By David Stockman
David Stockman's Contra Corner
March 28, 2026
It's probably nothin' according to the MAGA crowd and the Fed fanboys alike.
But then again, anyone who has been paying attention to the financial metrics for more than two weeks might beg to differ. When you have the following eruption in real time, there is surely an economic earthquake rumbling ominously just below the surface:
- Gold recently eclipsed $5,000 per ounce, which is double its $2,700 per oz price when Trump was sworn in on January 20, 2025.
- Silver recently surged past $100 per oz before pulling back, which is nearly 4X its year-ago price at $31.
- Gross federal debt crossing the $39 trillion mark and heading for $40 trillion within weeks-up from $36.4 trillion one year ago.
These are powerful signals about the future outlook, but self-evidently a Golden Age of prosperity or the S&P 500 at 10,000 is not among them. To the contrary, this has every appearance of a break-out-an overwhelming vote of no confidence in the spend, borrow, and print-a-thons which continue to emanate from Washington, and at an accelerating pace.
As is evident from the chart below, the price of historic money-gold-has entered a new, nearly parabolic phase. Thus, it took nine years for the price to double from $1300 per oz in 2016 to $2,700 by January 2025 under what amounted to UniParty borrow and print policies.
But it has now not only doubled again since the arrival of Trump 2.0, but has actually erupted by 31%-from $3,400 to around $4,440-just since August.
The rise of another ancient money, silver, was even more spectacular of late.
After years at $20 per ounce or lower, it went vertical-rising by 65% in just 30 days. Alas, there was only one other time when silver surged like it has recently. Namely, in 1978-1980 when the price exploded from $5 per ounce to $40.
Thereafter, of course, inflation soared into double digits and the Volcker treatment quickly ensued. The 10-year UST yield went to 16% and the prime rate to north of 20%, followed by two years of severe stagflationary turmoil.
To be sure, history often rhymes but rarely repeats itself. And in the present circumstance, there is no Volcker at the Fed or even one remotely on the horizon.
To wit, despite all of his plenitude of failings, Jimmy Carter did not hesitate to pick a strong, sound money Fed chairman in August 1979, who, in turn, did not hesitate to shut down the printing presses at the Fed.
One of the clear but long-forgotten aspects of Volcker's triumphant rescue of the inflation-racked US economy of the late 1970s was that the dollar regained its footing as Volcker throttled back the printing presses. Between late 1979 and 1985, the dollar's trade-weighted value (blue line below) more than doubled.
In turn, that reduced the dollar cost of imports and brought related downward pressure on the pricing of US-made goods, as well. The simple fact then, and the same fact now, is that when you trash the dollar in the context of an economy that is a massive importer of $3.5 trillion of goods per year, and where such imports are the marginal source of supply, the exchange rate drives the price curve for goods and commodities.
Not surprisingly, therefore, the 13%+ CPI inflation of 1980 (red line below) was driven to barely 3% per annum on a Y/Y basis by mid-1983 in response to the dollar's strong recovery.
Needless to say, if the Donald has one signature posture when it comes to economics, it is a relentless demand for lower interest rates and a weaker dollar. The latter, in fact, rises to the level of an obsessive fetish.
The truth is, Donald Trump has never, ever understood the free market or had any respect for it. His basic mentality is that of a plenary commander of all matters economic, and also that of a conspiracy theorist who believes that any condition to his disliking-such as a firmer dollar exchange rate-is owing to the nefarious doings of foreigners rather than the supply and demand forces of the market.
So not surprisingly, another metric heading decisively in the wrong direction during the last 12 months is the FX rate of the dollar.
But at least back in those days, the US position on behalf of a weaker dollar was being led by a strong Secretary of the Treasury, James Baker, who had a Texas populist penchant for lower interest rates and a weaker dollar, but also a decent respect for policy experts and mainstream opinion.
So what eventually materialized was a reset of the dollar's FX rate at the level which had prevailed before the late 1970's inflationary blow-off.
But it was not an unhinged war on the dollar driven by the likes of today's absolute economic moron and know-it-all in the Oval Office. Nor was Ronald Reagan accompanied by an ass-kissing Treasury Secretary like Trump's, who basically doesn't know the difference between the utterly fabricated Trumpian Golden Age spin and the real facts and conditions of the economic and financial world.
This latter point became more than evident recently when US Treasury Secretary Scott Bessent ordered a "rate check"-a rare operational move instructing the Federal Reserve Bank of New York to survey banks regarding exchange rates for the USD/JPY currency pair.
Of course, this kind of "rate check" is a heads-up to FX markets that a major currency intervention is coming and that it would be wise not to be caught flat-footed.
That is to say, Washington is fixing to shit-can its own currency in order to rescue the faltering yen. And it appears to be doing so on the cockamamie theory that this will help Uncle Sam sell the massive volume of new bonds, bills and notes that will be needed to finance the Donald's soaring deficit.
In short, the brown stuff is about to hit the fan in the US Treasury market and we now have in power a gang of absolute financial cowboys who are likely to resort to any and all anti-market expedients to avoid the day of reckoning. But FX intervention on behalf of the yen is surely a reminder that the Trumpian spenders, borrowers, printers, interventionists, and economic statists are fixing to truly veer off the deep end.
After all, if there is a single economy in the developed world that is an embodiment of the public debt and central bank money printing gone wild, it is Japan. Yet the clueless Trumpian dreamers are now fixing to bail it out on the jackass theory that debt-entombed Japan will then keep buying Uncle Sam's flood of debt paper.
Reprinted with permission from David Stockman's Contra Corner.