The Federal Reserve’s Rate Hike is just a distraction

The Federal Reserve raised its target for the federal funds rate by 25 basis points on Wednesday, its first rate hike in more than three years. Fed Chairman Kevin Warsh cited inflation* that has been “too high for too long” as the principal reason for the move. Warsh has maintained a commitment to getting the inflation rate back to the Fed’s stated goal of 2 percent annually since being confirmed.

Opinions vary on the decision. President Trump, always and everywhere a proponent of lower interest rates, managed to criticize the move without castigating Warsh, whom he just appointed chairman. Instead, Trump blamed “the board,” meaning the Fed’s Board of Governors, saying, “The board is very hostile. They’re very political. They’re doing the wrong thing.”

Meanwhile, longtime Fed critic Peter Schiff argued on his podcast that the rate hike is far too small given the current inflation rate, arguing that the Fed should have started with at least a 50 percent hike and continued higher from there.

To the extent the federal funds rate affects price levels, Schiff is correct. A quarter-point hike is not significant enough to overcome other factors pushing up prices. But everyone, including Schiff, still talks about monetary policy as if it operates the way it did before 2008.

It doesn’t.

Before 2008, the Federal Reserve could only lower the federal funds rate by creating new money. It bought government securities from its member banks through open-market operations with newly created money, increasing the supply of money available for lending and thereby decreasing the price of money, i.e., interest rates. Conversely, it could only raise interest rates by destroying money. It would sell government securities to its member banks, decreasing their supply of money and thereby increasing interest rates.

This had an exponential effect on the supply of money available to the public. It both increased the amount of money available for banks to lend and encouraged them to lend it at lower interest rates than they otherwise would. Given our fractional-reserve system, an increase in lending activity by commercial banks increased the money supply beyond the new money created by the Fed.

This is not the way monetary policy works anymore. Due to the large reserve balances held at the Federal Reserve by its member banks—a post-2008 phenomenon—the Fed’s interest-rate and money-supply policies are now separate. The Fed can lower the federal funds rate without creating new money simply by lowering the interest rate it pays on those reserves.

Similarly, it can now raise the federal funds rate without destroying existing money by raising the interest rate it pays on those reserves.

This doesn’t mean Fed rate policy has no effect on the economy, but it has much less effect than it did before. It still influences how many loans commercial banks make and at what rates, but it no longer necessarily accompanies that influence with increases in the monetary base. And while interest rates do affect price levels and investment decisions, increases in the money supply by the Fed have a much larger effect. Consider the following charts:

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Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness? Part One and host of the Tom Mullen Talks Freedom podcast.

Trump is FDR without the cigarette holder and snooty accent

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President Trump on Wednesday promised to issue a $5,000 “dividend” to every American adult if the Republicans retained majorities in both the House of Representatives and the Senate in this November’s mid term elections. Trump said the payment would be “very much like a successful company will do a cash distribution to its shareholders.”

There is so much wrong with this statement that it is difficult to know where to begin. Let’s start with the fact that this is nothing like a successful company making a cash distribution to its shareholders. The shareholders of a private sector company voluntarily buy its stock and can sell it (no longer own or have anything to do with the company) any time they want. And a successful company funds its distributions from the profits earned when its customers voluntarily pay the company more for its products that it cost the company to provide them.

The government represents the antithesis of this of this scenario in every regard. Neither its “shareholders” nor its customers act voluntarily. They are, in fact, the same people and they purchase the government’s products (pay taxes) under the threat of fine or imprisonment if they don’t. Should they resist adamantly enough, armed men will come to drag them away and kill them if they resist that.

This is why the hoary Republican promise of electing a businessman to “run the government like a business” has always been nonsensical.

But even if one accepts the analogy for the moment, there is a further problem with Trump’s reasoning. The “company” isn’t successful. Its “sales” aren’t remotely exceeding its costs and haven’t during any year in this century. The federal government is projected to spend $7.4 trillion in FY2026 while only collecting $5.6 trillion in taxes. As a going concern, it is losing money. There are no “profits” to distribute.

This is transparent vote buying, practiced to some extent by every politician, but on a scale not seen since the president Trump often invokes as almost as “great” as himself: Franklin Delano Roosevelt. In many respects, Trump is Roosevelt, without the cigarette holder and snooty accent.

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The 250th Anniversary Of…What, Exactly?

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In a few days, Americans will celebrate the 250th anniversary of the Declaration of Independence. There will be fireworks, concerts, speeches, and millions of backyard barbecues.

But what precisely are we celebrating?

Most Americans know that on July 4, 1776, the Continental Congress approved the Declaration of Independence, explaining why the colonies were “dissolving the political bands” connecting them to Great Britain. Far fewer know that the actual act of separation took place two days earlier, when Congress approved Richard Henry Lee’s resolution declaring the colonies “free and independent States.”

More importantly, few Americans understand what those words meant.

Today, when we hear the phrase “the United States,” we naturally think of a single nation. But in 1776, the word “state” meant what we would today call a country. The Declaration itself says that the former colonies possessed “full Power to levy War, conclude Peace, contract Alliances, establish Commerce, and to do all other Acts and Things which Independent States may of right do.”

In other words, Congress did not create one new nation on July 2. It declared thirteen separate states—Massachusetts, Virginia, Pennsylvania, and the others—to be sovereign political communities possessing the same powers as Great Britain, France, or Spain.

Seven years later, Great Britain itself recognized this reality in the Treaty of Paris:

“His Britannic Majesty acknowledges the said United States, viz., New Hampshire, Massachusetts Bay, Rhode Island and Providence Plantations, Connecticut, New York, New Jersey, Pennsylvania, Delaware, Maryland, Virginia, North Carolina, South Carolina and Georgia, to be free sovereign and Independent States.”

This is quite different from the story most Americans have in mind when they celebrate Independence Day.

Most Americans believe that a new nation (not thirteen new nations) was created that day. Politicians will likely confuse the matter even further with sophisms like “the birth of our democracy.” Democracy is not mentioned in any of the founding documents.

Now, it would be dishonest not to recognize that the Founders intended more than thirteen separate states. According to Thomas Jefferson’s autobiography, they moved directly on to the Articles of Confederation, defining something more than an alliance but far less than a monolithic nation state. According to the Articles, it was “a confederation.” The Articles describe the relationship as “a firm league of friendship” that agreed to delegate certain powers to a federal government, leaving all others to the individual states.

This is not just an academic point. It was the kind of relationship the colonists argued was their proper one to the British Empire before leaving it. In his A Summary View of the Rights of British America, Jefferson argued that the colonies were subject to the king but not to Parliament. As far as internal matters, including taxation, were concerned, only the local colonial governments had any legitimate authority. The king’s authority was limited to foreign policy and regulating trade.

We still call the government in Washington DC “the federal government,” but have lost the meaning of the word. A federal government governs a federation, not a nation. But the government in Washington DC acts as a national government in all but name.

Again, this is no mere pedantry. We are still arguing today over who makes rules over issues like abortion, gun regulation, and drugs. The Constitution leaves all these issues to the states, but since the early twentieth century progressives, both liberal and conservative, have used the Supreme Court to “discover” those powers in the Constitution, mostly through spurious readings of the Bill of Rights.

But the spirit of ’76 was to leave all such matters to local governance, not decided by supposed elites in a distant capital. And Washington DC is literally as distant to many U.S. states as London was in 1776 and culturally much more so to almost all of them.

Then, there is “our democracy.” The reason you don’t find the word democracy in the Declaration or the Constitution is that the Founders did not envision a government that did any mythical “will of the people” or “will of the majority.” Rather, the purpose of government according to the Declaration was to secure the inalienable rights of the individual.

Modern Americans often speak of “our democracy” as though elections determine what government ought to do. The Founders viewed matters differently. Elections were not intended to determine the purpose of government. That purpose was already fixed. The role of government was to secure the rights of individuals. Elections merely determined who would exercise the limited powers delegated for that end.

Read the rest at The Libertarian Institute…

Tom Mullen is the author of It’s the Fed, Stupidand Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

What National Interests Were Served by the Iran War?

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As President Trump continues to attempt to extricate himself from the Iran War, analysts are left to assess what has been gained or lost in fighting it. Certainly, Iran has realized enormous gains. If the Memorandum of Understanding (MOU) signed by President Trump on Thursday is representative of the final agreement, Iran will be in a better position on the world stage than it has been at any time since the 1979 revolution.

According to the MOU, the U.S. will lift the economic sanctions it has imposed upon Iran for several decades. It will return $24 billion in Iranian funds frozen by the U.S. government. Iran will keep its conventional missile capability and some sort of peaceful nuclear program, almost certainly to include uranium enrichment, likely capped at a level far below weapons grade. The U.S. has also pledged to “remove its forces from the proximity of the Islamic Republic of Iran within 30 days after the final deal.”

That means the U.S. will not send troops back to the military bases encircling Iran which the U.S. evacuated at the beginning of the war and Iran subsequently bombed into various states of damage or destruction.

Regarding the damage done to Iran by 40 days of bombing by the U.S. and Israel, the U.S. has agreed to “develop a definitive mutually agreed plan with at least USD 300 billion for the reconstruction and economic development of the Islamic Republic of Iran.”

As for the United States, it emerges from the war with very little to show for its efforts. Iran agrees not to develop or acquire nuclear weapons, but they have promised as much for the past two decades and submitted to and passed inspections to ensure compliance.

That this “no nukes” clause represents no change in Iran’s policy or behavior is reflected in the agreement, which states, “The Islamic Republic of Iran reaffirms that it shall not procure or develop nuclear weapons.” The word “reaffirms” was likely insisted upon by Iran so that the MOU would reflect what they claim has been their position since suspending their nuclear weapons program over twenty years ago.

Besides this non-concession, no other U.S. demand is satisfied in the MOU. The document is completely silent on Iran’s conventional missile program, which the U.S. demanded be curtailed or eliminated at the beginning of the war. Iran’s “proxies,” Hezbollah, Hamas, and the Houthis are similarly not mentioned. So, Iran is not agreeing to anything regarding their support of those groups.

In fact, the MOU implicitly takes Hezbollah’s side, requiring, “immediate and permanent termination of military operations on all fronts, including in Lebanon,” and also “ensuring the territorial integrity and sovereignty of Lebanon.” This means Israel must withdraw its troops from Lebanon, where they are currently fighting Hezbollah. Lebanon is named three times in the first paragraph to ensure there is no confusion it is part of the deal, as there was at the beginning of the first ceasefire.

These are the kinds of terms imposed on the losers of a war by the winners.

Clearly, no U.S. interests were served by losing the war with Iran. But what if the U.S. had won it? What if the decapitation strategy pursued by the U.S. in March had succeeded, the neocon dream of mass revolt of the Iranian people had taken place, and the mullahs had been deposed? What U.S. national interest would have been served then?

Read the rest on Tom’s Substack…

Tom Mullen is the author of It’s the Fed, Stupidand Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

Isolationism Seems to be Working Just Fine for China

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As the 100th day approached of a war with Iran President Trump once said the U.S. won “in the first hour” of fighting on February 28, equity markets began to exhibit the kind of fear one would expect with 20% of the world’s oil and fertilizer trapped in the Persian Gulf.

Until today, Trump’s tap dancing between threats of Iran’s catastrophic destruction and last minute postponements due to supposed breakthroughs in negotiations, along with the release of hundreds of millions of barrels of oil from the Strategic Petroleum Reserve (SPR), had kept the oil price down and equity markets up.

But the president can only dance so long. The reality that there is no good way out of this war without explicitly or tacitly acceding to Iran’s demands may be starting to dawn on investors. That means the Iran War, whether it ends soon via U.S. capitulation or becomes yet another Middle East quagmire that drags on for years, will ultimately yield no benefit to the American people. All they’ll be left with are the costs, which in this case could be considerable and ongoing.

For average Americans, the empire is “all pain no gain.”

Proponents of the empire insist it is vital to “U.S. interests.” They argue that average Americans couldn’t enjoy the prosperity and freedom they do without the global standing army and gargantuan military budget to support it. But when pressed for details, the cause/effect relationships between the constant interventions and whatever freedom and prosperity Americans enjoy always gets vaguer and vaguer the more details one demands.

Regarding the current war, it is argued that Iran is a threat to Israel, a key ally. But when asked, “how does this alliance benefit Americans,” one usually receives replies like, “Israel is the only democracy in the region!” To which one could reasonably ask, “How do Americans benefit from there being a democracy in the region?”

There is usually some reference to oil at this point, which prompts the question, “How does America improve its access to Middle Eastern oil by antagonizing the oil producers?”

The arguments for the proxy war against Russia in Ukraine are similarly vague. And when one tries to pin proponents of the empire down by saying, “Explain, step by step, how Americans would have been adversely affected if this intervention never occurred,” one is met only with platitudes. “American Exceptionalism.” “Indispensable Nation.” “Western values.”

Maybe it’s hard to explain concretely because it’s just bunk.

Even the foreign policy realists like John Mearscheimer and Robert Pape, who have been 100 percent correct in their predictions about how this war would go, warn us that America cannot relapse into “isolationism,” lest other powers like China “fill the vacuum.”

It is important to understand isolationism as both the interventionists and the realists define it. Isolationism is refusing to take responsibility for security issues all over the world. While the neocons advocate kinetic military operations and the realists suggest strategies like containment and offshore balancing, they all agree Americans have to pay for the massive military structure necessary for either strategy.

Anything less is “isolationism,” even if the country in question has robust trade relationships with every existing and emerging power on earth and a military more than capable of enforcing its own security interests. That is still a recipe for disaster because it allows for the emergence of new threats like China and reemergence of old ones like Russia. And we all know no nation could prosper and grow while allowing that to happen.

Except China. It seems to be working just fine for China.

Read the rest on Tom’s Substack…

Tom Mullen is the author of It’s the Fed, Stupidand Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

Time is running out for Trump, not Iran

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Despite myriad statements by President Trump indicating progress in peace talks with Iran, Iranian Foreign Minister Abbas Araghchi says no progress has been made on a deal to date. Trump has taken the American public on a pendulum ride of sorts, first threatening to destroy Iran completely if a deal isn’t reach by his latest deadline, only to postpone the destruction at the last minute, claiming a breakthrough in negotiations that is expected to imminently lead to an agreement.

Then, no agreement comes, and the cycle starts over.

The truth is there have been no significant breakthroughs in negotiations since the war began February 28. The core U.S. demands have not changed; neither have the core Iranian demands.

The U.S. demands Iran cease nuclear enrichment entirely, even though enrichment is named an inalienable right under the Nuclear Non-Proliferation Treaty (NPT); Iran refuses to cease enrichment.

The U.S. demands Iran dismantle its missile capabilities; Iran refuses to do so.

The U.S. demands Iran ceases to support its proxies in Lebanon, Palestine, and Yemen; Iran refuses, considering them “allies” rather than “proxies.”

The U.S. demands Iran relinquish all control over the Strait of Hormuz; Iran refuses and maintains it will continue to collect tolls in lieu of reparations for damage done by the war if it does not receive direct payment from the U.S. and Israel (i.e., “the U.S.”).

It’s really a stretch to even call what is going on between the two countries “negotiations.” Iran has refused to engage the U.S. directly after Trump imposed a blockade the day after a tenuous ceasefire. Instead, the U.S. sends emails to Pakistan, which is acting as intermediary. Pakistan forwards those emails to Iran.

Iran responds to those it feels it needs to. This is not the behavior of a defeated nation whose leadership is in disarray. It is the behavior of a nation on the verge of winning a war.

Read the rest on Tom’s Substack…

Tom Mullen is the author of It’s the Fed, Stupidand Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty, and the Pursuit of Happiness?

Leave the Epstein Files, Take the Anti-War

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Thomas Massie is one of the two best U.S. House Representatives of my lifetime. Were I a voter in KY-4 during this recent primary, I would have voted for him early and often. I would have persuaded my parents to vote for him (and they’re both deceased). I have agreed with Massie on absolutely every contentious issue he’s taken a stand on, except one.

The “Epstein Files.”

I realize this renders the vast majority of those whom I consider political allies apoplectic. I would ask all reading to bear with me. Make no mistake, I would still vote for Massie despite this one disagreement, but it is an important one not only for him but the entire “liberty movement” or whatever we’re calling it these days.

The fixation with Epstein has become so pervasive among anti-establishment groups of all kinds – libertarian, America First conservatives, some left-wing groups, etc. – that it has become fashionable to refer to the people previously called “the elites” or “the globalists” as “the Epstein class.”

There is no denying this has been effective. The targets clearly don’t like it, and it provides coalition building between groups that may not have much else in common. That Massie was able to partner with Ro Khanna on this issue may remind Ron Paul libertarians of Paul’s coalitions with Dennis Kucinich against unconstitutional wars of aggression. But this coalition is fundamentally different, for several reasons.

First, the overall theory isn’t true. As rapacious as the so-called globalists may be economically, it is probably not true that sexual crimes against girls under the age of consent is rampant or was so when Epstein was alive. If it were true, then proponents of this theory would be able to present clear cut individual cases which should be prosecuted but haven’t been.

Repeatedly, I have challenged my fellow libertarians to produce a solitary case against someone where the evidence of guilt is clear and but for reluctance to prosecute the perpetrator would be sitting in jail. I have yet to be presented with a single such case.

And no, Prince Andrew is not an example. He was thoroughly investigated and prosecution was not possible due to lack of evidence.

The second reason this coalition is different is its basis in Marxist-feminist reasoning. The invitation by the left to “believe all women” necessitates destroying due process, a fundamental pillar of liberty itself. Libertarians were willing to defend Bush ally Brett Kavanaugh on these grounds when just such an accusation was made, despite having no love for Kavanaugh.

Read the rest at Tom’s Substack

Tom Mullen is the author of Where Do Conservatives and Liberals Come From? And What Ever Happened to Life, Liberty and the Pursuit of Happiness? Part One and host of the Tom Mullen Talks Freedom podcast.

Why The Saint is so much better than James Bond

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I was born in the mid-1960s and remember the birth of cable television. Home Box Office (HBO) premiered in 1972 and soon after my family had a cable subscription.

By the early 70s I was already a huge Universal classic horror fan. Even before cable, I had seen the 1931 Karloff Frankenstein, the 1931 Lugosi Dracula, and a few of the others on the “Friday Fright Night” late show that ran after the 11:00 news on the local ABC affiliate. But cable television opened up the entire catalog to me.

In those days, cable scheduling was fast and loose. What used to be an empty spot on the dial pre-cable now might host one cable channel for part of the day and another for the rest. Most of the cable stations went off air at midnight, just like the local network affiliates, with a rendition of the national anthem.

One such channel in the Buffalo, N.Y. market (I don’t remember the dial number) carried WPIX Channel 11 from New York City (NYC) on Saturday mornings until 10 AM. There was a god-awful children’s show about a leprechaun named “Harrigan” until 9:30, at which time an episode of the 1960s Spiderman cartoon series would come on. I timed breakfast so that I was finished just in time to hear as little of the Harrigan outro theme song as possible without missing the teaser for Spiderman.

But that was just the warmup act for what followed. At 10 AM, the station would switch from WPIX Channel 11 NYC to WOR TV Channel 9 NYC. And every Saturday morning at that time, a 1930s or 1940s film would be shown. These included the Universal classic horror films – usually the B movie sequels, not the originals. However, they tended to run them in multi-week series. So, if The Mummy’s Hand (1940) were shown one Saturday, then the Mummy’s Tomb (1942) would show the next, The Mummy’s Ghost (1944) the week after, and The Mummy’s Curse (1944) the week after that.

Ditto with the Frankenstein films. If Son of Frankenstein (1939) played the first week, it likely would be followed in successive weeks by Ghost of Frankenstein (1942), Frankenstein Meets the Wolfman (1943), House of Frankenstein (1944), and House of Dracula (1945).

I was like a prospector who had hit the mother lode.

Of course, it wasn’t just the Universal classic horror films that played in the 10 AM slot. When they weren’t running those, they would run other films from the same period, which I came to enjoy almost as much. It was on WOR Channel 9 that I first encountered The Saint.

In keeping with the pattern, I don’t believe I saw the first of the RKO Saint series starring Louis Hayward in the title role. My entire exposure to the Saint was the following five films starring George Sanders. As far as I was concerned, George Sanders was The Saint. I had no knowledge of the Leslie Charteris novels and short stories wherein the character had been created. Neither did The Saint’s ideological significance occur to me at that age.

After finally reading several of the Charteris novels (Meet the Tiger, Enter the Saint, The Last Hero aka The Saint Closes the Case, The Avenging Saint) and rewatching the five Sanders films (conveniently sold in one DVD collection), it is obvious Simon Templar inspired Ian Fleming’s James Bond, even if Fleming never publicly acknowledged it.

Templar is essentially Bond’s prototype: a suave Englishman with expensive tastes, a predilection for fast cars, a way with beautiful women, and a habit of delivering sharp one-liners while facing deadly threats and taking on sophisticated criminals. But one thing makes Simon Templar far better than James Bond:

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What Would Truly Make America Great Again?

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Donald Trump ran three presidential campaigns under the banner Make America Great Again (MAGA). He also promised to put “America First,” a reference to the 20^th century interwar movement that opposed further involvement in foreign wars. Instead, its adherents then and a large portion of Trump’s supporters now believe the wars America has fought have not served the interests of Americans and that the federal government should address those instead of “going abroad in search of monsters to destroy.”

But therein lies the rub. Whether or not MAGA and America First are compatible largely depends upon how one defines “great.” And based upon the president’s actions thus far during his second term, his definition does not jibe with that of his America First supporters nor their 20^th century predecessors.

Trump’s supporters are sometimes criticized for romanticizing the 1950s, a period of relative peace and domestic prosperity. From the early 50s through the mid-1960s, life most approached what they consider the American ideal. Jobs were plentiful, including high paying manufacturing jobs, and most American households could live comfortably on one income.

They believe economic “globalization” ruined this idyllic lifestyle. Specifically, “free” trade agreements like NAFTA and allowing China to enter the WTO resulted in U.S. manufacturing being outsourced to cheaper labor markets abroad. This, they contend, has resulted in a dearth of high-paying jobs and the necessity for at least two people in the average household to work just to scrape by.

Thus, Trump’s first inaugural promised to reverse this “American carnage,” bring high paying manufacturing jobs back to the U.S., and restore the idyllic lifestyle Americans once enjoyed as their birthright.

It’s a compelling story and has certainly created a vast political movement. It’s also demonstrably false on every point.

First, American manufacturing has not been “hollowed out.” Manufacturing output is currently at an all-time high and any honest analysis of its virtually uninterrupted ascent over the past 100 years would conclude that the only interruptions to this success story have been the two financial crises – and accompanying monetary inflation – in 2008 and 2020. More on that later.

It is true that manufacturing jobs have declined precipitously, but that just means that the U.S. manufacturing sector is becoming more efficient, able to produce more output with fewer workers. The same thing has happened in farming over the past 100 years. In any case, the trend has nothing to do with NAFTA or China entering the WTO, as this chart clearly demonstrates:

If one were to take away the years at the bottom of that chart, no one claiming NAFTA or China entering the WTO were the driving factors in the decline of manufacturing jobs would be able to find those trade agreements on the chart. In fact, if one were to pull the timeframe out to include pre-WWII periods, it would show that WWII and the years immediately afterward were the highwater mark in terms of manufacturing jobs as a percentage of all jobs.

In other words, for most of American history, including most of the 1950s, 70% or more of American workers had non-manufacturing jobs. And somehow they were able to live middle class lifestyles.

It isn’t even true that increasing the number of manufacturing jobs would make the average American wealthier today. The median annual wage or salary for all full-time jobs in the U.S. economy is about $62,400. The median for full-time manufacturing jobs is about $45,960. Americans leaving the average job for a manufacturing job would not live a higher lifestyle. Quite the contrary.

Nevertheless, there does seem to be an “affordability” problem for average Americans. And the U.S. has been running large net trade deficits for decades, with no foreseeable end in sight. If Trump’s story doesn’t explain these problems, what does?

That brings us back to the definition of “greatness.”

Read the rest on Tom’s Substack…

Iran exposes the delusional empire and its mad king

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Eight days after threatening on Easter Sunday to end Iran’s civilization should it not open the Strait of Hormuz, President Trump on Monday began blockading the strait himself. He also threatened to “seek and interdict every vessel in International Waters that has paid a toll to Iran. No one who pays an illegal toll will have safe passage on the high seas.”

This latter threat, which if carried out would amount to acts of war against the country of origin of the vessel(s), would include Russian and Chinese ships.

It is one thing to demand the strait be opened and, when Iran refused, to “close it harder” yourself. It is quite another to declare your intention to commit acts of war against the two most powerful countries in the world besides the United States, both with significant nuclear arsenals.

Fortunately, April 14 turned out to be another “TACO Tuesday” as previously sanctioned ship Rich Starry, bound for China and carrying a Chinese crew, successfully exited the Persian Gulf through the Strait of Hormuz. U.S. officials explained its inaction based upon the ship having loaded its cargo in a United Arab Emirates port, rather than an Iranian port, and having not paid a toll to Iran. The ship therefore did not meet U.S. criteria for stoppage.

Whatever. That the U.S. did not commit any acts of war against a Chinese-crewed ship bound for China is a good thing. Iran has been allowing the ships of its allies to navigate the strait since the beginning of the war. It remains to be seen what will happen if a Russian or Chinese ship which does meet the U.S. criteria attempts to leave the gulf. The Murlikishan, another Chinese-crewed ship under a foreign flag and eventually bound for China, is currently in the gulf.

The blockade is the latest in a series of erratic attempts by President Trump to find an exit ramp from a war even he clearly realizes was a major blunder. The problem is that no matter which direction Trump goes in, the Iranian’s have the upper hand.

His threat to “end Iran’s civilization” by bombing their energy plants, desalination plants, and other civilian infrastructure was countered by Iran’s threat to do likewise to the GCC states. While this wouldn’t save Iran from devastation, it would effectively take the entire world down with it as about 20 percent of the world’s oil supply would no longer merely be interrupted by a temporary blockade but destroyed. The U.S. can’t afford a global depression. Iran’s capability to take down the global economy effectively gives them a trump card (intended) on military escalation.

Neither will Trump’s blockade be effective. Trump was willing to go to the extremes he did on Easter Sunday precisely because Iran’s own closure of the Strait of Hormuz was already damaging the world economy and that damage would increase exponentially the longer the closure went on. That fact hasn’t changed. Trump is saying that if Iran won’t let its enemies ships pass through the strait, then the U.S. won’t let its friends pass, either.

That not only doesn’t solve the economic problems caused by Iran’s closure; it makes them worse. It just means that even less oil, gas, and fertilizer is leaving the Persian Gulf than under Iran’s blockade alone. If Iran’s friends can no longer obtain those commodities from the Persian Gulf, they are going to compete with the U.S. and its allies for them in other markets, driving up the price for everyone. Iran wins again.

The madness of King Donald is driven by desperation. He cannot admit to himself he made a mistake starting the war in the first place nor face the reality that his tried-and-true bag of tricks – including making extreme demands and then pivoting to a more reasonable but advantageous position – is not going to get him out of this. Iran simply responds with the Art of the No Deal and leaves Trump flailing.

Iran has all the cards in this hand precisely because the administration has given them nothing to lose. It is true that the U.S. and Israel have destroyed a huge percentage of Iran’s above ground capabilities. But Iran anticipated that eventuality for decades. They’ve been preparing to survive this war since before Trump started hosting The Apprentice.

Given that all Iran must do to win is survive, maintain its capabilities to control the Strait, and retain its ability to respond to external attacks, it had a huge advantage before the first shot was fired. On the other hand, for the U.S. to win, it must either change the entire structure of Iranian government or truly eliminate Iran’s missile and nuclear enrichment capabilities, both of which may be far enough underground that even nuclear weapons cannot reach them.

Thus, the U.S. stumbles from one strategy to the next, trying to find one that has any leverage. It has lately moved several thousand ground troops to the region either for appearances or as a contingency. But again, what will the winning strategy be on the ground? Conquering Iran would take hundreds of thousands of troops if it were possible for the U.S. at all. Anything short of that would be short lived and indecisive. Indecisive means Iran wins again.

It isn’t only the emperor who has lost touch with reality but the empire itself. The 20^th century was the American century. The U.S. built its global empire fighting and defeating the Soviet Union in the Cold War. While there were plenty of blunders to point to and at least one defeat in Vietnam, the empire in general achieved its strategic goals. Whether the average American would have been better off without the empire is an argument for another day. But on its own terms, the empire set reasonable goals and achieved them.

This century tells a different story.

Read the rest on Tom’s Substack…