The struggle for the survival of US democracy

As Donald Trump’s grip on the Republican party tightens, Joe Biden is playing for huge stakes — and he knows it

Martin Wolf

  © Barry Falls

“The question of whether our democracy will long endure is both ancient and urgent, as old as our republic.” 

Thus, in his address to Congress of April 28, did Joe Biden define what is at stake in his presidency. 

He was right, too, in stating that autocrats are betting that US democracy cannot “overcome the lies, anger, hate and fears that have pulled us apart”. 

But those autocrats might even be right. 

One of the main American parties has become unambiguously anti-democratic. 

This is now a struggle between two old men for the fate of liberal democracy in the US.

In a liberal democracy, fair elections determine who holds power. 

Attempts to subvert or overturn the vote are treason. 

That is precisely what Donald Trump attempted to do both before and after last year’s presidential election. 

He tried to turn the US into an autocracy. 

That was not at all surprising: it had been obvious from the beginning of his political career that this was his aim.

He failed. 

Decent and brave people ensured that. 

But this story has only just begun. 

Even without social media, Trump still holds the loyalty of his party’s base and so controls its leaders. 

Even people whose lives he placed in danger with the invasion of the Capitol he promoted rush to kiss his hand at Mar-a-Lago. 

Meanwhile, deeply conservative stalwarts, such as Liz Cheney, the third-highest ranking Republican in the House of Representatives, are being defenestrated. 

Her crime? 

Stating that Trump’s Big Lie that the actual outcome of the election was a Big Lie is a big lie.

The fact that Trump is lying is not news. 

What is news is that, even shorn of public office, Trump defines the truth for his party. 

There is a word for a political organisation in which the prime duty of members is absolute loyalty to a leader who defines what is true and right: Führerprinzip (“leadership principle”). 

The Republican’s wholesale embrace of Trump’s Big Lie is a perfect instance of it.

This, alas, is far from all. 

Trump’s Big Lie is being weaponised through state legislation designed to subvert elections. 

Much attention is being paid to obstacles to voting. 

But death threats have also hounded honest officials out of office.

Worse still, as the States United Democracy Center notes: “In 2021, state legislatures across the country — through at least 148 bills filed in 36 states — are moving to muscle their way into election administration, as they attempt to dislodge or unsettle the executive branch and/or local election officials who, traditionally, have run our voting systems.” 

Accountable individuals feel bound to uphold their oaths of office. Less visible legislators might not.

Alas, this assault is not surprising. 

Eight of the 23 states that Republicans control totally were members of the Old Confederacy. 

These states shifted towards the Republicans after passage of the Civil Rights Act, in 1964. 

A big part of this story then is the attempt of the South to protect itself, yet again, from the votes of African Americans.

So what we are seeing is a blend of fanaticism with careerism. 

It is fine, both groups feel, to subvert elections if doing so puts the “right” people in power. 

After all, these Democrats are just un-American. 

The end of keeping them out of power justifies any means.

Biden understands this. 

As he told Congress: “If we truly want to restore the soul of America, we need to protect the sacred right to vote.” 

But Democrats also need to change the electoral coalitions of the contemporary US in their favour. 

To do that, they have to move significant numbers of white non-college educated people into their camp. 

In brief, Biden needs to turn a decent approval rating (by Trump’s standards) into an overwhelming one.

The only hope of doing this, Biden understands, is to prove that government can act effectively, in the interests of all. 

He has done so through the spectacular vaccine rollout. 

He is trying to do so through his huge immediate and longer-term spending programmes. 

Huge, indeed, they are. 

Olivier Blanchard, former chief economist of the IMF, told the FT’s Global Boardroom last week that discretionary and automatic fiscal support amounted to 12.6 per cent of US gross domestic product last year and is set to be 12.8 per cent this year. 

According to his estimates, that is three times as big as the US output gap — the shortfall of actual from potential output.

This spending seems certain to generate a very strong short-term boom. 

If all goes well, output will expand to meet demand, inflation will rise modestly and the economy will shift on to a new and more dynamic path. 

But if, as Larry Summers, former US Treasury secretary, told the FT’s Economists Exchange, the outcome is, instead, a big jump in inflation and a belated monetary tightening, a financial crisis and a deep recession could occur before 2024, bringing Trump, or worse, to power.

Biden is playing for huge stakes — and knows it. 

This is not just about securing a strong post-Covid economic recovery for the US. 

It is not just about restoring the US position in the world as ally and as actor on crucial issues, such as climate. 

It is not just about proving that the US government is capable of doing important things. 

It is now about protecting the core of democracy — peaceful acceptance of electoral outcomes.

If that were to go in the US, would-be autocrats everywhere would have carte blanche to do as they pleased. 

The danger is great, since the Republicans are no longer a normal democratic party. 

They are increasingly an anti-democratic cult with a would-be despot as their leader.

I desperately hope Biden succeeds. 

But he has taken a huge gamble on the success of his programme. 

It may be the most consequential gamble taken by any democratic leader in my lifetime. 

The future of democracy is at stake.

A farewell to forward guidance at the Fed

There has been a sea change in central banking that many have failed to grasp.

Edward Price

         © REUTERS

US monetary policy is accommodative — it has been for years. 

But, just as loose conditions are becoming easier to anticipate, policy itself is becoming harder to predict. 

This has left traders on edge, with the Treasury market gyrating as they try to bet when the Fed will tighten.

One cause of that uncertainty is the Federal Reserve’s new approach to monetary policy.

The approach’s cornerstone, unveiled last summer, is Flexible Average Inflation Targeting, or FAIT. 

It goes a little something like this. 

The Fed will pursue modest, but undefined, periods of inflation above its 2 per cent target (which it has failed to hit for a number of years). 

This aims to bring the average of any two periods up to, and anchor expectations at, 2 per cent. 

If the first period sees inflation below 2 per cent, and in the second period above, then inflation is actually at — wait for it — 2 per cent.


It’s obvious why the Fed would seek an approach that gives it more headroom to target higher inflation. 

Having saved capital markets from a pandemic-related meltdown in 2020, it’s now attempting to support a deeply troubled US labour market in order to fulfil its commitment to maximum employment. 

That’s all to the good. 

The pandemic has spurred talk of the K-shaped American recovery that exacerbates economic inequality.

However, it’s not actually clear for how long the Fed will run the engine hot. 

When pushed, the Fed’s response is something like ‘for a sustained period’. 

In other words: we don’t know and neither do you.

We are in uncharted territory here. 

While several central banks target inflation of 2 per cent, the Fed is the first major central bank to explicitly state that it wants to see a period of above-target inflation before tightening monetary policy. 

This is perhaps hyperbolic, but it appears FAIT has ended forward guidance as we know it and marks the end of an era of ever-greater central bank openness.

Over recent decades, central bankers have become less and less ambiguous about where they see monetary policy heading. 

The idea behind this more open style of communication is that signalling what you want to do bolsters the effectiveness of what you actually do before you do it. 

The idea has taken off to the extent that the term forward guidance has become commonplace among central bankers.

Yet FAIT goes in the opposite direction. 

Instead of injecting greater certainty, the new approach introduces a significant degree of uncertainty into the central bank’s future conduct. 

The idea is akin to doublethink. 

If successful, inflation will be static, at 2 per cent. 

But only because it’s dynamic and above 2 per cent for a period. 

This is a contradiction. And it’s probably too subtle for the labour market to grasp. 

That matters because, if workers and other economic actors don’t adjust their expectations and act as though inflation will be above 2 per cent for a while, then it becomes less likely that the Fed will succeed with FAIT.

The role of expectations goes some way to explaining why the Fed’s ambiguity is constructive. 

What happens to inflation is not solely down to external forces — it is influenced by guesses as to the Fed’s tolerance for price pressures is too. 

If the Fed was explicit that it would tolerate a “sustained period” of, say, 2.5 per cent inflation, then the risk is that this would become entrenched and people would expect inflation to average that amount over a longer time horizon than policymakers might like.

As much as FAIT produces uncertainty, it is also a product of uncertainty.

For a while now, central bankers have admitted they can’t really measure the economy. 

Jerome Powell in Jackson Hole in 2018 spoke about how the stars — shorthand for policymakers’ estimates of the natural rates of inflation, unemployment and interest rates — are shifting all over the place. 

He’s right. We can’t measure everything we want to measure. 

Nowhere is this more so than in the labour market, where recent periods of low unemployment have failed to produce the price pressures that economists would usually expect, leading the Fed to persistently undershoot its 2 per cent goal.

And so, unable to judge the trade-off between jobs and price pressures, we can’t be overly mechanistic in the way we set monetary policy. 

Since the global financial crisis, and during the pandemic, this truth has become ever clearer. 

In a possibilistic world, a reliance on probabilistic reasoning eventually backfires.

Of course, the Fed is not entirely letting go of clarity. 

Their forecasts are clear as to their expectations to leave rates on hold throughout 2023. 

And the Fed is nothing if not open about FAIT itself. 

But explaining the framework again and again, as Jerome Powell and others have done, doesn’t reduce the injection of uncertainty. 

If anything, it just provides forward guidance about the dilution, even end, of forward guidance itself.

In times as strange as these, let’s just be thankful the American central bank is smart enough to deal in ambiguities. 

That might mean waving goodbye to forward guidance and embracing the weird, but the world is in flux and anything less agile than FAIT could become an implausible commitment.

Edward Price is a former British economic official and current teacher of political economy at New York University's Center for Global Affairs. In this post, he sets out why the Federal Reserve’s new framework marks a break with the trend towards more certainty in central banking. 

What Do You Do When the Kids Are Still Unvaccinated?

There will be more than one reasonable way to approach the risks of family activities.

By David Leonhardt

    CreditCredit...By Luis Mazon

Many families will soon face a complicated choice about how quickly to resume their pre-pandemic activities.

More than 50 percent of American adults have already received at least one Covid-19 vaccine shot. 

At the current pace, virtually all adults who want to get vaccinated will have been able to get a shot by July. 

Yet relatively few children, especially younger children, will have been vaccinated by then. 

While the Pfizer-BioNTech vaccine may be authorized for children ages 12 to 15 as early as next month, younger children appear to remain months away from being eligible for any vaccine.

What should those families do this summer and next fall, as they consider sending children to day care, seeing relatives, socializing with friends, eating in restaurants or traveling on airplanes?

The answers will not be easy. Families will make different decisions based on their own preferences. 

There will be more than one reasonable approach.

Some parents will choose to keep their children largely away from indoor social situations until vaccines are available for them. 

These parents will point out that some children have died from the coronavirus, while a few thousand others have contracted a rare inflammatory condition. 

These parents will also rightly say that many things about Covid remain mysterious.

Future variants could cause more severe effects in children, and the long-term effects of Covid-19 are unclear. 

A cautious approach may be especially sensible for families in which the children have underlying health conditions or some adults have chosen not to be vaccinated.

But other parents will be more willing to resume many parts of normal life before all of their children have been vaccinated. 

And those parents will be making a decision that is as scientifically grounded as the more cautious approach.

I recognize that some readers will be skeptical of this argument. 

Many Americans have now spent 13 months in some version of lockdown, and imagining a return to normalcy can be as uncomfortable as it is exciting. 

Perhaps even more important, parents feel intensely protective about their children and are often happy to endure inconveniences or worse to protect their children from any danger.

Unfortunately, there is no risk-free option available to parents in the coming months. 

Keeping children at home — away from their friends, activities, schools and extended family — can also harm them, as multiple studies have suggested.

“It’s really important to look at a child’s overall health rather than a Covid-only perspective,” Dr. Amesh Adalja, a pandemic expert at Johns Hopkins University, told me. 

Keeping children isolated is particularly fraught for lower-income parents, because it forecloses child-care options and can keep them from working a normal schedule.

Any decision about family life over the next several months will have to involve weighing one set of dangers against another. 

My goal here is to walk you through the risks that Covid poses to children.

As a comparison, let’s start with its effect on adults. 

For them, Covid-19 has exacted a brutal toll, one large enough to warrant the shutdown of much of daily life. 

The disease has killed about 16 times more Americans than the flu would in a typical year.

Note: Seasonal flu data for 2012-2019 seasons.·Source: C.D.C.

Nationwide, Covid-19 was the third leading cause of death in 2020, after heart disease and cancer. 

Even for adults who are only in their 30s, Covid-19 has meaningfully increased the dangers of everyday life: It appears to have been the fifth most common cause of death over the past year, after accidents, suicide, cancer and heart disease — and ahead of murder, liver disease, diabetes and every other cause.

Covid among the top five causes of death among adults. 

Among kids, it ranks 10th.

Notes: C.L.R.D. is chronic lower respiratory disease. Covid death data for 2020, other causes data for 2019.·Source: C.D.C.

But Covid’s effect on children has been fundamentally different from its effect on adults. 

For children, Covid looks much more like the kind of risk that society has long tolerated, without upending daily life.

“For the average kid, Covid is a negligible risk,” Dr. Aaron Richterman, an infectious disease specialist at the University of Pennsylvania, told me. 

Dr. Richterman added that he would not upend his own family’s life to avoid every possible exposure to children.

To put this in perspective, I worked with experts and colleagues to compile data comparing Covid-19 to influenza in recent years. 

The underlying numbers come from the Centers for Disease Control and Prevention. 

They are necessarily incomplete, because not all cases of Covid or the flu are diagnosed. 

But academic researchers have published work that estimates the number of undiagnosed cases, which makes the comparisons meaningful.

Consider that Covid-19 has killed fewer than 450 Americans under the age of 18, which is less than a flu season often does. 

The flu can be deadlier for children than Covid has been even though most children receive a flu vaccine. 

While some of the new coronavirus variants may be more severe, the difference is not big enough to change any of the fundamental comparisons. 

“It’s very unusual for kids to get very sick,” Dr. Rebecca Wurtz of the University of Minnesota said.

The low toll of Covid-19 on children is not just because millions of them have largely stayed at home over the past year and avoided getting the virus. 

Among those children who have contracted Covid-19, the death rate still looks similar to the death rate from the flu:

These numbers offer a reminder that influenza is a serious disease. 

In an average year, it kills about 35,000 Americans, which is nearly as many deaths as are caused by gun violence. 

The flu’s toll is worse for Black, Latino and Native Americans, as is the case with Covid.

Still, the flu does not upend most children’s lives. 

They go to school when the flu is circulating. 

Americans have understandably decided that keeping children away from their classrooms, day-care centers, friends, relatives and activities would bring a larger cost than shielding them from the flu. 

And Covid-19 appears to present a smaller risk to children than many flu seasons.

“For people under the age of 18, Covid is really not that big of a risk,” said Stephen Kissler, a researcher at Harvard’s T.H. Chan School of Public Health. 

“I do think of it as on par with the risk from flu.”

It’s also helpful to put Covid-19 in the context of other risks that children face. 

About twice as many children drown in a typical year than have died from Covid-19 over the past year. 

About five times as many die in vehicle accidents. 

If protecting children from small but real risks of serious harm were society’s top goal, keeping children away from pools and cars would probably have a bigger effect than isolating them in coming months.

There is also evidence that Americans are exaggerating Covid’s risks to children. 

When a large survey by Gallup and Franklin Templeton asked people to estimate the share of Covid deaths that have occurred among people under age 25, the average answer was 8 percent (and Democratic voters tended to give higher estimates than Republican voters did). 

The actual answer was 0.1 percent. 

By contrast, Americans badly underestimated the share of deaths among people over age 65.

Jennifer Nuzzo, an epidemiologist at Johns Hopkins University, told me that she viewed decisions about children’s activities as a matter of personal choice that different parents would make differently. 

In her own family, she said she was worried about how a year of pandemic life had hurt her children, by making them less comfortable in social situations. 

Once all the adults are vaccinated, she plans to restart more activities.

“I can accept the risks of my kids getting Covid, in part because I compare it to the risk of them getting other infectious diseases and the risk seems very, very small,” Dr. Nuzzo said. 

“I feel that if my kids were to get Covid, they would be OK. 

I also see the direct harms of their not having a normal life.”

Of course, many parents aren’t worried only about death or hospitalization with Covid-19. 

They are also anxious about chronic long-term effects, like potential neurological or cardiac damage. 

This is a murkier area — and arguably the best case for treating Covid exposure as different from flu exposure. 

There is a reason scientists use the term “novel coronavirus” to describe this virus: It’s new. 

We don’t yet know what its eventual effects will be.

Already, some people have suffered from a condition known as “long Covid,” with protracted fatigue and other symptoms. 

A recent study published in Nature Medicine found that 2.3 percent of Covid patients had symptoms that lasted for at least 12 weeks.

Still, it is worth remembering that some of the focus on these long-term symptoms reflects the current attention on all things Covid. 

The chronic effects of Covid may well be worse than the chronic effects of familiar illnesses, like the flu, but it is not yet clear how much worse. 

One academic study found that up to 10 percent of people who contracted influenza later developed myocarditis, or cardiac inflammation.

For children, the evidence so far does not offer much reason for alarm about Covid-19’s long-term effects. 

They are much less likely than adults to contract virtually every worrisome version or symptom of the disease.

So what should your family do once the adults in it are vaccinated? 

Until all adults have had a chance to receive a shot, experts recommend caution, because children can spread the virus. 

Even after that, some basic safety measures will make sense, Dr. Nuzzo points out. 

They include wearing masks when in close contact with people who may not be vaccinated and avoiding situations that offer little benefit but a meaningful risk of infection. 

Taking children to a crowded, poorly ventilated restaurant, for example, seems questionable.

But it’s important to keep in mind that acting in the best interests of children is not the same thing as minimizing Covid risk. 

“Everything has risk,” as Dr. Adalja of Johns Hopkins said. 

For more than a year, many Americans have reordered their lives because of the extreme danger of Covid-19. 

And Covid continues to dominate our thinking. 

Whether it should dominate our children’s lives is a different question.

David Leonhardt (@DLeonhardt) writes The Morning, The Times’s main daily newsletter. Previously at The Times, he was the Washington bureau chief, the founding editor of The Upshot, an Op-Ed columnist, and the head of The 2020 Project, on the future of the Times newsroom. He won the 2011 Pulitzer Prize for commentary.


By Egon von Greyerz

The silver price is today half of the January 1980 level. 

That was the peak at $50 which silver reached again 31 years later in 2011. 

But alas, the bullion banks, aided by the BIS (Bank for International Settlement) and central banks have again managed to push it down again and today silver is only $26.10.

The current silver price has nothing to do with supply and demand. 

In a real market the Price of Silver would be substantially higher. 

In a fake market, the manipulators have no problem to suppress the price by selling virtually unlimited fake paper silver.


The LBMA and Comex clan has sold their physical silver up to 1,000X over.

If a salesman has a demand for 1,000 items of a product of which he possesses the only one available, he will first rub his hands and then perform a victory dance. 

He knows he will achieve an astronomical price.

And that is exactly what would happen in a free silver market. 

But since the paper silver issuers know that they are dealing with totally clueless buyers who don’t understand that there is no silver, they will continue to stuff the gullible buyers with more fake silver.

That is, until the buyers wake up and ask for delivery to find out that the silver vaults are empty.

We know that the silver market is very strained already. 

Retail silver can fetch margins up to 50% and they have been at 100% premium. 

But at least when people buy retail silver from a reputable dealer and take delivery, they know that they have real silver.

I have warned investors many times not to buy gold or silver ETFs or funds of any kind. The risks are multiple. 

Here are some of them:

- It is a paper security held within the financial system

- It has multiple counterparty risks

- The gold/silver holdings are not segregated from custodians’ assets

- It owns no gold/silver directly

-The gold/silver is stored within the banking system

- The gold/silver held is probably rehypothecated

- The gold/silver is not fully insured

- Investors have no access to their gold/silver

There have been many reports of problems of getting physical delivery from mints and bullion dealers.


John Evans of As Good As Gold Australia has reported extensively on the problems at the Perth Mint. 

Numerous investors holding paper or synthetic silver with the Perth Mint are reporting delays of 4 months when they ask for delivery. 

Even clients who have demanded and paid for their silver to be transferred from unallocated to allocated have been told that they can’t get delivery.

The Perth Mint is owned by the government of Western Australia so you would not expect them to renege on their commitments. 

Still, I wouldn’t store my gold with any government whether it is in Australia, Canada or the US.

Interestingly, I remember the Perth Mint having similar problems 10 years ago, when the delay for getting physical delivery of the gold and silver certificates was up to 6 months!

So it is not the first time that the Perth Mint is in trouble. When not even a government owned organisation can be trusted, it is clear evidence how careful investors must be.


It is not easy for precious metals investors to navigate through the jungle of problems in the precious metals market.

- You can’t trust the bullion banks and their paper metals.

- You can’t trust certain mints or bullion dealers.

- You can’t trust gold or silver ETFs or funds.

- You can’t trust futures exchanges.

- You can’t trust banks to hold your metals.

Gold and silver must be owned and held directly in physical form. 

The precious metals must be stored outside the banking system in the safest vaults and jurisdictions. 

The investor must also have direct personal access to the vault.

You should never store more gold and silver at home than you can afford to lose. 

It doesn’t help with a good safe when burglars come to your house and threaten members of your family when you are in.


The debate about -flation continuous with both camps feeling strongly about inflation or deflation. 

I have for many, many years been of the firm opinion that this economic cycle will lead to hyperinflation.

But it is not as simple as that. 

Hyperinflation is a monetary event and arises as a result of a major increase in money supply which leads to the total debasement of the currency.

We already have both a massive increase in money supply and all major currencies which have declined by 97-99%. 

The next phase will be unlimited money printing combined with a substantial increase in the velocity of money.

However, hyperinflation is not the only flation we will experience. 

We will also see stagflation and deflation.

The hyperinflation will occur in most commodities including food, oil, hard assets and especially gold and silver.

Bubble assets like stocks, bonds and property on the other hand will see deflation – at least in real terms. Real terms means measured in constant purchasing power like gold.

There will also be stagflation which means economic stagnation combined with inflation.

The flation which ordinary people will notice will be hyperinflation. The cost of living and especially food prices will rise dramatically. 

At the same time, many people will lose their jobs. 

Pensions and social security payments will not in any way keep up with inflation and many people will sadly be destitute.


The deflation or collapse of bubble asset prices like stocks, bonds and property (in real terms) will be mostly noticed by the wealthy. 

They will experience a devastating decline in their wealth. 

The current bubble of billionaires’ and millionaires’ fortunes will burst and $100s of billions of assets will go up in smoke.

The Arnaults, Gates, Musks, Bezos and Zuckerbergs of this world will not understand how quickly their wealth disappeared. 

Easy come and much easier go!

But don’t get me wrong. 

None of these guys will be poor. 

They will still have massive wealth although it might have gone down by 75-95%. 

Obviously with that kind of drop, they will feel extremely poor.

The biggest beneficiaries of the coming wealth transfer will be owners of commodities, like food and hard assets.


The turn in markets is slowly approaching. 

No one should hold ordinary stocks now. 

The risk is massive and a crash can happen at any time. 

It is never worth squeezing the last few pennies out of a 40 year (at least) bull market. 

Even worse to follow it 90%+ down (in real terms) in the coming years.


When I sent the tweet below out on March 31st, gold was $1,707. 

Gold had twice touched the $1,670s and told us that the 8 month correction was finished.

The price is up $80 since the tweet but that is just the beginning. 

Sadly, very few investors have taken advantage of this opportunity to acquire gold at a low price. 

Now is still a great time to get in on what will be the biggest bull market in the history of gold and silver.

What investors must remember is that on the other side of the gold and silver coin is a collapsing currency.

That is why wealth preservation is so critical. 

Not only will stocks, bonds and property collapse but so will the value of money. 

So going liquid is not the solution.

Again, history tells us what the solution is and if you defy history, you will come to regret it.