, especially with a generous severance. The ROI for the country as a whole would be much greater, with a fraction of the outlay, than on $1 trillion of Federal infrapork.


    • You are probably right about the specifics of the audit approach. Too scattershot and too difficult to keep up public interest. I like your idea of going after one big, prominent target. That probably works better. What is important is that Trump imparts fear to Washington. That is not something Washington has much experienced for many years.


  6. this is exactly what needs to be done. The question is can Mr. Trump do it. I have my doubts but then he has surprised me numerous times in the last 2 years. He needs economic advisors that understand this and are able to convince him. Needs to look at what Harding and Hoover did and the results and follow the one who had the good results.


  7. Convention of States (COS)has a solution as big as the problem of government overreach and overspending. The (COS) resolution in the state legislatures applies for convention to propose amendments limited to three areas.
    1. To impose fiscal restraints on the federal government,
    2. Limit the power and jurisdiction of the federal government, and
    3. To impose term limits on all government officials and members of congress.


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  10. Big fear will come with COS. Trump should support COS bigly!


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