The Illusion Collapses

When King Louis XV died in 1774, nearly all of France breathed a collective sigh of relief.

The late king, along with his predecessor— the legendary Louis XIV— had indebted France up to its eyeballs with endless war, waste, and lavish spending.

Sure, Versailles was gorgeous. But the interest payments were eating the royal Treasury alive. And everyone knew that France was in serious trouble… so when the king died, people became hopeful that change was coming.

The new king, Louis XVI, was young, bright, energetic, and wildly popular. People desperately believed that he would finally be the one to reform the system and fix the nation’s gargantuan problems.

And initially things went very well. One of the young king’s first orders was to appoint an economic libertarian named Jacques Turgot as his chief minister.

Turgot made his principles crystal clear from day one: France would not declare bankruptcy. It would introduce no new taxes. And it would incur no new debts.

In short, Turgot planned to fix the nation’s finances through massive spending cuts—something everyone acknowledged was long overdue. He also aimed to improve the efficiency of the state, and there were plenty of obvious, sensible reforms to be made there as well.

Unfortunately for France, it didn’t last long.

Turgot made enemies fast— which wasn’t very surprising given that he was threatening the political class’s taxpayer-funded gravy train. Nearly everyone— the Church, the media, the nobles— turned on Turgot and called for his removal.

So by May of 1776, just 18 months after Turgot took office, the King dismissed him.

At that point, it became painfully clear that the necessary reforms weren’t going to happen. In fact France went in the opposite direction— providing major financial support to America— until finally hitting rock bottom in 1789 at which point France suffered its own revolution, along with the Reign of Terror, multiple wars, hyperinflation, and more.

When it comes to making much needed reforms, I see a lot of similarities between 1770s France and 2020s America.

When Donald Trump won the 2024 election, there was real cause for optimism.

Trump had a strong economic record already. He talked during the campaign about the need to cut the deficit. He hammered the regulatory state. He made it clear that America couldn’t keep limping along funded by infinite debt and magical thinking.

Then he brought in real firepower.

Elon Musk was elevated to head the DOGE initiative to take a chainsaw to government waste. Like Jacques Turgot in 1774, Elon found all sorts of garbage in Washington: redundant agencies, overlapping missions, and entire programs that were taxpayer-funded scams.

Most importantly, Elon identified spending cuts that, along with a strong deregulatory push to unleash growth, could have steered the ship in the right direction again. America’s debt problems wouldn’t vanish overnight, but they could start improving.

Plus, after years of ‘leadership’ from Joe Biden, i.e. a guy who shook hands with thin air and abandoned tens of billions of dollars of military equipment to America’s sworn enemy in Afghanistan, the US had elected someone whose first instinct upon his attempted assassination was to cheer Americans to fight.

Things certainly started well. In his first days as President, Trump issued a handful of powerful executive orders. The border was closed. DOGE started to gain traction. The woke nonsense ground to a halt.

But then he went all-in on tariffs, arguing they were the solution to America’s financial problems. Instead of offering the stability that businesses need to plan and grow, however, the ‘plan’ was a chaotic mix of on-again, off-again policies with no clear objective.

Then, just as DOGE was proposing serious spending cuts, the government did a 180 and backed a massive funding bill that added trillions to the deficit. Nearly everything that Elon found was ignored.

And in the end, Congress rescinded a whopping $9 billion of waste out of the hundreds of billions identified.

Then Trump and Elon had a falling out. Elon walked. And, just like that, it started to look—once again—like business as usual in Washington.

Still, optimists could hold out hope. Maybe it was just a year-one strategy—pass the big spending bills early, stabilize politically, and tackle reform in year two.

I’ve long argued the window is still open to arrest America’s decline. But they are pushing it dangerously close to the edge.

And then came Epstein.

No, it’s not an economic issue. It doesn’t directly affect bond markets or Social Security or the Fed.

But it is a major crack— perhaps the final crack— in the illusion that anything is going to change.

They are refusing to hold Epstein’s buddies accountable, to reveal what happened, and to deliver on a key promise of transparency that they made repeatedly.

And instead of leveling with the public—even if the truth was ugly—they chose to gaslight voters.

Trust in every major institution was already near historical lows prior to this Epstein issue. Now it will only get worse.

The Swamp, the Deep State, the runaway bureaucracy— whatever you want to call it, clearly lives on.

They’re not cutting the deficit. They haven’t significantly rolled back regulations. Reforming Social Security isn’t even on the table, just 8 years from insolvency. Spending keeps accelerating, with no plan to slow down.

Meanwhile, interest on the national debt has already blown past $1 trillion annually, which could easily triple within a decade.

Foreign governments and central banks—once the biggest buyers of US debt—are quietly backing away.

The White House is already planning on installing their own yes-men to the Federal Reserve, virtually guaranteeing a money-printing bonanza in the years to come… with the obvious effect being tons of inflation.

If you had put your Plan B on hold, it’s probably time to dust off the cobwebs.

The world’s not ending. America will not cease to exist. But it’s becoming ever more likely that the fiscal, social, and inflationary challenges ahead cannot be ignored.

Source

Simon Black is an international investor, entrepreneur and permanent traveler. His daily letter is both educational and entertaining, and we suggest that those who want unbiased, actionable information about global opportunities sign up for Sovereign Man’s free, actionable newsletter at http://www.SovereignMan.com.

From Simon Black of SovereignMan.com

Source: https://www.schiffsovereign.com/trends/the-illusion-collapses-153204/