jwithrow, Author at The Phoenician League

Investing in an America First World

The first snowfall of the new year fell upon the Virginia highlands last night. We awoke to this scene:

It’s a wet, thin snow… which is not nearly as pretty as the fluffy powder that blankets the trees. The wet snow is also decidedly more difficult to brush off of the solar panels atop my office roof.

Still, I never tire of seeing a winter wonderland in the mountains. It’s been nearly twelve years since we’ve been at this property – and we get excited for the prospects of snow every time.

With that said, let’s shift gears today…

We’ve been talking about the economic and societal implications of America’s Great Reorganization for months now. Today, let’s talk about investing in an America First world.

The Undeclared Recession of 2023

We’re continuing our discussion on America’s Great Reorganization this week.

When we left off yesterday, we were talking about what would happen if the DOGE team of Elon Musk and Vivek Ramaswamy managed to cut $2 trillion in government spending. Would there be a recession?

My suggestion is that we’ve already been in a recession for over a year now… except it’s impacted certain elements of the American population far more than others. Low-income households, renters, middle-wage workers, young families with children, and retirees on limited incomes have each struggled mightily over the past year.

Housing, rent, and food costs have risen dramatically… as have child care costs. Meanwhile, official statistics show that the record level of household savings we saw during the Covid hysteria has evaporated. Worse, auto and credit card delinquencies have ballooned.

My friends at Bonner Private Research use a proprietary model to measure the health of the real economy. It’s called the Doom Index (version 2) – and it uses real-world data, not government statistics which are constantly dressed up.

The latest Doom Index reading illustrates the undeclared recession of 2023 very clearly:

DOGE, recessions, and GDP…

I hope you had a wonderful Christmas holiday. This is such a magical time of year… and a great time to reflect on both our blessings and our aspirations.

It’s been over a week since I’ve written. We had an unexpected death in the family that called us to Cincinnati for a memorial service.

If I may, I’d like to share with you a picture I took of the memorial table:

See the large portrait in the center above the urn?

That’s a self-portrait that the man who left us drew of himself prior to his death. He wrote an accompanying note to his family and friends as well. It’s a short note that thanks the reader for their love and friendship during his lifetime.

Per his wishes, this portrait was printed onto a wallet-size card and laminated with his note on the back. The family placed hundreds of those cards on a table at the memorial service. Those who attended were invited to take a card home with them.

This struck me as an incredibly self-aware thing to do. It also illustrates something of a stoic mindset. To be comfortable with one’s eventual death is to know the ultimate peace.

Getting back to the realm of finance and economics…

Are we heading into a recession?

Yesterday we looked at the America First plan to recapitalize the United States.

To summarize briefly, that plan entails collateralizing Bitcoin and using it to backstop the US dollar to a certain extent while also drumming up significant institutional demand for US Treasuries to reduce the need for direct foreign investment. This will help stabilize the US dollar so that it can continue to serve as the world’s reserve currency for an extended period of time.

Meanwhile, the DOGE duo of Elon Musk and Vivek Ramaswamy are tasked with balancing the federal budget… or at least coming close. That’s essential to solidifying the US government’s finances and avoiding a massive debt spiral that would crash the entire system within the next four years.

It all goes hand-in-hand. The plan won’t work if they fail to execute any single aspect of it.

The DOGE team has the hardest assignment here. They have to figure out how to cut nearly $2 trillion from a federal budget that has morphed into a massive, out-of-control blob.

This task involves eliminating massive amounts of what we call corporate welfare and downsizing the federal government’s employment roll dramatically. There’s no way around that.

Some analysts in my circle believe that this would automatically create a major recession.

After all, the nearly $2 trillion figure we’re talking about represents the fiscal deficit. It’s money that the government “prints” and injects into the economy to pay for things that otherwise wouldn’t be paid for. How could you put a stop to that and not have a recession?

Perhaps they are right… but I’m not so sure.

The America First plan is falling into place…

We’ve been talking recently about the recapitalization of the United States.

There’s an old saying that if you want to know what’s going on, you have to follow the money. And the money is suggesting that institutional capital—large entities like pension funds, endowments, and insurance companies—are betting on significant policy changes.

My read is that we’re going to see a sincere effort to recapitalize the American economy. This will require a significant restructuring of America’s financial and economic framework on three levels:

Government Debt and Fiscal Health
Economic Revitalization
US Dollar Stability

Last week we touched on how Bitcoin fits into the picture. We noted that there’s strong support within the Trump administration for creating a Strategic Bitcoin Reserve for the country. That plan entails purchasing 200,000 bitcoins a year for five years.

As we discussed, this signals that Bitcoin will become a prime source of collateral within the dollar-based financial system. But there’s a lot more to that story than meets the eye…

The American Dream, Bitcoin, and Ripple – where are we today?

The holiday season is upon us… it’s such a magical time of year.

We visited my aunt at the old family home this past week. It always brings back fond memories.

My great grandfather Joseph Ellis built the house in 1934. It’s a beautiful two-story brick house with round white columns supporting the front porch. The architecture is very Jeffersonian – in a simple kinda way.

Ellis was born in Beirut, Lebanon in 1878. Seeking the American Dream, he immigrated to the US in 1895 – along with his wife Zelpha and a few other Lebanese families.

They entered the country through the Ellis Island immigration station and went through the examination and registration process. That’s where he got the surname “Ellis”. I’m not sure if it was his choice or the immigration officers’ decision, but somebody decided it would be better for him to have the last name Ellis rather than his Arabic name.

Upon completing the registration process, Ellis and his wife were deemed “Naturalized” and permitted to enter New York City. From there, this cohort of Lebanese families traveled south. They eventually settled in a small paper mill town up in the Virginia highlands. The mountains reminded them of home.

Once settled, Ellis opened a restaurant in Covington. I’m told they were the first restaurant in town to have pizza on the menu. The Italian immigrants wouldn’t show up for another several decades.

Ellis worked seven days a week in the restaurant for much of his life. But it afforded him the ability to have four children and eventually build the family home in 1934. It’s perched atop a large hill overlooking the town.

Here’s a picture I took this past week:

What the Dow and the dollar are saying…

I’m a bit tardy in following up on our conversation this week. But it’s a good one…

Last week we noticed an odd correlation – the Dow Jones Industrial Average (DJIA), the US Dollar Index (DXY), Bitcoin (BTC), and Ripple (XRP) each surged higher immediately after last month’s presidential election here in the US.

It would be one thing if these were overnight moves higher that immediately reversed. But that’s not what we saw. Each of these assets ripped higher in the 30 days following the election:

Dow Jones Industrial Average: +6.6%
US Dollar Index (DXY): +2.8%
Bitcoin (BTC): +43.8%
Ripple (XRP): +361%

With the exception of Bitcoin, each has pulled back slightly this week – which is to be expected after such a strong run. But it’s not so much their price action that’s interesting… it’s what that price action is telling us.

As we noted last week, most activity in the financial markets is driven by institutional capital flow – much of it automated. The strong moves we’re talking about here weren’t driven by individuals each investing a little bit of money into these assets. It took tens of billions – likely hundreds of billions of dollars – to drive prices higher like this.

I suggested last week that this was a signal. Institutional capital—large entities like pension funds, endowments, and insurance companies—are betting on a recapitalization of the United States.

Here’s how that applies to each of the assets that surged higher after the election…

The last piece of the recapitalization puzzle…

We’ve been talking about the pending recapitalization of the United States this week…

For those just joining our conversation, enormous amounts of investment capital has flowed into American assets, Bitcoin, and other cryptocurrencies over the past month. If we look at the charts, it’s clear that the presidential election was the catalyst driving these moves.

Government Debt and Fiscal Health
Economic Revitalization
US Dollar Stability

We talked about the US government impending debt wall and the need for dramatic spending cuts on Wednesday. And we hit on the prospect of economic revitalization yesterday.

Today let’s tackle dollar stability. And it starts with this chart…

Economic Overhaul: The Urgent Need for US Recapitalization

As we discussed yesterday, we’ve seen some interesting moves in the markets over the past month – including a very curious correlation between the Dow Jones Industrial Average, the US Dollar Index, Bitcoin, and Ripple.

These moves are sending a signal. They suggest that we’re going to see a major recapitalization of the United States.

Simply put, bad policies over the past 50 years have put the federal government on the precipice of default. The current trajectory cannot continue for much longer.

If we account for its massive unfunded liabilities in future Social Security and Medicare payments, the US government is already insolvent. If it were a private company, it would have already had to file for bankruptcy.

It’s obvious that the globalist faction welcomed the chaos that would come from a US government default. That’s how they envision instituting a centralized global government – creating order out of chaos.

What the markets are telling us right now…

The Dow Jones… the US dollar… Bitcoin… Ripple…

They have each surged higher over the past month. Something’s going on here…

We wouldn’t expect these four assets to be correlated with one another. Never before have they each benefitted from the same trend.

Now, it would be one thing if these four assets just happened to perform well on the same day – showing small gains. But that’s not what we’re talking about. Here are their gains over the past 30 days:

Dow Jones Industrial Average: +6.6%
US Dollar Index (DXY): +2.8%
Bitcoin (BTC): +43.8%
Ripple (XRP): +361%

These are massive moves for each asset over a one-month time period… and that’s never happened before for each of them at the same time.

Historically, it’s not uncommon for the Dow and the US Dollar Index to rise in tandem. But typically we would expect Bitcoin and Ripple to fall when those two rise.