The absurdity of today’s behavior by the Trump administration was put on full display by United States Secretary of the Treasury Scott Bessent and US Trade Representative Greer with these comments today(all via X):
The markets failed to react much because this sounded just like the comments from the end of April, first of May, end of May, middle of June, etc.
Of course the Treasury Secretary continued this morning with some more absurdities like this beauty:
Which eventually led up this outright threat against China for some reason:
Why is all of this important in relation for what appears to be Trump’s decisions to begin an acceleration of early 1970’s style policies just like Richard Nixon? Just this one statement highlights America’s upcoming dilemma:
🇺🇸⚔️🇨🇳 Trump says the United States is already in a trade war with China. pic.twitter.com/fG7x6hSOq9
— DD Geopolitics (@DD_Geopolitics) October 15, 2025
And yes my readers, that was not a “misquote” it was actually said.
What does this all mean, the origins of similar Nixonian economic policies, and why is Trump selecting this path to exert Executive Branch power to such a degree over the US economy? Let us all delve into this together with a little history.
1970’s, Nixon, and Price Controls
The problem with a lot of my fellow gold bugs is that everyone cites or remembers the dollar gold divorce other than the other actions which Nixon undertook during that era. The big one, which was hugely popular with the stock market and the public was the initiation of price controls to contain inflation.
Executive Order 11615 was far reaching but the pertinent section from the Federal Register provides a snapshot as to how the US can and does often repeat history:
Beyond this and the actions to sever the link between the US Dollar and gold, tariffs were also imposed by President Nixon which had a long lasting impact on keeping the stagflation cycle lasting longer, rather than ending the inflation of that era.
But was inflation really all that high in 1971 or was this an election stunt designed to ensure Nixon’s re-election?
Based on the trajectory of inflation, relatively mild unemployment, and the end of the brief stagflationary recession of 1970, it would seem the policies engaged in by Nixon were more of electoral populism versus practical economics.
As written about in these pages, Nixon’s push to divorce the US dollar from the gold standard seemed almost to dare anyone to challenge the US dominance of that era and so OPEC did shortly after Nixon was sworn into office with the oil embargo and resulting inflationary spike which occurred.
The problem then, much like now, is who President Nixon was surrounded by. Paul Volcker believed in fixing rates absurdly low to keep economic stimulus and credit flowing. Federal Reserve Chairman Arthur Burns pressed for the end of dollar convertibility to gold to provide more flexibility with Federal Reserve policy. Meanwhile, Secretary of the Treasury John Connally, were more fixated on the evaporation of the US trade surplus since the late 1960’s versus the financial soundness of the currency and the nation; let me know if this sounds familiar.
Trump’s Attempt at Nixonization
The first of many absurdities highlighted by this author was best summarized in this article:
This Item is a Threat to America’s National Security
Within that story, I pointed out that by using Section 232 tariffs, which are only to be used for threats to America’s national security, President Trump was imposing tariffs on things like Chinese and Indian stainless steel butter knives (among other tableware). When one considers this insanity, it is little wonder where and how we arrived at some of the commentary and anti-capitalist statements which originated from this administration today.
Like this gem from Bessent:
The war in the Middle East is supposedly over. The border is sealed tight. Tariffs are being imposed on every nation to some degree, even if those nations are run by penguins and polar bears. So what is the reason for needing “emergency powers” to protect the US economy?
Oh, that’s right. The administration that promised to “Make America Great Again” by forcing insourcing and making manufacturing return to the US in 2017 to achieve any of the promises made then.
But where does the Nixonian angle come into the story. When the Treasury Secretary made this statement:
This is not a rational course of action unless there is a great fear within the administration of deflation, not inflation.
There is some justification for this. If interest rates continue to collapse, it means one of if not two things at once. First, there pool of qualified borrowers is reduced due to a lack of demand for credit, and those who need the additional access to funding are high risk candidates should a recessionary event occur (hint: It already has started). Secondly, the individuals who might consider looking for capital see no reason to expand their businesses or increase risk with the unstable economic policy outlook; much like 1972-1973.
Interest rates are nothing more than a reflection of the demand for credit, or money. If there are more people seeking credit, the banks can charge higher rates. The distortions created by Quantitative Easing and the Fed’s policy choices since 2009 have done nothing but create wasteful speculative cycles which have large risks of booms and busts versus maintainable economic growth. The lack of demand for money causing interest rates to fall is an often overlooked aspect of yields and I fear that in the end it will tell the tale of an economic contraction which could last for many years regardless of fiscal or monetary stimulus.
If the partial nationalization of American corporations is not terrifying enough for those of us with a libertarian laissez-faire economic mindset, then think about the course of actions this administration might engage in with a full blown stagflationary recession where higher inflation, lower demand, and increasing unemployment all coincide. The Trump administration has demonstrated it is more than willing to engage in the policies of Nixon and his economic team and that should have every American thinking about their immediate future.
Got gold?