A friend recently pitched me on his favorite cryptocurrency, XRP.

The core of his thesis was that since XRP trades at just $1.41 per token, it’s a bargain compared to Bitcoin.

Bitcoin trades at $78,600 per coin. So he believed that XRP is wildly underpriced at just $1.41. He told me that buying XRP today is like buying Bitcoin in 2012.

My friend doesn’t have a lot of investing experience, so I explained a key concept to him.

I told him the price of any stock or crypto is meaningless. UNLESS you know how many shares or tokens are out there.

There will eventually be 100 billion XRP tokens circulating in the world. Multiply that by the price of $1.41, and you get $141 billion. That’s the total market capitalization of XRP.

Meanwhile, there will only ever be 21 million Bitcoins in the world. Multiply that by the current price of $78,600 and you get a market capitalization of $1.65 trillion.

On price alone, it appears that Bitcoin is 55,000x more expensive than XRP ($78,600 vs $1.41). But once we factor in the enormous amount of XRP (100 billion tokens), it changes everything.

In reality, Bitcoin is only 11.6x bigger than XRP by market cap (total value).

So no, XRP is not some tiny crypto project which people are getting into early. It is massive. And probably still overpriced (sorry XRP bros).

Stocks Too

The same concepts apply to stocks. Just because a company’s shares trade at $3 doesn’t mean it’s cheap.

Let’s look at two stocks with wildly different prices, but similar valuations (market caps).

Ambev (NYSE: ABEV) is a Brazilian beer company. It trades at “just” $3. But there are 15.5 billion shares outstanding. So its market cap is about $48 billion.

Autozone (NYSE: AZO) is a well-known auto parts retailer and distributor. Its shares trade at $2,902. But there are only 16.3 million shares outstanding. Autozone’s market cap is also $48 billion.

These two stocks trade at wildly different prices ($3 vs $2,902). But investors value them the same ($48B market cap).

All because of a different number of shares outstanding.

We should never buy stocks, or any other investment, simply due to the fact that the price-per-unit is low.

A $1 stock can still be incredibly expensive.

I’ve also had people tell me they would rather own 100 shares of a $1 stock than 1 share of a $100 stock. But if the company does well, it won’t matter.

If it goes up 20%, the gain will be the same either way. You end up with 1 share worth $120, or 120 shares worth $1 each. Same result, a $20 gain on your $100 investment.

Focus on Fundamentals

So we know that the price of an asset tells us nothing by itself.

Much more important are the fundamentals.

We can only judge how cheap or expensive a stock is by looking at its key stats.

• What’s the price/earning (P/E) ratio? Lower is cheaper.
• How does free cash flow look?
• How fast is revenue growing? Earnings?
• What’s the dividend yield?
• Is the dividend sustainable?
• Are there balance sheet problems? Too much debt?
• Is leadership stable? Are they hitting goals?
• What’s the competitive situation? Are they disrupting, being disrupted, or coasting?

We’ll dig further into fundamental analysis soon.

For now, I wanted to clear up this misunderstanding about price vs market cap.

Chasing low-priced stocks is a common error. Don’t get me wrong, occasionally it works. But price should never be what draws us to a stock.

Growth, earnings, yield. That’s what should draw us to a stock. Not a discounted share price.

The post When ‘Cheap’ Assets are a Mirage appeared first on 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.

The Joker craves a worthy adversary, because he realizes it brings out the best in both of them. Steel sharpens steel.

So yes, China’s growing industrial power is a threat to our economy.

But without them, who would give us the motivation to push forward? To make technological breakthroughs?

Not Europe, that’s for sure. Innovation is on life support in the EU.

Japan is past its prime. South America? No, they’re more of a resource-based economy. Canada? Mexico? No, no.

China is our prime competitor for the foreseeable future. And if we play it right, both countries can benefit from this rivalry. Yes, there will be some pain and adjustment.

But capable adversaries bring out the best in people. And in a tight spot, nobody is more dynamic than Americans.

Fruits of the Space Race

Beep… Beep… Beep…

On October 4th, 1957, the Soviets launched the world’s first satellite into orbit. Sputnik shocked the world.

Americans wondered, how the heck did the commies beat us to space?

The U.S. government didn’t waste time. Within a year, it had:

• Created NASA
• Created ARPA, which became DARPA
• Increased engineering and science programs
• Expanded scientific research and education
• Increased government spending and grants for space and industrial research
• Expanded early computer research

The government’s rapid reforms helped us catch up and then surpass the Soviets in space tech.

And the research which started after Sputnik led to incredible breakthroughs like the Apollo Guidance Computer, which was among the first to use integrated circuits. This helped pave the way for the modern electronics age (for better or worse).

The idea that the Soviets were outcompeting us lit a fire underneath the entire country. Government, corporations, and people. All working together to ensure we don’t fall behind.

Intense rivalry is absolutely critical to these types of breakthroughs. We saw it in World War II as well, of course. The British would never have created the first radar network without the threat of German bombers overhead. Turing never would have had the funding or motivation to create early computers, if not for the fact that we really needed to crack the Germans’ Enigma encryption machine.

Of course, I do NOT think we’re going to go to war with China in a kinetic sense. This will stay a purely technological race. Mostly because we’re both armed with nuclear ICBMs (a product of the space race, ironically).

It will be difficult. But if we play it right, there will be truly miraculous, and disturbing, technological breakthroughs going forward. All driven by a fierce competitive spirit.

The AI Race, Too

OpenAI released its first public version of ChatGPT on November 30th, 2022. We’re less than 4 years into this madness.

And the competition with China is heating up. For a long time, Chinese AI models couldn’t compete with America’s.

But in the past year, this has changed. Chinese AI now offers genuine competition to our best.

The rivalry is keeping the big American AI leaders on their toes. We’ve seen a consistent pattern. An American AI leader, usually either OpenAI or Anthropic, will release a new breakthrough model.

China will soon release an AI model 95% as good, but for a much lower cost. Rinse and repeat.

This cycle is what’s driving the huge gains we’re seeing in AI today. And it’s not just software, it’s hardware too. Servers, GPUs, network infrastructure.

For a long time, Nvidia was really the only game in town for building and running modern AI models. But AMD, another American firm, has stepped up its game.

And in China, there’s a hardware renaissance happening. We cut them off from Nvidia’s best AI hardware, so they had no choice but to build their own domestic alternatives.

Now Nvidia is feeling major competitive pressure, particularly from China. So they’re pushing hard to make new breakthroughs. And succeeding.

My point is that we need to use China’s tech progress as motivation to keep our foot on the gas.

And it goes far beyond AI and manufacturing. Pharmaceuticals, R&D, nuclear energy, space tech, and much more. China is challenging us in all these areas.

Having a strong competitor will drive both sides to innovate.

With this rivalry, technology and medicine are set to leap forward in unpredictable and disruptive ways. At times it’s going to be overwhelming, even frightening.

But ultimately, steel sharpens steel. We need a capable adversary to really push the needle. China fits the bill.

Now let’s make sure we win this upcoming phase. In June, I laid out the steps we must take in How We Can Win vs China.

The post The Joker to Our Batman appeared first on Daily Reckoning.

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.

Or as the Associated Press (AP) framed the matter:

WASHINGTON (AP) — A divided Supreme Court on Monday (August 31; BWK) allowed the White House to continue construction on a $400 million ballroom project as lawsuits play out, a win for President Donald Trump as he flexes unprecedented executive power and remakes the capital in his image.

Most imagery of the new structure shows a spacious building with prominent pillars, glass, and the usual gilded glitz of a Trump-brand hotel.

Proposed interior of new Ballroom. Credit White House.

But wait, there’s more! Because, per court filings, apparently the above-ground edifice will cap a deeply buried military complex of nuclear-hardened spaces, communications capacity, medical facilities, and more of the super-secret stuff that supports what people in Washington call “continuity-of-government.”

Marble above. Bunker below. Versailles sur Cheyenne Mountain, one might say.

Does Standing on the Sidewalk Convey “Standing”?

No doubt, you’ve heard the story. Last year Trump ordered that the 1940s-era East Wing be demolished. He then presented drawings for a “Ballroom.” And of course, the usual suspects squealed like stuck hogs.

Naturally – cuz it’s Trump! – a so-called “historic preservation” group sued and argued that the Chief Executive could not reconstruct the White House grounds absent bureaucratic review, if not congressional authority. Then, naturally, a D.C. district judge and two D.C appellate judges took the claim seriously and ordered work halted as the concrete was setting.

Trump’s lawyers appealed and, in a 5–4 decision, the Supreme Court allowed construction to continue while litigation proceeds. The unsigned majority order stated that the court was not deciding whether Trump’s reconstruction project is lawful. Indeed, the outcome rests entirely upon whether the plaintiff has what’s called “standing” to bring suit in the first place.

Standing sounds like a term from the legal weeds but is, in essence, the key to the door of the courthouse. That is, if I’m standing on the sidewalk and your tree falls on my head, arguably I have standing to sue you because I was injured. But if I’m standing on the sidewalk and I don’t like the paint color on your house, I’m not really “injured” enough to have standing to sue, right?

Basically, if you show standing, you can sue; if you lack standing, you can’t file. And in this case, per the Supreme Court, absent standing by the preservation group, Trump and his construction crews can continue to erect steel and stone.

Which returns us to that vote, 5–4. Four justices, including Chief Justice Roberts (full disclosure: a classmate of mine at Harvard), apparently believe that the plaintiff has enough stake – aka standing – in the White House project to keep the case alive. Plus, Roberts and the court’s three liberal justices opined that the construction was “likely unlawful.”

But five justices thought otherwise. Which means that only one vote separates “likely unlawful” construction from the ancient legal concept of “pour more concrete.”

Is this crazy, or what? We’re not talking about patching potholes in Pittsburgh. This is the White House, easily among the most recognizable buildings in the world. And the lawsuit is about presidential power to build and rebuild without bureaucratic and legislative signoff.

Five justices said the plaintiff cannot sue the president. But four justices said that a guy walking his dog outside the fenceline can seek judicial remedies and slam the brakes on further construction.

At which point, this whole thing is NOT about marble, fancy pillars and gold gilt, let alone the bomb shelter. It’s about the rules of political combat in our Republic. That is, who may sue whom? Over what? And when is a claimed “injury” sufficient to open the big bronze doors of the courthouse?

Meanwhile, in terms of Supreme Court jurisprudence, when does the so-called “highest court in the land” determine that a dispute is too radioactive? And then bury the Geiger counter beneath the doctrine of standing?

The Trapdoor of Standing

If this issue seems familiar, recall December 2020 when the State of Texas filed what’s called an “original jurisdiction” action in the Supreme Court against Pennsylvania, Georgia, Michigan and Wisconsin over election procedures from that year. Sixteen other states joined the case.

Under the Constitution’s original jurisdiction language, the Supreme Court is the forum for disputes between states. And Texas’s filing was no jailhouse missive scrawled on some yellow legal pad. In fact, Texas had a long list of claims, and soon the docket was packed with related, supplemental filings, including many well-crafted “amici” briefs from serious players. And of course, the defendant states filed answers.

Whatever one might think of the Texas allegations, at an institutional level the question was national and Constitutional, regarding a presidential election and original jurisdiction.

But the Supreme Court dismissed Texas and the other states – one third of the states of the Union – with two sentences. Namely, that Texas lacked standing because it had not shown a “judicially cognizable interest” in how other states conduct elections. And all other motions were moot.

To their credit, in 2020 Justices Alito and Thomas argued that the Supreme Court lacked discretion to refuse an original jurisdiction case. But still, the Court summarily ended the matter based on one magic word: standing, aka the trapdoor of the courthouse. By dismissing the case, the Supreme Court avoided addressing Texas’s arguments, while coming off as merely controlling the keys to the front door.

So, here we have two cases about standing. One dismissed an original jurisdiction action, a legal pathway clearly written into the Constitution; the other was a close call – one vote! – about a case filed by some guy who walked his dog in front of the White House and claimed “aesthetic” injury.

Which is it? Is there no more original jurisdiction? Or does a guy in the street almost – by four votes out of nine – have standing to stop a White House military bunker with a Ballroom on top? Or are both cases simply occasions when the Supreme Court avoided inconvenient matters?

At root, the idea of standing prevents courts from becoming debating clubs. And it’s probably prudent to avoid ugly politics. Yet at some point we don’t have neutral law anymore, either.

The Price of Legal Fog

The Ballroom litigation is not just an argument about Donald Trump, the East Wing or the emotions of 2020. Because federal courts are part of the operating system of the Republic.

If standing is too tight, genuine injuries go unheard. If standing is too loose, anyone with an attitude can jam the gears. Either way, confusion is costly: projects and progress halts; political actors preen and posture; lawfare body shops seek plaintiffs; and capital fails to move because legal uncertainty is a tax, but no one knows the exact rate.

This is how a modern empire declines and falls; not through one grand Constitutional crash, but via thousands of acts of ambiguity. Do you have standing or not? After a while no one knows where the lines are, so everybody sues if only to preserve leverage.

The irony is that the Supreme Court claims to stay out of politics. Yet clearly, the Constitution assigns certain disputes by design. Meanwhile, federal governance is a priori political. And obviously, the presidency is political and every justice on the Court reached the bench through a political process. So, when the Court sanctimoniously pretends to be apolitical, it doesn’t purify a quarrel; it just relocates the knife fight to a darker alley.

And no, the Court can’t decide every national p!ssing fight. It’s not a council of elders. But when it defaults to “lack of standing” to avoid hard questions, it owes the country some bright lines. Otherwise, standing is not a constitutional doctrine. It’s more like a judicial mood gauge.

From Permits to Political Risk

Carry this idea beyond the courthouse. Pipelines and mining roads cross federal lands. Ports and rivers must be dredged. Defense sites and shipyards may need to expand. And in countless other ways, many ambiguities arise that are not distinctly addressed in law and regulation, such that someone somewhere claims injury. And the question of who can sue becomes almost as important as who is right.

When legal thresholds are obscure, project sponsors lack certainty. Permitting is provisional, final agency action is in “quotation marks,” litigation looms, and capital formation slows because investors can’t model whether a permit ends the process or merely determines who files the appeal. Infrastructure and economic development transition from asset creation to hostage negotiation. In their own bizarre way, court dockets become part of the overall capital portfolio.

The fog of legal uncertainty favors the side that willingly litigates. It rewards delays and allows public officials to recast policy disputes as jurisdictional puzzles. It turns every development project into a law-school exam.

In this sense, the 2020 “lack of standing” dismissal against Texas still stings. Set aside the personalities and election outcomes. If Texas and 16 other states believed that sister states altered voting rules to distort the legitimacy of our federal compact, where else can this kind of dispute go? We’ve already tried Fort Sumter.

Perhaps Texas deserved to lose on the merits; but we’ll never know because the 2020 dismissal was based on catch-all “lack of standing” procedure. So, instead of clarifying law, the Supreme Court bred further suspicion.

Likewise, if Congress must authorize Trump’s Big Beautiful Ballroom, then say so. If executive control of the White House grounds prevails, say that. But draw some boundaries because restraint without explanation is not wisdom. Evading hard calls comes with costs.

The Holy Roman Warning

Perhaps our nine justices simply don’t want to arbitrate a fractured Republic. Or in a manner of speaking, nobody wants to referee the Holy Roman Empire, and this point is more than a joke.

The Holy Roman Empire was a loose mosaic of kingdoms, duchies, bishoprics, counties and imperial cities. Its emperor was elected. Authority was layered, with many overlaps. The emperor possessed majesty but limited powers. Local rulers guarded sovereignty like family silver. And this concoction of a political entity endured for centuries, which is no small achievement. But it also produced jurisdictional complexity, from the days of Charlemagne to governance under Napoleon.

The lesson is not that federal systems are doomed. Indeed, ambiguity can help preserve order by allowing every faction to tell itself a tolerable story. But confusion compounds, and over time every quarrel becomes a legal fight that drags out and locks up the gears of society.

With a dismissal based on “lack of standing,” the Supreme Court justices may think they’ve avoided ugly politics. But actually, they create an imperial, jurisdictional maze within which every elector, governor, politician, agency and lawfare mill reads a different map. Last week, the Court saved itself a bitter decision on the merits; but now hands the country a future of procedural wars.

Law, or Oracles?

Done right, the doctrine of standing disciplines litigation. It prevents generalized grievances from becoming federal cases and prevents judges from issuing advisory opinions. Courts remain a forum for real disputes brought by parties with real stakes.

But unpredictable “standing” doctrine – whether dismissing Texas or a 5-4 decision about Trump’s Ballroom – does the reverse. Now, we’ll see more lawsuits because nobody knows the boundaries. The Court has politicized procedure because its denials look selective. Meanwhile, the Court invites forum shopping, bizarre claims and emergency applications.

When the courthouse is open only according to the heat map of a dispute, the Court reveals its institutional discomfort with the power of the Constitution. And sorry, but America can’t run on judicial avoidance.

Indeed, over 250 years – okay, since 1789 – the Republic has survived bad rulings, even foolish ones. But what it cannot survive is an elite legal culture that turns access to court into some sort of petition to the oracles. You ask whether you may sue; the oracle studies goat entrails, sniffs the political winds and replies: “Yes, but only maybe; and not exactly now, but possibly next time.”

That’s not law; it’s judicial ambiguity. It weaponizes procedure and leaves citizens and states wondering whether the Constitution has become another museum piece: admired and revered, protected by thick glass at the National Archives, and increasingly irrelevant.

With the Ballroom decision, the justices may think they acted in restraint. But I suspect that history will frame it as a warning sign of deep, structural problems that precede the so-called “decline and fall,” if not disaster.

And on that note, I rest my case.

That’s all for now… Thank you for subscribing and reading.

The post Trump’s ‘Ballroom’ and a Legal Bunker-Buster appeared first on Daily Reckoning.

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. Just stop drinking. The simplicity of it makes it almost unbearable…and unthinkable.

Japan has been on a bender for 35 years. Its stock market bubble popped in 1990. Its feds have been pumping like crazy ever since, trying to get the buzz back on. They’ve inflated Japanese government debt to the largest in the world — at 250% of GDP, twice the US level — hoping to revive those glorious, intoxicating go-go years of the 1980s. That was when Japan Inc. was the envy of every business school in the world.

Back then, in the ‘80s, Japan’s industries —Mitsubishi, Toyota, Honda — dominated the financial pages. Then, after the crash, Japan continued to lead the world, but in borrowing. And now Japan has one massive hangover.

When you stop drinking your recovery begins almost immediately. But as Marc Antony said over the body of Caesar, ‘the evil that men do lives after them.’ You can stop spending, but the shadow of the past — debt — stays with you.

And Japan is not the only one living in the shade of debt. It’s been party time, worldwide, ever since Alan Greenspan revealed his ‘put option’ for the stock market. Free drinks. No closing time. Stock prices could go up all they wanted; but if they began to fall, the Fed would cut rates to catch them.

As a result, world debt is estimated at $329 trillion — or more than three times GDP. The US is right in line with more than $100 trillion in debt…or, about three times GDP. That doesn’t include the $15 trillion or so the feds are legally obligated to pay their own government retirees.

The dipsomaniac may be jolly or morose…rich or poor…smart or dumb. But until he gets that monkey off his back, he’s going to have trouble.

The US has problems too. Iran. Canada. A ‘heat dome.’ Water shortages. Hurricanes. Illegal immigrants. Obstreperousness overseas. Lawlessness at home. Mosquitoes. But the big ape on the back of the US is obvious. It’s the one neither political party wants to talk about. And no wonder; they put it there.

It’s the debt, stupid– the price of all the dumb ‘problem solving’ of the past. Who wants to remember them? Old girlfriends. Empty bottles and cigar stubs. Yesterday’s newspapers. The Gulf War of 1991…Obama’s record $1.4 trillion deficit in 2009, LA riots of 1992…Hurricane Andrew…Oklahoma City bombing…Monica Lewinsky?

All have faded from public memory…but the bills, great or small, are still unpaid. They are among the $40 trillion worth of accumulated federal debt that must be serviced every year, for ever and ever, Amen. At just 5% interest, the annual charge will soon come to $2 trillion per year, whether anyone remembers what the money was spent on or not. Federal tax receipts last year were $5.2 trillion. So, nearly half of the feds’ revenue is now headed to pay for things that were always a waste of money…and now, are largely forgotten.

Politicians don’t want to talk about it because solving the debt problem will hurt. Like cutting off a gangrenous finger without anesthetic or going ‘cold turkey’ in an asylum, neither party has the stomach for it. The voters will howl. The press will harrumph. Wall Street will quake. And, most likely, some fringy politician will take charge…and start a war to take our minds off of it.

You can ignore a debt build-up; for a long time, it will seem ‘manageable.’ But then, after a party, you end up in a ditch. Drying out (aka deflation) won’t be pleasant. People only do it because the alternative is worse.

A debt hangover is hard to shake off. Short term interest rates are lower…and closer to ‘cash.’ So, the feds moved more of their borrowing to the short end of the yield curve. This leaves them needing to ‘rollover’ their debt more frequently — even as interest rates go up. Even if they balanced the budget tomorrow, they’d still need to refinance more than $1 trillion per month.

A report from Armstrong Economics tells us that $29 trillion will be borrowed this year:

Governments and corporations are expected to borrow a record $29 trillion from global bond markets in 2026, according to the OECD. That is $4 trillion more than in 2024 and twice the amount borrowed only ten years ago. This is the Ponzi structure underlying modern government finance.

Carlo Ponzi might be proud. Practically all of the world’s post-war western governments adopted his model.

But where are we going with this? Where else, the same place it took Ponzi himself: to Hell in a handcart! Ponzi died in a charity ward in Brazil, with only $75 to his name.

And now, there is no way a society can devote half its government’s revenues to paying for the bad investments of the past…at least, not indefinitely. And the most likely ‘solution’ is the most dangerous and painful one — inflating away the debt…which is like curing the hangover with a bottle of gin before breakfast.

But we shouldn’t be too surprised if a more audacious leader — such as Jean-Luc Melenchon in France — comes along with a more radical plan. The French leftist proposes to simply renege on a portion of French debt.

And maybe that wouldn’t be such a bad idea…

Stay tuned…

The post It’s the Debt Stupid, Part Duh appeared first on Daily Reckoning.

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.

Most of the evidence we had was from one-sided exchanges like the U.S. vs. Iraq. American cruise missiles were highly effective, but the country had poor air defenses. It was a bit like shooting fish in a barrel. With a really nice gun.

Many analysts claimed Russia’s missiles were crude and inaccurate. After all, they historically had been. The old Russian SCUD missiles launched by Saddam Hussein had a CEP of up to 1 kilometer (CEP is an accuracy rating which means 50% of missiles fired would land within a circle 1 km from the target).

Originally, ballistic missiles were primarily a vehicle for nuclear weapons. So they didn’t need to be super accurate.

But the world has entered a new phase. With satellite navigation, better electronics, and AI, precision missiles are sprouting up like weeds.

Many countries have effective missile programs today. China and Russia are now selling sophisticated models to friendly nations.

The tech is improving rapidly, and proliferating around the world.

Cruise vs. Ballistic

Let’s go over some basics quickly. The two main types of missiles are cruise and ballistic. I made the graphic below to show the difference:

Cruise missiles fly very low, powered by jet engines throughout their flight. They can fly very long distances, and are difficult to detect and shoot down due to their low altitude.

The U.S. is a leader in cruise missile technology, where we pioneered long-range precision weapons. Our stealth cruise missiles, such as the LRASM, are probably the most advanced in the world.

Meanwhile ballistic missiles follow a parabolic arc, with some models flying into space before re-entering the atmosphere. They are powered by rocket engines, fueled by either solid or liquid propellant. Ballistic missiles are fast, and can surpass hypersonic speeds (greater than Mach 5, or 3,836 MPH).

Ballistic missiles are also difficult to intercept due to their high altitude and speed.

Lessons from Ukraine and Iran

The conflicts in Ukraine and Iran have taught us much about where missiles fit into the modern battlefield.

And they have a critical role to play. Both cruise and ballistic models.

Speed is one advantage missiles have over drones. The fastest jet drones today travel around 400 MPH. Hypersonic ballistic missiles, on the other hand, can reach speeds from 4,000 MPH all the way up to 16,000 MPH. Anything moving that fast is going to be almost impossible to intercept.

The largest drone warheads weigh around 200 lbs. Less than half of that is explosive, and the rest is the weight of the steel surrounding it.

Missile warheads can weigh up to 4,000 lbs. But a more typical warhead weight is around 1,500 lb.

So when you need to take out something quickly, and make sure it’s destroyed, a missile is the obvious choice. Think ammo depots, troop gathering points, bunkers, command headquarters, air defenses, enemy missile launchers, and fuel tanks.

Russia has used its impressive array of missiles to take out military sites throughout Ukraine. And from Iran, we saw unprecedented long-distance (2,000 km+) precision strikes on targets in Israel. And a lot of shorter-range strikes.

All of the questions about missiles have been answered. They are an absolutely critical element in modern war.

Sci-Fi Territory

Next up: Hypersonic Glide Vehicles (HGVs). It’s a mouthful of a name. But the tech is downright devious.

These weapons can reach ridiculous speeds of Mach 22 (16,000+ MPH) or higher. They fly to the edge of space, then use that energy to glide to the target. HGVs can maneuver to avoid air defenses.

And they strike with such speed, that the kinetic energy alone is equivalent to a massive bomb. Add in 500kg of high-explosive, and HGVs are terrifying weapons.

Here’s what an HGV trajectory looks like:

We’re getting into science-fiction territory here, but a number of these weapons are already in production.

Russia has the Avangard HGV:

The rocket boosts the weapon into the edge of space, then the glide vehicle deploys:

Russia hasn’t used the Avangard in battle yet. How they managed to produce alloys that survive Mach 22 speeds is top secret. Not to mention the communication tech, which needed to overcome serious obstacles like the missile being surrounded by a bubble of glowing plasma during high speeds.

China and North Korea also have HGVs. This is an area where the U.S. is behind the competition.

HGVs are too expensive and top-secret for most real-world use, but there are applications where the cost and risk could be justified. In the future, though, they will likely become a standard weapons system.

Blurred Lines

Is the weapon below a cruise missile, or a drone?

Source: U.S. Army

This is Russia’s new Geran-5 jet drone. It has a jet engine and a 200 lb warhead. It can reach a cruising speed of 370 MPH, and has a range of 1,000 km (621 miles).

The U.S. Army estimates that the Geran-5 costs around $125,000. That’s far cheaper than Russia’s cruise missiles, which run about 8x more.

This is what I mean when saying the line between missiles and drones will increasingly blur. This is essentially a mini cruise missile.

We’re going to see a lot of weapons like the Geran-5 going forward. Here in the U.S., a number of companies, such as Anduril, are working on similar systems.

Eventually swarms of these types of “drones” will scour the battlefield for targets. The line between drone and missile will continue to blur.

But there will always be a place for larger cruise and ballistic missiles. As we’ve seen in Iran and Ukraine, these weapons offer unique capabilities.

Going forward, missiles and drones will become the cornerstones of war. The importance of manned jets, tanks, and artillery will fade.

We’re entering a new era of war. One where asymmetric weapons are the apex predators. The implications are far-reaching. For the American empire, defense stocks, and geopolitical game theory. We’ll explore it all soon.

In the meantime, here are some prior articles from our Modern Warfare series:

• Modern Warfare: Lessons from Ukraine
• Modern Warfare 2: Lessons from Iran
• The Evolution of Hunter-Killers
• Drones Invade Moscow
• Cheap Drones Swarm the Future

The post Modern Missile Mayhem appeared first on Daily Reckoning.

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?

I blanch when I look at Big Apple menu prices. They’re unambiguously ludicrous. And I immediately wonder how a family of four survives these days.

When I was a kid, it was different.

My father drove a truck for a living. He came home every night smelling like grease, but I never wanted for a thing. Back in the 80s, things were affordable.

Then, when I hit the workforce, I outearned him. I did it on 3 continents, in industries he knew nothing about. That wasn’t unusual for my generation. I went to college and worked, and then I did better than my old man. That was exactly as expected.

My son Micah is only 9. If I’m honest, I’m not sure he’ll outearn me. That’s no reflection on Micah’s intelligence or work ethic, which I’d argue are shaping up to be more formidable than mine. It’s about the system he has to deal with, which is completely different from the one I had to contend with.

A Harvard economist, Raj Chetty, put a number on my intuition, and it’s uglier than you’d think.

The Number

In 2017, Chetty and a team of economists published a paper in Science titled “The Fading American Dream.” They asked one question: What share of American kids grow up to earn more than their parents did at the same age, after inflation?

For Americans born in 1940, the answer was about 92%. If you were born that year, outearning your parents was nearly guaranteed.

For Americans born in 1984, the answer was about 50%.

The American Dream went from a near-certainty to a coin flip in two generations.

That 1984 kid is 42 now. He’s a grown man in his peak earning years, and half his cohort is doing worse than Mom and Dad.

The decline didn’t spike and recover. It fell for every birth year in between, like a stone rolling downhill. Every state in the union got hit. The worst damage happened in the industrial Midwest, in places like Michigan, Ohio, and Illinois. Those places built things and then got hollowed out.

Ross Perot’s “sucking sound of American jobs” is ringing in your ears, isn’t it?

Fair Share

Chetty didn’t stop at the headline number. He asked why it fell.

There are two possible stories. One: the economy stopped growing as fast, so there was less to go around. Two: the economy kept growing, but the growth went to fewer people.

So he ran the experiment both ways.

First, he gave the 1984 cohort the roaring growth rates of the postwar years but left today’s lopsided distribution in place. Mobility rose from 50% to around 62%. Better, but nowhere near the old deal.

Then he flipped it. He kept today’s slower growth but divided it the way America divided it in the 1940s and 50s. Mobility jumped to about 80%.

Faster growth alone bought 12 points. A fairer split bought 30.

Roughly ⅔ to ¾ of the American Dream’s collapse came not from a smaller pie, but from who got to cut it.

Who Held the Pie Knife

As you well know, new money leaves the Fed, lands at the banks, and flows into whatever asset is closest to the spigot. The people who own stocks, bonds, real estate, and private equity get richer before a single dollar reaches a paycheck. That’s the Cantillon Effect, and it’s been running hot since August 1971 (the Nixon Shock) and red hot since the 2008 Global Financial Crisis and Bernanke’s helicopter money.

The 1940 cohort grew up in a country where productivity gains showed up in wages. For about 3 decades after the war, pay and productivity rose together. Then, around the early 1970s, by most common measures, they split. Productivity kept climbing, but wages flatlined. The gap between those two lines is the money that went somewhere else.

It went to asset prices. Your house tripled in value, and the Greenspan Put saved your 401(k) countless times. And your kids, who owned nothing yet, watched the purchase price for everything they wanted run away from them.

That’s not a moral failing on their part. It’s math. A starter home that cost roughly 3 years of income in the 1970s costs 6 or 7 years of income today. A college degree that cost a summer job now costs a mortgage. The printing press sawed off the bottom rungs of life’s ladder.

The Uncomfortable Mirror

You probably outearned your parents. And you probably did it, at least in part, by owning assets that inflated. That’s ok. You played the hand you were dealt, and you played it well.

But it also means the same mechanism that made you richer than your father is the one making your kids poorer than you are. The Cantillon winners of one generation are, on average, the parents of the Cantillon losers in the next.

But not always, and not all.

Your To Do List

First, stop measuring the country’s success by stock market performance. A rising S&P tells you asset holders are winning. That’s all. It tells you nothing about whether a 30-year-old can afford to buy a house. Chetty’s number is the real scorecard, and it says half the country is losing.

Second, if you own the assets, you’re the bridge to your children’s success. Their mobility is now, more than at any time since the Gilded Age, a function of inheritance rather than effort. I don’t like that, either. But pretending otherwise won’t help them.

Get them into real assets early, and make sure you hand yours over to them when you’ve shuffled off your mortal coil. Giving your money away to some anonymous charity instead of your children doesn’t make you a hero. Your only job is to make sure your children win the game.

Third, keep your own capital near the spigot. Unless and until the monetary system is reformed (and pigs fly), the only viable strategy is to own what the printing press inflates and avoid what it erodes.

Wrap Up

I outearned my father with a couple of finance degrees earned during rampant bull markets and a bunch of airport lounges.

Micah’s generation is playing with a deck shuffled by people who never have to show their hands.

You saw wages stall while houses soared. You didn’t need a Harvard paper to tell you something broke around the time the dollar left gold.

Chetty just gave you the number.

It’s a coin flip. And the coin is weighted.

Your job is to increase the probability of your children’s success.

Have a great day ahead.

The post The Coin Flip appeared first on Daily Reckoning.

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. Here’s some detail from the Purdue University Agriculture Department’s August update:

Whether an energy shock is propagating into agriculture is not settled by asking whether farm-gate prices rose alongside it. Raw commodity prices are set by supply and demand for the commodity itself, not by what it cost to produce. With the crop already in the ground and the herd already on feed, short-run supply is close to fixed, and a rise in fuel or fertilizer costs cannot be passed forward the way a processor passes along a packaging cost. It shows up instead in net returns. Falling farm prices alongside rising energy costs are therefore not evidence that the shock missed agriculture. It is evidence that agriculture must absorb it in the short run.

This is a critical piece of information. It means that farmers (like miners and oil companies) are price takers. The market doesn’t care what it cost you to get the product, it sets the price globally.

That’s why corn and wheat prices stayed low even though the cost for inputs like fuel and fertilizer soared. And we’ve seen this story before. In 2022, the industry costs hit $431 per acre of wheat. Today they stand at $428 per acre. But prices are far below the 2022 highs:

That’s a problem for farmers. They carry the price risk through the season. Some farmers will sell part of their production ahead of time (hedging).  That way they have some guaranteed return on their investment.

However, no amount of hedging can offset the massive increase in costs for farmers. And, as the authors above said, we are in a place where the crops are about to be harvested. Farmers that take a beating this year will have less capital for planting in the spring.

These high costs will also change the math on what gets planted. When fertilizer costs soar (like today) farmers often plant soybeans instead of corn. Soy doesn’t need nitrogen fertilizer, so it’s a cheaper and more profitable alternative. For example, the December 2027 corn futures are $5.30 per bushel while November 2027 soybean futures are $12.00 per bushel. That means soybeans bring in $6.70 per bushel more than corn.

That’s going to lure a lot of farmers to switch acres from corn to soybeans.

Wheat farmers face the same problem. The forecast cost for an acre of wheat just hit $428, a record high price. In the States, wheat farmers substitute different crops depending on where they farm.

There is a saying among commodity investors: “The cure for low prices is low prices.”

That is just shorthand for saying that low prices will curtail supply. When you reduce supply, and keep demand steady, prices must go up. And grains like corn and wheat underpin much of the U.S. food supply. That’s why corn and wheat prices will prove that idiom over the next 18 months. I don’t know if they will test 2022 highs, but the prices are going higher.

We don’t want to buy farmers, because they aren’t going to make any money. Instead, the best way to play the rising prices is through two simple exchange traded funds: Teucrium Wheat Fund (NYSE: WEAT) or the Teucrium Corn Fund (NYSE: CORN).

As you can see from the chart, the price of both wheat and corn rose since July. But they have a long way to go to retest the high prices from 2022. I still think that’s a possibility. The price is too low for the cost inputs. Farmers are losing a lot of money. That’s a recipe for a big win in grain prices.

The post Big Gains Ahead in Soft Commodities appeared first on Daily Reckoning.

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.

In ancient China, governments even issued copper alloy knives as a form of currency. Talk about hard money…

Ancient Chinese knife money. Source: Wikipedia

Bronze, an alloy of mostly copper and tin, was a major tech breakthrough. It was sturdier than plain copper, making better tools, weapons, and armor.

For hundreds of years, copper and bronze ingots, coins, and bars were a common form of money.

But as mining activity increased, these metals became too common. The value was too low to carry much wealth around. You’d need a chest full of it to buy a cow.

Silver, a more rare metal, became the favored currency. It was the Goldilocks form of money. Not too rare, not too common. Just right.

And for most of the past 3,000 years, silver has been the world’s preferred form of money. With several interruptions, all of which proved to be temporary.

The Modern Gold Era

Gold has also been a form of money for thousands of years. But before industrial-scale mining, it was rare.

Only the wealthiest citizens would own a decent chunk of gold. This is even true today. Many regular people can’t afford to buy ounces of gold at $4,400 a pop.

Silver was (and is) the people’s money. It’s about 9x more common than gold. Still rare enough to be valuable, but common enough that most people can own some.

Throughout ancient history, the gold-to-silver ratio averaged around 10. Meaning gold was 10 times more valuable than silver.

Source: Make Gold Great

Today, 1 ounce of gold is worth 67 ounces of silver. So silver is valued far lower than it was throughout history (compared with gold).

Silver has been de-monetized. Since 1965, it is no longer in our coins.

It is now a primarily industrial metal. Silver is the best electricity conductor on the planet. It also resists corrosion, making it critical for modern electronics.

The metal is particularly useful in solar panels, where it drives efficiency and long life. Solar power alone accounts for about 22% of total silver demand today. And industrial utility gives silver a lot of value by itself.

Today, gold is much more of a monetary asset than silver is. That’s primarily because central banks, like the Federal Reserve, still hold vast sums of gold as reserves.

But gold’s reign as the king of hard currency may not last forever…

Silver’s Inevitable Return

Since silver was de-monetized in 1965, it has been a rollercoaster of price action.

Throughout the 1960s, the U.S. government dumped their stockpile of silver at bargain basement prices.

The 1970s is when things got interesting. That was a period of inflation, slow growth, and financial chaos. It’s when the fiat (paper money) era began.

And periods like this are when silver shines.

Silver began 1970 trading around $1.80. By November 1971, it had fallen to $1.27. From there it went on one of the craziest bull runs in history, reaching nearly $50 in early 1980.

With high inflation throughout the 1970s, everyone looked for ways to preserve their wealth. For many people, silver fit the bill.

Yes, there was a sophisticated effort to “corner the silver market” by the Hunt Brothers, which helped drive up prices. Without them, silver wouldn’t have gotten close to $50. But the move would have been more durable. I wrote a letter on the Hunt Brothers and silver last year here.

The point is that when inflation gets nasty, ordinary people turn to silver for monetary salvation. It’s practically in our DNA.

A Silver Phoenix

Silver was the world’s favorite form of money for thousands of years. Today it’s still largely viewed as a monetary relic.

A metal that used to be money, but is now used for electronics. This will change once inflation rears its ugly head again, as we move further into the debt crisis.

People will seek out silver as an inflation hedge, store-of-value, and speculative asset. We’ve already seen hints of this, like during the silver price runup earlier this year. But that was just a hint of what’s ahead.

Because silver is primarily an industrial metal today, it is mostly priced according to that demand. Demand which is relatively predictable. Analysts model out industrial demand based on trends and surveys, and can get a pretty good idea about where the price should be headed.

But investment demand for silver is much harder to model. A full-on mania is impossible to accurately predict.

Only about 18% of silver purchased today is for investment purposes. Coins and bars. That’s why the metal is priced like an industrial input rather than a monetary asset.

But if investment demand creeps up to just 25%, that’d create fireworks. Like we saw briefly earlier this year, when silver ran from $35 to $115 in about 9 months.

And I suspect that silver will eventually make an even bigger return as the debt crisis progresses, and inflation worsens. As the world becomes more digital (and hackable), people will want a hard asset to store their wealth. And for many, gold’s out of the question. Too expensive.

Once again, silver will emerge as the metal of the people. A tool to help us preserve and grow our wealth.

Silver is currently trading at around $65 an ounce. I think that’s a fine price to buy at for long-term investors. It’s difficult to say what silver will do over the next 6 months, or even a year.

But over the next 5 years, I’m confident we’re headed much higher. And when silver inevitably goes through its next mania phase, I want plenty of exposure.

So I’m patiently holding. Waiting for the next mania phase.

The Hoover Dam Through a Garden Hose

And let’s not forget about silver miners. When the next mania phase hits, they are going to go ballistic. Check out the chart below, which shows the market cap of every silver miner ($66 billion) vs the value of big tech stocks.

Souce: X

As you can see, every silver miner in the world combined is worth just 1/80th of Nvidia (NVDA). So during a silver mania, a flood of money pours into a very small sector.

This reminds me of a quote from Doug Casey:

“The market capitalization of silver [miner] equities is insufficient to accommodate the inflows of capital from generalist investors when the precious metals narrative takes over.

When the generalist investors come in, the result is like trying to siphon the flow of the Hoover Dam through a garden hose.”

It’s a great reminder that silver, and the companies who mine it, are tiny. So when money rushes in, the results can be absolutely explosive.

The post Silver Will Rise Again appeared first on Daily Reckoning.

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. They are ‘poorer.’ That leaves those without stocks relatively richer. They have a bigger claim on the real goods and services the economy produces.

The feds and their elite cronies have a good racket going…diddling markets so as to shift more and more wealth away from the public and towards themselves. They own most of the capital assets…and they control the US budget. Pressuring interest rates lower, and backing up the stock market with bailouts and ‘put’ options…they’ve gotten richer and richer. As we saw last week, at today’s prices the stockholding class can theoretically buy twice the GDP…and have $10 trillion left over.

It wasn’t capitalism that made them so rich; it was a corrupt money system. And if the dogs of capitalism were unleashed, they’d have their fake money fortunes for dinner. Interest rates would be set by honest savers and borrowers — not by Fed policy decisions. Prices would be determined by buyers and sellers; the budget would be balanced; the debt would be cleaned up; the troops would come home; inflation would disappear; and the Baltimore O’s would win the World Series.

But of course, we’re dreaming.

Sticking to the real world…

Our high confidence guess is that the bubble will deflate. Everything will fall in price. Then, the feds will panic. They will do ‘whatever it takes’ to stop markets from doing their work — with more fake money, lower interest rates, yield curve control, quantitative easing. And probably some tricks we haven’t heard of yet.

After an initial sell-off, gold will go up. It will sniff out what is coming — more inflation. Other real asset prices too — from hot dogs to hotels — will get a whiff of the coming price hikes. Consumer prices will rise as ‘inflation expectations’ increase.

The feds really only have one tool — fake money. In a crisis, they will produce more of it…a lot more. And, in addition to the quantity of money coming into the economy, there’s another key inflation variable: the velocity of money. A dollar spent two times in a year is counted twice.

When people think the feds are going to print money, the dollar becomes a hot potato. They aim to get rid of it as soon as possible. Sales go up in the short run. In the longer run, the economy is destroyed.

And here’s an important addendum. We say ‘inflate or die.’ But those are just policy choices. In the long run, you can inflate all you want. The bubble will still die — a later, more gruesome death.

In the fight between markets on one side…and politicians, grifters, fixers and central planners on the other…markets always win, eventually. They win by deflation.

Even in an inflationary blow off — with prices soaring — real prices fall. Consumer prices rise, in nominal currency. But gold — real money — typically rises even more…so that in gold terms, real things actually become cheaper. Prices deflate in real terms.

Observers in Germany’s record-setting hyperinflation remarked that foreigners were able to use dollars — then, backed by gold — to buy things at absurdly low prices. By November, 1923, a dollar was equal to 4.2 trillion marks. This made American visitors trillionaires (in marks) allowing them to buy whole houses for the price of a magazine subscription. In real terms, prices had deflated down to almost nothing.

We witnessed it, ourselves, in Argentina. In pesos, consumer prices more than doubled every twelve months…but dollars (even with a dodgy dollar) made them cheaper than ever. We would go to a restaurant, for example, and feel guilty about paying so little for such a good meal.

The same phenomenon is already taking place in America, too. Housing has gotten much more expensive, right? And the stock market is much higher too, right? But looked at in terms of gold, stocks are less than half of what they were worth in 1999…and the Case-Shiller Home Price Index, expressed in gold, shows house prices down about 80% over the last quarter century.

The Case Shiller Home Price Index, in gold terms, has fallen around 80% in the last 25 years.

In real terms, all bubbles deflate…but you need real money to see it.

P.S. Find more of Bill’s writing at Bonner Private Research.

The post All Bubbles End in Deflation appeared first on Daily Reckoning.

It’s September 1^st and we’re ten days out from 9/11 + 25 years. Next week, on Friday, September 11^th, 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. It’s an idea with staying power, considering that people still follow the custom after 500 years; eg., a wedding anniversary. As for silver, it’s ceremonial and polished, if not elegant. And it suggests reflection and continuity.

Then again, how “polished” is a calamitous event with national and international impact? What happens on year 25 when a date recalls a path of painful history?

At five years, a terrible event may still be playing out, complete with raw scars if not open wounds. By the tenth anniversary, remembrance likely includes rituals, and approved versions of public vocabulary. By year 20, public ceremonies angle towards a historical view, although it’s not quite yet a museum display.

Now, skip ahead to a 50^th anniversary, by which time memory has transformed into heritage. That is, most adult eyewitnesses are gone, or at best elderly and fading, and thus is ceremony often wrapped in an evolved sense of national nostalgia.

Which brings us back to the 25^th anniversary, moored in the middle of this river of time. The initial shock has passed. Early monuments are up. Public language is distant enough to speak in terms of doctrine yet also close enough to events that living witnesses can still object.

Still, it’s fair to say that by the silver moment, at 25 years, much memory has crystallized into something like an approved curriculum and ceremony, all intended to become the “official” explanation.

The Battle to Harness Legitimacy

In other words, at five and ten, recollection is controlled by recent shock and pain. At twenty, history writers and policy wonks are reorganizing evidence and framing future narratives. Then by year 50, the state and culture own the story.

But midway, at the 25^th annual mark? Memory remains contested. Witnesses, institutions and political actors all compete for positional authority. Participants demand fidelity to what they saw, heard and lost. While younger people who inherited the consequences ask what the event means to them; that is, why it still matters and where does its legacy take them as they blaze their own trail through life.

Remembering 9/11. Credit New York Times.

At year 25, the story still begins by honoring the loss; but it can end by narrowing the past. That is, grief has transformed into doctrine which then becomes a shield against questions; definitely, it’s a problem with “official” history. And inevitably, governments, political actors, media, academics, museums and other groups – think of veterans – begin to close ranks around the version of history that future citizens will be encouraged to remember.

Another angle is that, by year 25, state actors and other powerful interests have converted the catastrophe into what passes for moral permission to do… well, to do whatever they want. Old pain and scars become the basis for current policy, while politicians and policymakers willingly mask their own failures with patriotic language, if not treat inquiry as disloyalty.

In this sense, a 25^th anniversary is a center of gravity within the long-term contest over who gets to define the past for the benefit of the present and future. So, as noted above, we’ll look at 9/11 on 9/11. But for today, let’s revisit two other 25-year markers from long-ago in 1966, both of which are revealing.

First, on December 7, 1966, America recalled Japan’s surprise attack on Pearl Harbor in 1941. Also in 1966, the Soviet Union recalled the German invasion of June 21, 1941, aka “Operation Barbarossa” which led to what Russians call the “Great Patriotic War.”

Both Barbarossa and Pearl Harbor began with surprise attacks. Both led to immediate and vast warfare, immense death and destruction, and creation of a very different, postwar European and Pacific worlds. Yet by their respective 25^thanniversaries, the two events played different roles in different cultures.

In the U.S., Pearl Harbor+25 began with memorial and grief for the direct loss, but then followed an upbeat arc: from defeat to mobilization, then victory, occupation, global reach, superpower status, and even alliance with the former foe.

In the USSR, the quarter-century remembrance also mourned the dead and celebrated victory. Plus, it harnessed past suffering to reinforce the ongoing legitimacy of Communist state power, along with permanent anti-capitalist/imperialist vigilance.

Again, as we approach 9/11+25, the question is not just how a nation remembers its past, but who controls the framing and narrative; of what questions remain permissible, and whether the dead are honored by truth in full, or by a polished story that leaves too much out.

Pearl Harbor+25: Grief Recast as Victory

On December 7, 1966, America marked Pearl Harbor+25 while already moving towards another Asian war, this one in Vietnam. Many veterans of the fight against Japan were in the prime of life. Certainly, many were political actors if not movers and shakers in public life, business, media and academe; and of course, the U.S. was full of old vets who swapped tales down at the VFW halls.

In this sense, the 25^th Pearl Harbor anniversary was not just history, but a state-level reminder of the need for America to be vigilant: watch for enemies, watch the sky, watch the Pacific, expect surprise, and never assume that vast oceans protect America. The lessons of December 7^th carried great force.

USS Arizona Memorial, Pearl Harbor. Credit U.S. Navy.

In this sense, Pearl Harbor+25 differed from our own, upcoming 9/11+25 because, by 1966, the U.S. could look back on wartime victory of great scale and scope. Between 1941 – 45, American energy, industry and arms defeated and occupied Japan and converted that nation into a Cold War ally. Thus did memory and memorial begin in fire and death, but the arcs ended in triumph and overwhelming American power and influence.

Along these lines, the sunken battleship ex-USS Arizona (BB-39) and the USS Arizona Memorial mattered much to the 25^th anniversary in 1966. By then, an elegant white structure spanned the ruined ship without touching it, while the names of entombed Sailors and Marines were carved into white marble within the structure. The harbor’s flat water and soft breezes remain part of the evidence; the memorial admits the disaster without turning loss into abstraction.

List of names, lost on December 7, 1941. Credit U.S. Navy.

Artistically, the memorial carries the Pacific war’s whole message: surprise attack, mobilization, energy, industry, logistics, overcoming the tyranny of geography, fighting, bombing, blood, surrender and the postwar American order. Yet at root, the overall physical Arizona memorial displays the human cost as exact and visible, with names fixed in stone where no future politician can erase them.

In the Soviet Union, Memory Became State Armor

In the Soviet Union of 1966, the 25-year reckoning worked differently. Emphasis fell less on the final victory of 1945 than on the treacherous surprise of Germany’s June 1941 invasion, the opening of the Great Patriotic War.

Germany’s Operation Barbarossa. Credit Imperial War Museum.

By 1966, that memory had become an emotional and political foundation for Soviet legitimacy. Moscow had already made the May 9^th “Victory Day” remembrance into a public holiday, and the story of total, continental-scale war became more than solemn remembrance; it was hard proof that the Communist Party had saved both the post-1917 Soviet state as well as the ancient and venerable Russian civilization.

The Soviet sacrifice was immense: about 27 million dead, of whom 10 million were military and 17 million civilians. Plus, innumerable cities and regions were occupied, burned, wrecked and starved. Indeed, Soviet losses surpass anything like easy comprehension to an outsider, and even today in 2026 families across the former-USSR still live with painful memories.

Soviet monuments at Stalingrad. Credit Kremlin.ru.

At the same time, the Soviet silver anniversary also showed how total state power can dominate memory. Official history emphasized unyielding resistance, heroic suffering and inevitable triumph, while masking Stalin’s pre-war purges, misjudgments and terror. The state-level story elevated military endurance but suppressed political culpability. It honored veterans yet subordinated them to the power of the Communist Party. The famous phrase “No one and nothing is forgotten” sounded absolute, but many questions remained dangerous to ask.

In the Cold War context, the 1966 message was contemporary as much as historical. For example, West Germany’s place in NATO was cast as revanchism in postwar dress, while the U.S. war in Vietnam became ipso facto proof of imperial aggression.

All in all, in 1966, Soviet postwar power – its comprehensive, national-scale militarism and Communist international agitprop – was presented not only as the force that defeated H!tler and the N@z!s, but also as the shield of global peace; and hence, went the argument, none of Moscow’s policies of the era deserved scrutiny.

The Lesson of 25 Years

There’s more to say; whole libraries exist on these subjects. But as we approach America’s 9/11+25, the lesson is clear: a silver anniversary can sharpen national understanding, but also harden a narrative into official doctrine, if not national myth.

Handled honestly, a 25^th year, silver remembrance can widen inquiry while witnesses remain to correct the record. But handled politically, remembrance risks morphing into liturgy that narrows inquiry because the entireties of an event – its overall moments in time – are now masked by well-choreographed ceremony and approved vocabulary. As in… yes, we honor the dead; but at the same time bury the inconvenient questions.

Even today, certain Big Questions from 1941 have never quite disappeared: Did President Franklin Roosevelt know enough to warn his Pearl Harbor commanders that Japan would strike, yet fail to raise the alarm? Did Joseph Stalin know enough to see Barbarossa coming, yet fail to prevent the catastrophe? In both cases, the issue is not cheap accusation; it’s accountability.

A serious anniversary of a serious event – and certainly, its silver moment – must be a “house with many mansions,” to borrow an old term (John 14:2-6). Recollection must make room for heroism, courage, fear, grief, sacrifice, policy success; but also, for policy failure, mistakes and unintended consequences.

A day of remembrance is a teachable moment, or otherwise it becomes mere theater. Worse, it becomes whitewash for people and institutions that deserve true scrutiny. And whether the subject is Pearl Harbor, Barbarossa or our own upcoming 9/11, the warning stands: memory monopolized by the state uses just enough truth to build a grand façade. It salutes the dead, waves the flag, and asks the rest of us to stop asking questions.

But don’t stop asking questions. And that’s all for today.

Thank you for subscribing and reading.

The post 9/11 + 25: When History Turns Silver appeared first on Daily Reckoning.