What if Trump Breaks This Promise?

What if Trump Breaks This Promise?

It was one of the more unusual promises Donald Trump made during the 2024 campaign. We noticed it as soon as he made it — right around this time a year ago…

“As your president, I will never allow the creation of a central bank digital currency,” he said while campaigning in New Hampshire.

“Such a currency would give a federal government — our federal government — absolute control over your money. They could take your money and you wouldn’t even know it’s gone.”

At the risk of tooting our own horn, it’s safe to say Trump would have never made this pledge were it not for Paradigm’s macroeconomics maven Jim Rickards.

If you subscribed to Rickards’ Strategic Intelligence between mid-2022 and late 2023 you know exactly what we’re talking about. “Biden Bucks” was the alliterative lingo Jim applied to a CBDC or central bank digital currency.

“In a world of CBDCs,” Jim warned, “the government will know every purchase you make, every transaction you conduct and even your physical whereabouts at the point of purchase.”

From there, it’s a very small step toward “account freezes… and even putting you under FBI investigation if you vote for the wrong candidate or give donations to the wrong political party.”

Jim’s warning awakened tens, perhaps hundreds of thousands of Americans to the menace of a CBDC. Within months, corporate media began pushing back by publishing lame “fact checks” trying to debunk Jim’s thesis.

But there’s no stopping a powerful idea: In 2023 Sen. Ted Cruz (R-Texas) introduced a bill barring the Federal Reserve from pursuing a CBDC and Florida Gov. Ron DeSantis successfully pushed a bill through the legislature banning CBDCs in the Sunshine State.

DeSantis and Vivek Ramaswamy both talked up the threat of CBDCs during their presidential campaigns.

It was smart politics for Trump to take up the cause as well — and he reiterated his promise last summer during the annual Bitcoin conference in Nashville.

But what if Trump breaks that promise?

What follows is not a prediction. It’s a thought experiment. It falls under the category of “low probability, high impact.”

Follow along with me: There’s a long list of Trump campaign promises that got more attention than stopping a CBDC.

And at the top of that list is the twin promise of a) stopping a flood of illegal migrants and b) deporting the ones already here.

The second part of that twin promise will be devilishly hard to carry out.

Colleague Byron King hinted at the difficulties in yesterday’s Rude Awakening. Yes, there’s what Trump called the “low-hanging fruit” — people already ordered out of the country who are still here and people who’ve had run-ins with the law.

It would also be relatively simple to clear out big city hotels-turned-migrant holding centers like the Roosevelt Hotel in New York where the Biden administration put up hordes of new arrivals lacking their papers. Lots of people concentrated in one place, right?

Beyond that, it gets a lot harder. Because then you’re talking about the millions of illegal migrants dispersed across the land and throughout the workforce.

“More than likely, you don’t encounter them in your daily affairs,” Byron wrote. “But they’re out there; they work in industries that harvest and prepare food, cook meals and wash dishes in restaurants, make beds in motels, hang Sheetrock on construction sites, and much else.”

Remember last summer when the feds did a massive revision to their employment numbers — basically erasing 818,000 jobs they thought existed but didn’t really?

Well, Goldman Sachs did an interesting study pulling apart the feds’ figures and examining their methodology.

The conclusion: As many as 500,000 of those jobs actually did exist — but they were jobs held by illegal migrants flying under the feds’ radar, often paid under the table in cash.

The only way the Trump administration could get a handle on that cohort of illegal migrants is to cut off the money flows.

In other words, cut off the flow of physical cash from employers to immigrants… and from immigrants to landlords.

Do that and the immigrants would have no way to support themselves and nowhere to go — except somewhere besides the United States. They would self-deport.

Perhaps sometime in 2025 Trump’s advisers will sit him down and tell him the only way to pull that off is with a mode of payment that’s trackable and digital.

In other words, a CBDC.

Of course, he wouldn’t call it that. He’d try to sell it as some sort of new and better dollar, maybe call it a Citizens’ Dollar — and here you can imagine Trump’s voice — the most beautiful dollar ever in the history of dollars. A dollar that will help keep everyone accountable for their responsibilities as citizens. Isn’t that what we all want?

As I said — low probability, high impact.

To me, there’s no problem in the country so intractable that it would justify solving with the evils of a CBDC.

But there might be people in the Trump administration who see the situation otherwise. We’ll keep our ear to the ground as the year continues to unfold…

NVDA: Halfway There

Don’t look now but Nvidia is already halfway toward shedding $1 trillion of its market cap.

As you’ll recall, one of the Paradigm team’s truly out-of-the-box forecasts for the year was from trading pro Enrique Abeyta — who said NVDA’s market cap would see a $1 trillion scalping.

Life comes at you fast: The all-time intraday peak in NVDA’s share price came a week ago yesterday at $153, just before CEO Jensen Huang spoke at the Consumer Electronics Show in Las Vegas. The knee-jerk disappointment has lingered — sending NVDA as low as $130 yesterday.

That translates to a $575 billion loss in NVDA’s market cap.

Relative to that intraday low yesterday, NVDA has “recovered”– back over $131.

While the “is there all that is” reaction to Huang’s talk was the catalyst for the sell-off… Enrique says a more fundamental factor is at work. Silicon Valley’s massive buildout in AI hardware has gotten ahead of itself — and the market’s focus in 2024 is shifting to AI software.

The story is well underway — but nowhere near over yet.

[Editor’s note: Enrique will issue an urgent buy alert tomorrow at 11:00 a.m. EST — an AI-adjacent name he believes could be the biggest buy of the year.

This trade is so compelling that Paradigm’s editorial director is putting his own money on the line. He’ll tell you why as soon as you click here.]

As for the stock market as a whole, all the major averages are in the red, but not by much. The S&P 500 continues to hold the line on 5,800. It’s down about 4.5% from its record close on Dec. 6.

Treasury yields are backing down slightly, the 10-year Treasury at 4.79%.

Precious metals are trying to pick themselves up off the floor after yesterday’s smackdown — gold at $2,659 and silver $29.83. Crude has shed $1.30, down to $77.52. Bitcoin is rebounding, now $95,559.

The big economic number of the week comes tomorrow — the government’s official inflation rate. In the meantime, there’s one smaller data point to chew on…

Small-business owners remain giddy as the Trump 47 era approaches.

The National Federation of Independent Business is out with its monthly Small Business Optimism Index. After a huge leap in November, the number jumped again in December to 105.1, the highest reading since October 2018. (Going into the election, the number was mired in the low 90s.)

Looking at the internals of the survey, the jump in the headline number is driven by a) rising expectations for the economy to improve and b) rising expectations for higher sales.

Asked to identify their single most important problem, 20% of survey respondents cited inflation, followed by 19% who said good help is still hard to find. Taxes were cited by 15%, labor costs by 11%. Everything else was in single digits.

TikTok Tick-Tock: 5 Days

As we await the Supreme Court’s ruling on the fate of TikTok — explored here at length yesterday — events are starting to move quickly.

Bloomberg broke a story late last night — attributed to the usual anonymous “people familiar with the matter” — claiming that Chinese officials might be OK with selling TikTok’s U.S. operations to Elon Musk, who might combine it with X-formerly-Twitter. For its part, TikTok calls the report “pure fiction.”

Meanwhile, two Democratic members of Congress — California Rep. Ro Khanna and Massachusetts Sen. Ed Markey — are urging Congress and Joe Biden to extend the Sunday deadline by which TikTok’s Chinese parent firm must divest its U.S. operations.

Markey will introduce legislation to push back the deadline till mid-October. “A TikTok ban would impose serious consequences on millions of Americans who depend on the app for social connections and their economic livelihood,” he said. “We cannot allow that to happen.”

Go figure: Markey voted for the ban last spring. True, the ban was thrown into a single kitchen-sink bill along with aid for Ukraine, aid for Israel, etc. — but really?

Meanwhile, the law of unintended consequences is hard at work: Apprehensive Americans are adopting a different Chinese-owned social media platform.

“TikTok refugees,” they call themselves — and they’re flocking to something called RedNote, which was the most-downloaded app at Apple’s U.S. App Store yesterday.

(The fact the terms of service are written in Mandarin seems to be little hindrance.)

One new user says RedNote is her way of giving the U.S. government the finger: “I’m just a simple person living a simple life,” says Sarah Fotheringham, a school cafeteria worker from Utah.

“I don't have anything that China doesn't, and if they want my data that bad they can have it," she tells the BBC — in a message sent via RedNote.

Indeed, she says RedNote has “opened my world up to China and its people… I am now able to see things I never would have seen. Regular Chinese people, finding out about their culture, life, school, everything, it has been so much fun.”

You mean… they’re like Americans who just want to live their lives and do well by their families? How subversive!

Tax Migration

“Americans were on the move in 2024, and many chose low-tax states over high-tax ones,” writes Katherine Loughead from the Tax Foundation.

The Tax Foundation’s researchers have just finished poring over new Census Bureau figures, augmented by datasets from U-Haul and United Van Lines.

The upshot: “States that saw significant domestic migration-related population growth include South Carolina, Idaho, Delaware, North Carolina and Tennessee.

“At the other end of the spectrum, Hawaii lost the greatest share of its population to other states, followed by New York, California, Alaska and Illinois.”

“Of the 26 states whose overall state and local tax burdens per capita were below the national average in 2022 (the most recent year of data available),” Loughead writes, “18 experienced net inbound interstate migration in FY 2024.”

When it comes to income taxes specifically… the top third of states that registered the highest domestic population growth have a combined top marginal tax rate of 3.5%. The bottom third — 6.7%. Ouch.

A TikTok Mailbag

“As I read this email I couldn't stop thinking about how very communistic the whole thing actually is,” a reader writes after yesterday’s in-depth treatment of the impending TikTok ban.

“Which raises the question that I wish someone would ask our government officials: ‘Who's the communist now? Really.’

“Sorry to say that. But damn!”

Not everyone was in agreement. “American security trumps everything else,” says one email, asserting that China’s “party tentacles run deep.” Alas, he didn’t offer any details to back up that assertion.

“I appreciate your points about banning Chinese misinformation and disinformation as being the slippery slope to ANY censorship the U.S. government may want to impose in the future,” says another note of dissent… “but I thought it was the Chinese using TikTok to gain endless access to facial recognition of as many Americans as possible that was the real issue?

“Facial recognition programs are how they track and arrest their own Uyghurs and other Muslim citizens and put them in internment camps where they are abused by the Chinese government.

“I have never downloaded TikTok to my phone as a result. 

“The Chinese can gain endless private information about Americans as we use this platform.

Isn’t that the REAL issue?”

Dave responds: So you’re more worried about facial recognition by TikTok than by the TSA and other U.S. government agencies? Interesting priorities…

“I am hoping the Supreme Court decides that banning TikTok is a bad idea, and decides to nuke that bad piece of legislation,” says our final correspondent.

“It's not whether I use TikTok or not; I just think the Supremes should tell Congress that they are not allowed to ban things just because they decide they can. Both Congress and the deep state need to be slapped down and told that they can't ban ANYTHING!”

Dave: Alas, we’re governed by people who frequently think anything that’s not mandatory should be prohibited…

Best regards,

Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets