In the early hours of trading on Friday, August 8, 2025, global markets were shaken by the announcement of a 39 percent tariff on imported gold bars weighing 100 ounces or more by the Trump administration. US December gold futures reached an all-time high price of $3,534.10 per ounce shortly after the declaration was made. This sudden move injected uncertainty into the bullion market, unsettling dealers, refiners, and institutional investors trading in larger “exchange delivery” formats. While gold is rarely targeted by protectionist measures — unlike base metals, agriculture, or manufactured goods — this decision warrants close attention, both for its immediate market impact and potential implications for future monetary policy.

Likely Purposes

From an economic perspective, there are several plausible motivations (several of which may hold true simultaneously) for such a steep and sudden measure.

1. Raising Revenue
   
   The simplest explanation is fiscal. A 39 percent levy on high-value imports is a substantial revenue generator, particularly if the target is a commodity with significant daily transaction volume.
   
2. Targeting Switzerland
   
   The tariff could also be intended to primarily target Switzerland, a key player in global gold refining and bar creation. Switzerland is central to the gold supply chain, as it refines and standardizes much of the world’s gold before it’s distributed. By imposing a tariff on large gold imports, the US could limit Switzerland’s ability to sell refined gold at favorable prices, disrupting its dominance. This move would reduce reliance on Swiss refining and could be a response to recent tensions between Switzerland and the US over trade and tariff disputes. It signals the US aiming to punish Switzerland for its perceived intransigence in tariff discussions, as well attempting to wrest some control away from foreign gold pricing.

3. Restricting Supply and Controlling Markets
   
   A more strategic interpretation is that the administration may be attempting to restrict the flow of foreign gold into the US market. By making imports of 100-ounce bars prohibitively expensive, policymakers could reduce inflows, tightening domestic supply and potentially influencing prices. This approach mirrors past episodes where governments have sought to control the domestic availability of gold ahead of significant policy changes.
   
4. Countering Money Laundering and Imposing Compliance Costs
   
   Gold is often used in international transactions, particularly among institutional investors or high-net-worth individuals, as a way to move value across borders with fewer restrictions. By imposing a tariff, the US could be making it more expensive for these large transactions to occur within its borders, thereby reducing the attractiveness of using gold for these purposes. While it wouldn’t directly address outflow-related money laundering, the tariff could serve to discourage the use of gold bars in cross-border wealth transfers into the US, which could be seen as a measure to limit some money-laundering opportunities.
   
5. Positioning Ahead of a Major Policy Shift
   
   A 39 percent tariff on gold bars over 100 ounces could be a preparatory measure for the US to revalue its gold reserves, which are currently undervalued at $42 per ounce. The tariff could prevent arbitrage by limiting the ability of speculators to buy gold at lower international prices and sell it domestically at a higher future price, particularly if the US plans to revalue its gold to market prices around $3,200 per ounce. It would also help accumulate gold within the US, ensuring that domestic supply is maintained for a potential gold-backed or partially gold-backed dollar. Additionally, the tariff could stabilize domestic gold prices, mitigate speculation, and prepare the market for revaluation, signaling an intention to shift away from the dollar’s exclusive backing. This would reduce external manipulation and maintain US control over its gold supply, easing the transition to a new monetary framework while strengthening the dollar’s global position.

The Arbitrage Dimension

Ironically, if the tariff leads to a sustained domestic price premium for 100-ounce bars — either because of higher import costs or restricted supply — it could create exactly the kind of large-scale arbitrage the measure may have been intended to suppress.

Arbitrage occurs when price discrepancies for the same asset exist in different markets, allowing traders to buy low in one venue and sell high in another. In this case, if US gold prices rise sharply relative to London, Zurich, or Hong Kong due to the tariff, there will be a strong incentive for market participants to find ways to bypass the tariff or repackage gold into non-tariffed forms (such as smaller bars or coins) to import at lower cost.

At the institutional level, this could take the form of shipping gold to jurisdictions without the tariff, refining it into untaxed units, and then legally reintroducing it into the US market. On the futures side, arbitrageurs might use COMEX delivery mechanisms, swaps, or other derivative structures to capture the spread between the artificially elevated domestic price and the world market price. While such activity would eventually narrow the gap, it could generate windfall profits in the interim — ironically undermining the tariff’s supply-restriction intent and adding volatility to the very market it seeks to control.

Historical Precedents

Although the United States today operates under a fiat monetary system, the federal government has a long history of direct and indirect intervention in the gold market — often under the banner of “monetary stability” or “national interest.”

The most famous episode came in 1933–34, when the Roosevelt administration, facing a banking crisis and deep deflation, first prohibited the private ownership of most gold coins and bullion, then revalued gold from $20.67 per ounce to $35 per ounce. This represented a devaluation of the dollar’s gold content by nearly 41 percent and transferred substantial wealth from private holders to the government’s balance sheet. Importantly, the sequence began with restrictions on ownership and movement of gold — control first, revaluation second.

In the early 1970s, as the Bretton Woods system frayed, President Nixon “closed the gold window,” ending the dollar’s convertibility into gold for foreign central banks. While framed as a temporary suspension, it effectively severed the last formal link between the dollar and gold, freeing the Federal Reserve to pursue more accommodative monetary policies without the discipline of a fixed parity.

Even after the dollar floated freely, interventions persisted. In the late 1970s, as inflation accelerated and gold prices surged, the Treasury engaged in large-scale gold sales and swaps — sometimes in coordination with other central banks — to temper upward price movements. These efforts were often more symbolic than decisive, but they reinforced the notion that US authorities considered gold prices a matter of policy concern.

The 39 percent tariff on gold imports highlights the core concern that led EC Harwood to found the American Institute for Economic Research’s — the ongoing threat posed by governmental interventions in personal freedom and sound money. While the gold market should reflect private demand, mining supply, and global investment flows, it is often distorted by policies that serve short-term political goals. This tariff, with its abrupt implementation and targeted impact, risks distorting market pricing and suppressing economic freedom. It underscores the truth that, in times of fiscal strain or geopolitical risk, governments often turn to gold as a convenient target for intervention.

The immediate effects will likely be felt most by large bullion traders and institutional investors, with wider price differentials and reduced liquidity in the US market. History shows such measures rarely occur in isolation, and this could signal a broader shift in US monetary policy — whether revenue-driven or something more substantial. What’s clear is that AIER’s mission, focusing on defending financial freedom and sound money, remains as relevant as ever. The risks to market integrity that inspired our founding persist, and defending open markets and sound money continues to be an urgent, vital necessity.

In November 1974, New York Times film critic Vincent Canby wrote that the city had become “a metaphor for what looks like the last days of American civilization.” 

“It is run by fools,” he wrote. “Its citizens are at the mercy of its criminals who, often as not, are protected by an unholy alliance of civil libertarians and crooked cops. The air is foul. The traffic is impossible. Services are diminishing and the morale is such that ordering a cup of coffee in a diner can turn into a request for a fat lip.”  

The following year, New York City ran out of money.

Spending 

New York’s descent occurred as city government spending surged.    

Since 1965, its operating budget had more than tripled, with expenditures rising at an average of 12 percent annually. Treasury Secretary William E. Simon reported that “From 1963 to 1973, per capita municipal expenses of other large US cities increased, on the average, 2.2 times. During the same period, New York’s expenses increased about 3.5 times — a 50 percent greater rate.” 

As a result, “New York was spending in excess of three times more per capita than any city with a population of more than 1 million.” New York’s “level of spending on welfare (public assistance and Medicaid), higher education, and hospitals was virtually unique,” author Charles R. Morris wrote. 

“On a per capita basis, only Washington DC, which doubles as a state government, exceeds New York City’s rate of spending in these areas, and no other government comes close to the New York City level,” Morris wrote, with spending of $584 per capita in New York compared to $105 in Detroit, $234 in Los Angeles, $89 in Chicago, and $76 in Philadelphia. The average grant paid to recipients of Aid to Dependent Children (ADC) — $351 a month — was the highest in the country, with the second-, third-, and fourth-ranked states paying $340, $295, and $289, respectively. 

The city’s wage bill was another strain. While city workers were not lavishly paid relative to other cities, there were many more of them. New York employed 49 people per 1,000 residents, Simon noted. Across other major cities, the figure was between 30 and 32 employees per 1,000 residents.    

Taxes and Revenues  

Aside from federal and state grants, the city government had only two sources of funding for these expenses: taxing and borrowing. Regarding the former, there was ever less to tax. 

Between 1966 and 1973, writes author Kim Phillips-Fein, “the city raised income taxes multiple times, while property taxes climbed, and business taxes were extended to cover a variety of small businesses and partnerships.”

As a result, Gotham’s taxes became much higher than other US cities. Rather than pay, many businesses and individuals simply left. Johnny Carson took The Tonight Show to California in 1972. Pepsi and Shell also departed.

“Parts of the garment industry, large bakeries, and food processors and breweries left the city,” Simon wrote, “and by 1969 they had taken about 140,000 jobs with them. The flight accelerated at a frightening pace…between December 1974 and December 1975 alone…143,000 jobs disappeared. A cautious estimate suggests that between 1970 and 1977, some 400,000 jobs vanished.”   

Between 1970 and 1980, the city’s population fell by 10 percent: it was literally decimated. It was easy to see why. As taxes climbed, so did the number of murders, by 248 percent between 1960 and 1973. “[B]y 1975,” Morris wrote, “the city had 41 percent of the state’s population, but 68 percent of its welfare recipients, and with 44 percent of the state’s personal income, the city had to pay 73 percent of the local welfare costs.” 

“A ‘city’ of businesses and taxpayers as large as San Francisco has packed its bags and left New York,” New York magazine reported in 1976. “We have conducted a noble experiment in local socialism and income redistribution,” Ken Auletta noted in October, “one clear result of which has been to redistribute much of our tax base and many jobs out of the city.”   

As a result of the disappearance of its tax base, the city’s revenues were rising at a rate of just 5 percent annually.  

Borrowing  

The city covered the shortfall by borrowing short-term to finance current spending.   

“[B]y the early 1970s, [New York] regularly accounted for about 25 percent of all outstanding short-term state and local paper in the country,” Morris wrote, and by the end of 1974, it was selling $600 million of bonds every month, many backed by anticipated revenues that didn’t materialize. In November, outstanding short-term debt totaled $5.3 billion, up $1.9 billion since June, a fourfold increase in four years. By the end of 1974, New York City accounted for over 40 percent of short-term tax-exempt borrowing in the United States.

“By 1974, per capita debt in New York City was $1,767,” Daniel Patrick Moynihan noted, “while in Chicago it was $427.”  

This avalanche of bonds drove prices down and yields up. In November, city notes, which went for 4 percent in the late 1960s, were going for 8.34 percent; In December, the rate rose to 9.48 percent. In February, it emerged that the city did not have the tax receipts legally required to secure a $260 million bond issue, and Bankers Trust and Chase Manhattan refused to underwrite it. On March 13 and 20, the city offered $912 million of short-term, tax-free notes at up to 8 percent, an effective yield three times greater, on a tax equivalent basis, than that available in a savings bank.

Weeks later, more than half remained unsold.   

The Crash  

New York City had reached the end of the fiscal road.  

With federal and state funds and via a Municipal Assistance Corporation, the city refinanced its debts and the state government took effective control of its finances. In effect, the city had defaulted.  

Many of the problems New York faced in the 1960s and 1970s were not unique. Cities across America struggled with suburbanization and cuts to federal aid, and those in the Northeast with a migration of businesses to the South and West. But only New York went bust. As Phillips-Fein writes in her Pulitzer Finalist book Fear City: New York’s Fiscal Crisis and the Rise of Austerity Politics, “the scope of the city’s public sector brought [those problems] to the fore.”  

New York’s bankruptcy might not seem to offer any lessons above the state level. The federal government can print whatever money is necessary to finance its operations: It need never default in the “hard” terms of failing to pay its bills because it has the option to default in “soft” terms by paying them with money that is worth less. Ultimately, however, default is default. 

New York’s bankruptcy stands as an example of what happens when a government persistently spends more than it collects and throws itself at the mercy of the bond markets to keep itself going.

As New Yorkers ponder a re-run of what Morris called “the liberal experiment” of 1960 to 1975, or what Auletta termed its “noble experiment in local socialism and income redistribution,” it is an example they would do well to remember. So would the rest of us.

Japan eats a lot of rice. And it imposes tariffs on foreign rice to protect domestic producers — sometimes as high as 700 hundred percent. The result has been a disaster for Japan’s rice industry: the opposite of what tariffs are supposed to achieve.

In the early 1990s, Japan was forced to liberalize its rice market and did so reluctantly. But tariffs and subsidies designed to protect the domestic industry and keep prices high have instead corroded it by weakening incentives to be productive and innovative, among other problems. Because tariffs shield domestic producers and subsidies prop up prices while suppressing domestic output, Japan’s rice industry is inefficient and under-mechanized compared to Korea’s, which wasn’t as heavily protected and now thrives by comparison.

Consider now the political situation in the United States. Since January, the US and international markets have been subjected to ongoing tariff threats, many of which are later walked back. Admittedly, there are a few cases where tariffs might be justifiable, such as protecting nascent industries or those vital for national security. Trump and the MAGA crowd, however, generally appeal to four main justifications for tariffs:

1. To boost American manufacturing and jobs.
2. To address trade imbalances and promote trade reciprocity.
3. To protect national security.
4. To generate revenue and reduce taxes.

The difficulty — especially with rationales 1), 2), and 4) — is that tariffs tend to weaken the very industries they are supposed to protect. That is because they undercut the very forces that keep industries strong and competitive. Markets are antifragile systems: they require competitive stress and pressure to function properly, and they languish without it. A helpful analogy is the human immune system. Without regular stressors from infections and pathogens, it fails to flourish and develop. It is worth remembering that immune systems, like any system, can be overwhelmed. And they can also be under-stimulated. The immune system is trained and fine-tuned by challenge, and without that challenge, it atrophies.

The same lesson applies to industries insulated by tariffs. Protection from international competition weakens the incentive to innovate, discourages outside investment, and rewards rent-seeking and regulatory capture over genuine progress. Before reviewing the broader mechanisms, it’s worth considering a few concrete examples where tariffs backfired.

In the early 2000s, US steel received tariff protections. The results were dismal: more jobs were lost than saved, and US steel companies used the tariff shield to consolidate rather than to expand or innovate. Meanwhile, global competitors kept innovating and capturing market share at America’s expense.

With few exceptions, tariffs should be expected to weaken protected industries over time. The mechanisms are well understood. First, tariffs artificially raise prices, which dulls the incentive to innovate — to do more with less or to develop better products and services. Over time, these industries fall behind their international counterparts, unable to keep pace with firms exposed to real competition. The gap grows until the protected industry becomes fragile and inefficient.

Second, tariffs reduce incentives for long-term investment. Investors are less likely to back industries dependent on political protection rather than genuine performance. That means less capital for innovation, productivity gains, and market resilience.

Finally, protected industries often lobby to preserve those protections. The longer tariffs last, the stronger the signal that government will force consumers to pay higher prices and bail out weak firms through subsidies. Over time, these industries grow more dependent on political favors and less capable of competing on merit.

In the end, tariffs may sound patriotic, but they almost always dull the very industries they’re supposed to protect. By stifling competition, undercutting innovation, and rewarding political maneuvering over market success, tariffs leave industries brittle and taxpayers holding the bag. Competitive pressure is essential for efficiency and innovation. With a few rare exceptions, tariffs simply don’t deliver and mostly do harm.

Last month, like many, I went to see the newly released Superman movie by James Gunn. As a kid, I loved the 1978 Superman film with Christopher Reeve and the scene when he takes Lois Lane for an evening flight is one of my favorites. Margot Kidder portrayed Lane as smart and quirky — and I wanted to be just like her — and I was intrigued to see that Rachel Brosnahan is now playing the role. I’m a big fan of Brosnahan, after binging The Marvelous Mrs. Maisel, and her portrayal of Lois Lane did not disappoint.

The film itself was enjoyable, but later, I kept thinking about the whole moviegoing experience.

Over the years, I’ve had many types of movie viewing experiences. As a kid, my parents would treat us by going to the drive-in, and I remember being so excited about my first IMAX film. Now that I’m older, I’ve enjoyed seeing older flicks in nostalgic settings, like at The Allen Theatre, and I’ve enjoyed an adult beverage during a show at The Alamo Drafthouse Cinema. I’ve been to theaters that have seats like folding chairs and others that have couches. When it comes to timing, I prefer matinee shows not only due to minimal crowds and cost-effective ticket prices, but also because there are fewer restrictions for early showings. Usually there is no ticket-taker upon entry and heading into the theater works on something of an honor system. At early shows I can bring in a Yeti full of coffee and a bag full of snacks without fear of being reprimanded.

I decided to go to a 10:10am showing of Superman at Flagship Cinemas, where the seats are spacious, heated recliners. And I was thankful for the extra space when, despite the theater being largely empty, other audience members showed up and sat down right beside me. I thought it funny that neither the new guests nor I felt like moving from the seats we were assigned, even though we could claim a whole row all to ourselves. 

Sticking to an assigned seat isn’t always my forte. I have tried to make my way closer to a concert stage and have moved up in the bleachers at an ice hockey game. But that morning the seats were big enough and spaced out enough that having someone beside you didn’t matter much and, truth be told, I felt a bit compelled to stay seated so as to not insult the moviegoers beside me. For some reason I thought it would make it seem like they weren’t worth sitting next to (though, in reality, they might have preferred it if I moved).

As I remained in my designated spot and the movie progressed, it was fun to hear the gasps and laughs, and oohs and aahs, alongside my own. When audience members are engrossed in a scene that prompts a reaction, it makes for a more interactive experience. When audience members distract from what’s on the screen, however, it can be beyond off-putting. 

Theater companies, as well as movie makers, want any film experience to be a positive one. That means seeking quality not only in the movie but in the viewing environment, and ensuring both is no easy task. Individuals have different preferences for what they want to watch, how they want to watch, and with whom they watch it. The subjective value placed on each experience will inevitably vary with each individual.

Indeed, human action is a complex matter. The decisions we make, behaviors we partake in, and what rules we bend or break are predominantly self-determined (if not to be bound by rules of law). My decision to stay in my seat while watching Superman was based on the options available, my personal preferences, and my thoughts on how it might impact the other movie-goers. As for the snacks I brought in, I didn’t hold back from pulling them out from my handbag or drinking my brought-from-home beverage. I’ve become rather resourceful with refreshments over the years, and my kids are always mortified when I bring food into entertainment events to avoid concession stand prices. Fortunately, some places have embraced the idea of letting guests bring in their own food — ranging from amusement parks like Disney World to concert venues like Bethel Woods — and this option has added to my level of satisfaction. Venues tend to leverage the fact that they have a captive market, and so prices for a mere hotdog can be shocking. I’m more than happy to splurge on treats but less enthused to overspend just on fighting hunger pangs. It would be good for such venues to remember that they are not just selling tickets but fan experiences, and positive experiences can lead to repeat attendees and glowing reviews. 

I can afford going to various events and shows because I’m savvy about spending, particularly when it comes to little things like coffee and snacks. And while I may sneak in snacks to morning movie showings (since the theater’s popcorn machine isn’t even turned on yet), I still adhere to societal norms. I would never bring in any food item that had a strong smell or was loud or obnoxious to eat (for a hilarious example, see Mr. Bean trying to eat candy during a church service). 

A good society is derived from respectful and rational individuals more so than top-down restrictions and impositions. The curious nature of human action and social order is directly discussed in Leonard Read’s 1975 publication, Castles in the Air.

In Chapter 2, “Freedom: A New Vision,” Read explains that freedom is a means to social order.

In brief, the freedom philosophy or the free market is a way of life. But it differs from most philosophies in that it does not prescribe how any individual should live his life; there are no fixed concepts. It allows freedom for each to do as he pleases—live in accord with his own uniqueness as he sees it—so long as the rights of others are not infringed, which is to say, so long as no one does anything which were everyone to do would bring all of us to grief or ruin. In short, this way of life commends no controls external to the individual beyond those which a government limited to keeping the peace and invoking a common justice might impose. Each individual acts on his own authority and responsibility. 

And in Chapter 3, aptly titled “The Mystery of Social Order,” Read conveys the power of individuals and the importance of autonomy.

Why is social order so mysterious? It is mysterious because no one can describe it in advance. Opposed to the perfect cadence of the goose step is the blessing that flows from everyone peacefully pursuing his own goals, going his way, that is, every which way, in constant flux, milling around, each person responding to his own ever-changing aspirations, abilities, uniqueness. Instead of our being carbon copies of some know-it-all, we are what we were meant to be: originals!

So, in closing, let me refer back to Clark Kent, almost definitionally ‘unique.’ Just as Superman takes pride in using his abilities for good, we can choose to use ours in accordance with promoting a rational, respectful, and free society — while aiming to be the best version of ourselves.

In fact, my favorite scene in the new Superman is when Clark Kent revisits his childhood home and discovers the love he received from his human parents, in addition to the lessons they instilled in him during his upbringing, matter more than that of the planet he came from. ‘Pa Kent’ puts things in perspective for Clark by plainly stating “Your choices, your actions, that’s what makes you who you are.” And when (spoiler alert) Superman defeats Lex Luthor, Clark proudly proclaims that despite being different, he is human after all.

One of America’s long-standing cultural institutions is in decline. The Survey Center on American Life is reporting that only 38 percent of Gen Z Americans who are now adults report eating regularly with family at the dinner table. This is in contrast with 74 percent of Americans ages 50 and older who report having regular family dinners. This problem is especially present across educational boundaries. 

The survey reports that only 38 percent of young Americans who don’t go to college have family meals together every day. In contrast, 54 percent of college graduates had those daily family meals.

Eating family meals together correlates with all sorts of positive trends. For example, the 2025 World Happiness Report finds that meal-sharing is linked with social connectedness and subjective well-being. Furthermore, children of families who eat together tend to have fewer behavioral problems and higher literacy rates.

The American Enterprise Institute highlights research from Jane Waldfogel suggesting that, “Youths who ate dinner with their parents at least five times a week did better across a range of outcomes: they were less likely to smoke, to drink, to have used marijuana, to have been in a serious fight, to have had sex… or to have been suspended from school.”

To be fair, it’s hard to pull apart causation and correlation here. After all, it could be that there is something else about families that results in both fewer family meals and worse outcomes.

But more family dinners could theoretically cause better outcomes. Social interaction with parents in a friendly environment helps students learn to socialize in more hostile environments. 

Furthermore, while many kids likely eat lunch with their friends at school, most of a person’s life experiences will involve eating with adults, not kids. Learning how to socialize with peers is important, but for most of a person’s life, peers will not be children. Finally, the bond formed by spending time with family may provide children with the confidence and security they need to succeed elsewhere.

Most importantly, family is the central example of an informal institution. Economists have long recognized the importance of institutions for human flourishing. Adam Smith first recognized that governments needed to pursue peace, easy taxes, and a tolerable administration of justice for countries to grow wealthy.

Last year, Darron Acemoglu and co-authors Simon Johnson and James Robinson won the Nobel Prize in part for their work highlighting the importance of good institutions for the success of countries.

Institutions are essentially groups of rules for behavior. While many often think of formal institutions like government or private business, informal institutions like family are perhaps even more important. Ultimately, the most important socializing institution in the lives of an overwhelming majority of the population is the family. Family communicates culture, language, and attitude toward formal institutions. 

The influence of the family is easy to understand. Outside of school, children are generally at home, and parents are generally there with them. However, Americans may be trending away from that. Increasingly, ideas and communications from strangers enter the American home through screens.

Insofar as eating at the table is good because of social interaction, the presence of phones and other mobile devices will decrease this socialization, thereby decreasing the benefits. 

In the United Kingdom, a survey was done indicating that a majority of their children are on their devices during mealtimes, despite the fact that over 80 percent say they’d like the meal table to be a conversation space for parents/kids. 

Interestingly, these survey results indicate a kind of coordination problem, where everyone at the table wants to be part of a conversation, but it’s costly to try to convince everyone else to get off their phones and start the conversation.

It’s hard to imagine things are much different in the US in terms of screen presence at the table. Things get more concerning when you consider what the internet brings to the table. If family is valuable for socialization because it provides a gentle place to teach important rules, how does the internet stack up? 

Well, as anyone who spends time on the internet will tell you, the norms on the internet are not compatible with learning proper in-person socialization. Anonymity often leads internet users to act differently than they would at work or even in person among friends. One of the things that makes family such a strong institution is that it deals with repeated interactions between people who get to know each other very well. The internet, being nearly the opposite in many cases, is likely a poor substitute. 

The difficulty with informal institutions is that they often need to be changed from the ground up. In other words, there’s no easy fix. It’s both dangerous and silly to think the government should pass a law banning phones at a table in your house, but it seems that a behavioral change would be good nonetheless. Culturally, it’s time for a new generation of parents to recognize the danger of replacing family socialization with screens. 

Many were caught off-guard by how quickly the internet could fit into your pocket and change your brain, but now that parents understand the power of screens, they can set healthy rules to return the family to table conversation. As trust in institutions continues to fall, parents can be the first line of defense for children by giving them an institution they can trust. Protect table time from atomizing demands of events, clubs, video games, and technology. Your kids will thank you when they’re older.

Politics and finance move together: each policy change rearranges markets, and each market shift creates new policy incentives. Donald Trump’s well-known negotiating style — anchoring high, manufacturing urgency, then retreating just far enough to claim a win — offers a useful template for understanding Washington’s 2025 GENIUS Act on stablecoins. 

From Trump’s Philosophy to Dollar Digitalization 

President Trump opened trade talks with China and India by threatening “reciprocal tariffs,” then settled for narrower concessions on soybeans, pharmaceuticals, and digital services. The pattern mattered more than the particulars: start with maximum leverage, control the narrative, close quickly when the counterparty blinks. 

Stablecoins presented a similar opportunity. By 2024, they had become essential plumbing for crypto markets and crossborder payments, yet they sat in a regulatory gray zone. The GENIUS Act pulled them into US jurisdiction, requiring 100 percent backing with cash and Treasurys, and placing issuers under Federal Reserve supervision. The result: fintech firms gained legal clarity, Treasurys gained a new buyer base, and the dollar acquired a programmable form factor for the next phase of global payments. 

In this sense, the Act was not a technocratic tweak but a strategic negotiation — one that leverages private innovation to extend the reach of US monetary power. 

Stablecoins: From Faster Payments to Digital Dollar Power 

Stablecoins do not compete with the dollar; they repackage it for blockchains. USDT, USDC, and their peers function as dollar clearing lines that operate outside traditional correspondent banking, moving value across borders in minutes rather than the two-to-five-business-day window of SWIFT wires. In software terms, they compress both trust (collateral is visible on-chain or attested monthly) and time (settlement is embedded in the transaction itself). 

Mainstream adoption confirms the shift. Visa settles merchant payouts in USDC; PayPal and Stripe use it for crossborder remittances; BlackRock parks short-term Treasurys behind Circle’s reserves. Once speculative, these tokens now act as the payment rails for NFT markets, DAO payrolls, and dollar-based remittances in emerging economies. 

That reach amounts to a new kind of sovereignty. Control of the protocol — reserve rules, blacklist functions, upgrade paths — confers influence that is less visible than Federal Reserve policy but just as real. By installing a programmable, always-on dollar in decentralized networks, stablecoins extend US monetary power into domains where central banks have never operated. 

 The GENIUS Act: Institutionalizing Stablecoins 

By July 2025, the market value of dollarpegged stablecoins had climbed to roughly $255 billion, making tokens such as USDT and USDC indispensable for decentralized finance, crossborder payrolls, and on-chain trade credit. Yet the sector’s apparent strength masked structural fragility. When Silicon Valley Bank failed in March 2023, USDC briefly traded at $0.87 — a reminder that even “digital dollars” can wobble if reserves are opaque or inaccessible. Europe’s MiCA rules, which tightened disclosure and capital requirements, and Hong Kong’s new licensing regime for HKD-linked coins signaled that other jurisdictions were racing to shape the rules themselves. Washington did not want to lose the initiative. 

Congress responded with the GENIUS Act, a law that folds stablecoin issuance into the existing US financial perimeter while leaving day-to-day innovation to private code. The statute mandates that every circulating token be backed one-for-one by cash or short-term Treasury bills, verified by monthly attestations from registered accountants. Issuers must register with the Federal Reserve and apply full AML and KYC screening to wallet activity. In other words, the Act grafts the supervisory tools of the banking system onto a technology that was born outside it. 

Institutionalization has already paid three strategic dividends. First, a programmable dollar now circulates natively inside Web3 marketplaces, DAO payroll systems, and small firm supply chain platforms, extending US monetary reach to territories where correspondent banks never operated. Second, compulsory collateralization has turned stablecoin treasurers into steady buyers of government debt: in 2025 stablecoin treasurers hold approximately $160–200 billion in short-term US Treasurys, an unheralded boost for deficit finance. Third, on-chain transparency gives the Treasury and FinCEN near-real-time visibility into crossborder flows and illicit finance, transforming granular wallet data into regulatory leverage. 

The bargain is straightforward: lawmakers obtain surveillance tools and demand for bonds, issuers win legal certainty, and users keep the speed and finality of blockchain settlement. What remains untested is whether the same framework can contain the next liquidity shock — or whether another peg break will force an even tighter grip. 

From Spontaneous Order to Legislative Codification: The Hayekian Path of Stablecoins 

In the history of financial infrastructure, regulation rarely precedes innovation. This is especially true in the case of digital assets — where code, not committees, led the way. To understand why stablecoins have become a pillar of American digital strategy, we must return to one of the most foundational ideas in economics: spontaneous order. 

F.A. Hayek, the Austrian economist and philosopher, argued that many of the most effective institutions in society emerge not by central design but through decentralized trial and error. In his works The Use of Knowledge in Society and Law, Legislation and Liberty, Hayek warned against the arrogance of planning. Markets, he argued, embody a form of dispersed intelligence — aggregating individual preferences, constraints, and insights into dynamic patterns of coordination that no planner could replicate. 

Nowhere is this more evident than in the evolution of Bitcoin. Initially dismissed as a Ponzi scheme or digital gimmick, Bitcoin slowly earned credibility — not through government endorsement, but through use. Its first known transaction — a pizza purchased for 10,000 BTC — was not merely trivia; it was the moment value was assigned in a peer-driven economy. As adoption spread, Bitcoin began functioning as a store of value and a transnational asset class, eventually influencing central bank policy debates and sovereignty narratives. 

But the true Hayekian revolution arrived with stablecoins. Unlike Bitcoin, these instruments were not deflationary digital gold, but liquid, fiat-referenced settlement tools. USDT, USDC, and others responded to a real-world need: to facilitate trust, accelerate contract completion, and bypass banking intermediaries in a globally fragmented payments landscape. Their growth was not mandated. It was organic — driven by developers, traders, gig workers, and remittance users who found in stablecoins the functionality that legacy systems lacked. 

This bottom-up adoption eventually forced the hand of governments. The US GENIUS Act, Hong Kong’s Stablecoin Ordinance, and the EU’s evolving MiCA framework are not acts of regulatory foresight — they are institutional catch-up. Each reflects the recognition that stablecoins have crossed a threshold of legitimacy that can no longer be ignored. The state, in this case, is not the originator of order but its respondent. 

In doing so, these legislative moves are expanding the very definition of capital goods. Where once only factories, patents, and real estate occupied the economic imagination, today we must include digital protocols, asset-backed tokens, and settlement systems in the category of productive infrastructure. The passage of law does not replace spontaneous order — it enshrines it. Stablecoin legislation does not conclude innovation — it triggers new iterations: programmable finance, self-custody networks, DAO-linked payments, and real-time international remittance. 

This transformation affirms Hayek’s thesis. The most enduring economic orders are those that evolve from below, not those imposed from above. And in the realm of programmable money, the power of institution over innovation is increasingly created after the fact — not at its inception.

Ledger Competition: Dollar Rails vs RMB Networks 

Stablecoin dollarization is no longer unchallenged. China’s digital renminbi stack, tested through the mBridge project with Hong Kong, the UAE, and Thailand, has the potential to move millions of US dollars in payments — entirely outside the SWIFT/CHIPS loop. Hong Kong is adding HKD-pegged tokens to the same rails, creating a two-currency channel that could scale. 

Washington’s counterstrategy is dual: push dollarpegged coins everywhere while tightening supervision at home to keep them from becoming an unregulated shadow bank. The real prize is not the symbol on the token but control of the ledger — who can audit it, pause it, or upgrade it. 

China’s own trajectory underscores the fluidity of ledger politics. After dominating Bitcoin mining in the 2010s, Beijing banned open-network tokens in 2021, driving hash power offshore. Since 2023, it has pivoted again: provincial authorities promote permissioned chains, regulators have folded confiscated crypto into state wallets, and the central bank is active in global technical standards bodies. The contest has moved from raw computing power to protocol governance. Strategic advantage is now not in innovation, but control of regulation. 

Conclusion: Sovereignty in Software 

Every payment network encodes a hierarchy of trust. Stablecoins shift that hierarchy from correspondent banks to executable code. For the United States, the GENIUS Act ties this new rail to the dollar by anchoring tokens in Treasurys and US compliance rules, turning private innovation into public leverage. 

Whether that architecture can outscale China’s state-directed ledger projects will hinge on adoption, not declarations. The network that clears the most transactions with the least friction will write the default standard. In the emerging era of programmable value, monetary primacy will be decided less by whose currency people quote and more by whose settlement ledger they use.

I recently had the pleasure of reading War On Words: 10 Arguments Against Free Speech — And Why They Fail, a new book about the dangers of censorship by two eminent defenders of free speech: Greg Lukianoff (CEO of FIRE, the Foundation for Individual Rights and Expression) and Nadine Strossen (former president of the American Civil Liberties Union and a senior fellow at FIRE).

The book is marketed towards Americans across the political spectrum, but most of its arguments seem designed to appeal particularly to leftists. Lukianoff, and especially Strossen, document at length how threats of government censorship have been wielded against modern left-wing causes like Black Lives Matter. Both authors point out how civil rights activists in the 1950s and 1960s relied on freedom of speech to make their case — former Congressman John Lewis said, “Without freedom of speech and the right to dissent, the Civil Rights movement would have been a bird without wings.” Both authors point out that free speech has long been the bulwark of the disempowered, by protecting them from censorship and silencing attempts by the powerful whom they were challenging.

In today’s political climate, this is a strategically wise decision. Most of the philosophic arguments against free speech come from the left, from Critical Theorists like Richard Delgado and Jean Stefancic (authors of Must We Defend Nazis?: Why the First Amendment Should Not Protect Hate Speech and White Supremacy) and professor Mary Anne Franks (author of Fearless Speech: Breaking Free from The First Amendment). In 2017, a survey by Cato and YouGov found that Democrats were more likely than Republicans to believe that a business executive should be fired for a host of so-called politically incorrect beliefs, including the belief that “psychological differences explain why there are more male engineers” (which a third of Democrats considered to be a fire-worthy offense). 

FIRE’s 2025 College Free Speech Rankings report, which surveyed 58,807 students from 257 colleges and universities, found that political ideology correlates strongly with intolerance for supposedly “offensive” speech. That is, the more left-leaning a student is, the more likely they are to support illiberal and even violent measures to shut down speakers with whom they disagree. Eighty-four percent of very liberal students said that “shouting down a speaker to prevent them from speaking on campus” is at least “rarely” acceptable, and 38 percent of very liberal students said that “using violence to stop a campus speech” was at least “rarely” acceptable. While the Trump administration is shaping up to be no friend of free speech, most of the grassroots support for censorship is coming from the left, and so these are the hearts and minds that Lukianoff and Strossen are wisely focused on trying to persuade. 

The book makes dozens of arguments against censorship, but perhaps the most common thread of these arguments is a criticism of what Lukianoff calls “naive statism.” As Lukianoff describes it, naive statism “involves a kind of magical thinking by which the passage of a speech restriction eliminates a problem, without realizing that any law has to be passed and enforced by actual people.” Time after time, Lukianoff and Strossen stress this key point: categories of speech that people might wish to censor (for example, “hate speech”) are vague and nebulous, and lead to lots of edge cases that have to be decided by imperfect human beings. 

Such human beings are neither omniscient nor omnibenevolent; they can and do make mistakes. As Christopher Hitchens once put it:

Did you hear any speaker in opposition to this motion, eloquent as one of them was, to whom you would delegate the task of deciding for you what you could read? Do you know anyone? Hands up. Do you know anyone to whom you would give this job? Does anyone have a nominee? You mean there’s no one in Canada good enough to decide what I can read or hear? I had no idea.

And then there’s the potential for abuse of power. It turns out that when we give people the power to censor, they rarely use it in the way that we would like. Throughout history, censors have abused their power to punish dissent. In the Antebellum South, slave-owning politicians censored abolitionist literature under the guise that it could be “incendiary.” In the Middle Ages, the Papacy was obsessed with using its power to crack down on so-called “heretical” texts and pamphlets that described God in a way different from that approved by the Church. Stalin’s Soviet Union lobbied for international hate speech laws that helped legitimize its brutal repression of dissent and protest.

Censorship is a tool that the powerful use to keep the little guy down. And in a republic in which power regularly changes hands, any new censoring tools that we give to our political allies will invariably be wielded by our political opponents. As Lukianoff writes: “A good intellectual exercise before passing a new law is to consider how your worst enemy would use that law — and thinking about that is even more important when imagining restrictions on free speech.”

My favorite argument in the book is one that I’ve rarely heard before. Censorship laws often backfire, creating more of the views that they aim to punish. There are a few reasons for this, one being that censorship-related court cases actually generate a lot of visibility for the opinions of the censored. In 1985, for instance, Canada brought a case against a Holocaust denier, and journalists who wrote about the case had to explain the denier’s views and arguments in order to inform their readers. The attempt to tamp down on Holocaust denial by persecuting it actually led to its proliferation. This phenomenon is known as the Streisand Effect, and it recurs throughout history; whenever a point of view is censored by the powers that be, the censorship seems to generate more interest in (and visibility for) the censored point of view.

But Lukianoff and Strossen point to a deeper truth: this backfiring effect is most powerful when it comes to people with the kinds of truly odious views that many of us least want in the public discourse. As counterterrorism expert Elizabeth Neumann documents in Kingdom of Rage, violent political extremism has its roots in: “shame, humiliation, a lack of belonging and significance, loss of control, uncertainty, and a sense of unaddressed injustice.” When we use the power of the law to demonize and shame people who hold a specific view, and to try to rob them of that most intimate control over what they say, we don’t make them reconsider their view. Instead, we simply feed the psychosocial roots of their extremism. 

As Lukianoff and Strossen point out, this is how censorship has always worked. The Weimar Republic, for instance, heavily censored prominent Nazis. It shut down hundreds of Nazi newspapers and even banned Hitler himself from speaking in Germany. Far from diminishing the Nazis’ appeal, this censorship gave National Socialists new recruiting tools.

As one Nazi poster read:

Why is Adolf Hitler not allowed to speak? Because he is ruthless in uncovering the rulers of the German economy, the international bank Jews and their lackeys, the Democrats, Marxists, Jesuits, and Free Masons! Because he wants to free the workers from the domination of big money!

It turns out that if we want to combat conspiratorial views, employing powerful forces to silence the adherents of those views is actually quite counterproductive.

Free speech is in crisis throughout the world. As a 2025 report by the Future of Free Speech documents, “In the past decade, the number of countries experiencing increased repression of free speech has far outnumbered those demonstrating substantial improvements, and the share of countries with strong free speech protections has declined significantly.” Free speech is on the ropes, and experts warn that we are entering a “free speech recession.” 

Free speech is in danger in the United States as well. The United States has long been a champion of free speech, but that may be changing. On several measures, the Future of Free Speech reports that we’ve become more censorious than we were a few years ago. In 2024, just 60 percent of Americans agreed that “People should be able to express statements that are offensive to minority groups” and about the same number agreed that “People should be able to express statements that insult the national flag.”

All of which is to say: Lukianoff and Strossen’s book couldn’t have come at a more opportune time. If we want to climb out of our “free speech recession” and rebuild a culture willing to defend free speech as a principle, we need to understand the arguments in favor of censorship and why they’re misguided.

Last week, the Bureau of Labor Statistics issued sharp downward revisions to its job growth estimates for May and June. May’s gain was cut by 125,000, from +144,000 to just +19,000. June’s was reduced by 133,000, leaving a meager +14,000 jobs added. Combined with July’s weak initial estimate of 73,000, the data paint a sobering picture of a labor market losing momentum.

The revisions came just days after the Federal Open Market Committee (FOMC) voted to hold the Fed’s policy rate steady. At the press conference following the meeting, Chair Jerome Powell supported the decision, in part, by citing what he described as continued strength in the labor market — a point he has emphasized repeatedly in recent months.

But not everyone on the Committee agreed.

Fed Governor Christopher Waller — one of two FOMC members who dissented from the decision to hold last week — has been arguing for some time that the Fed should begin cutting its policy rate. In a speech delivered a few weeks before the July meeting, he warned that the initial labor market data for May and June might be overstating the economy’s strength and flagged the risk of downward revisions. As he explained:

A pattern in data revisions in recent years tells us that the private payroll data are being overestimated and will be revised down significantly when the benchmark revision occurs in early 2026. Accounting for the anticipated revision to the level of employment in March 2025 and extrapolating forward, private-sector employment gains last month [June] were much closer to zero. This is why I say private-sector payroll gains are near stall speed and flashing red.

He also made clear that waiting for the labor market to visibly weaken before easing would be a mistake. The risk, he explained, is that the Fed could once again fall behind the curve — just as it did in the aftermath of the pandemic. But this time, it would err in the opposite direction: keeping policy too tight for too long:

If the slowing of economic and employment growth were to accelerate and warrant moving toward a more neutral setting more quickly, then waiting until September or even later in the year would risk us falling behind the curve of appropriate policy.

Unsurprisingly, labor market concerns were central to Waller’s dissent from the Committee’s decision to hold rates steady. Following the FOMC meeting, he reiterated the case for easing:

[W]hile the labor market looks fine on the surface, once we account for expected data revisions, private-sector payroll growth is near stall speed, and other data suggest that the downside risks to the labor market have increased. With underlying inflation near target and the upside risks to inflation limited, we should not wait until the labor market deteriorates before we cut the policy rate.

It seems the market is finally catching up to Waller’s view. Following the BLS revisions, futures pricing shifted sharply. The implied probability of a rate cut in September now stands at 92 percent, up from just 46 percent on July 30, the day of the FOMC meeting. This dramatic swing underscores just how significant the BLS revisions were, and what they reveal about the true state of the economy.

As I argued recently, the Fed may be inadvertently tightening monetary policy despite taking no overt action. If tariffs and broader economic uncertainty are weighing on productivity and investment, they are also likely pulling down the neutral rate of interest. In that case, holding the federal funds rate constant — as the Fed has done since December — means that real interest rates are rising relative to the neutral rate. In short, monetary policy may be far from neutral despite the Fed’s inaction. The recent labor market revisions suggest that this is indeed the case.

Now that we have better data, it is clear that Waller’s concerns were justified. The sharp downward revisions to job growth in May and June confirm that the labor market has been slowing for months. In short, his warning that the Fed risked falling behind the curve by waiting now looks increasingly prescient. The question now is whether his colleagues on the FOMC will recognize the need to change course before it’s too late.

The latest GDP report has Washington officials buzzing. Growth hit 3.0 percent for Q2, which is a staggering reversal of the dismal -0.5 percent growth in Q1. The White House claims that this is evidence that their trade policies are “an absolute blockbuster.” 

New Right pundits are pointing out that it beat expectations and that it “has good internals.” Some are even suggesting that economics is a “dismal pseudoscience” and that Trump has “smashed one of the supposedly iron laws of economics.”

“Collapsing imports,” these pundits say, “saved the day” with regard to GDP figures, just as they were quick to use a surge in imports to explain the Q1 shrinkage.

Both are dead wrong. This latest report is just more evidence that tariffs are a disaster, and the economists who warned about them were correct.

Let’s cut through the noise and unpack this report. Trade deficits, as I’ve written, are among the most misunderstood concepts in all of economics. The reality is that imports do not affect GDP at all. To explain this, we need to understand that GDP is meant to measure the amount of production that happens in a country. Since “production” is difficult to measure in and of itself, the Bureau of Economic Analysis instead measures “expenditures.” This makes sense because, if we think about it, any time we spend money on a good, someone else must have produced that good that we bought.

But what about people who buy American-made products who do not actually live in America? Clearly, we should count that spending, too. Lo and behold, we do, which is why we add exports to American spending totals, reflecting the production that happened here despite the spending happening elsewhere.

Because the BEA, however, tallies all the spending that Americans do in a given period, and Americans also spend money on imported goods, that spending on imports would also be included in this expenditure method. To fix this, the BEA simply subtracts the value of all the goods that we import from other countries.

So what does all this mean? All else being equal, when spending on imports rises, GDP will remain unchanged. When spending on imports falls, GDP will remain… unchanged. The simple reality is that spending on imports does nothing to GDP whatsoever.

But does this mean that tariffs, which reduce imports, do not affect GDP? Not in the slightest. 

When raw materials like steel and aluminum, as well as intermediate goods such as automotive components, become more expensive, production costs rise. When the cost of production increases, firms respond by producing less. That reduced production shows up in GDP figures as reductions in consumption, investment, government spending, or exports.

Note here the distinction: imports affect GDP insofar as they are used as inputs into domestic production. Spending on imports, however, does not affect GDP in and of itself. If anything, the relationship between “imports” and “GDP” should be the exact opposite that people allege: when firms buy more imported raw materials or intermediate goods, GDP should actually rise in subsequent reports, not fall. The opposite is also true.

So what should we make of this latest report, especially in light of the first quarter numbers? Frankly, we should conclude that economists warning about the effects of tariffs on business were right.

Consider the fact that in the first quarter, which ended March 31, Trump used IEEPA to actually change tariff rates dozens of times and to implement new tariffs. This, as plenty of economists pointed out, created tremendous uncertainty in what the tariff rates were going to be on a day-by-day basis. When uncertainty rises, businesses slow down and reduce output. Some even close altogether.

Contrast this with the second quarter, which began on April 1. There was “Liberation Day” on April 2, then the famous 90-day pause, a trade war with China (and only with China), and a lot of threats of tariffs. But no actual new tariffs were raised. We also had delays and reductions in previously announced tariffs.

In other words, in the quarter when Trump was imposing tariffs, GDP growth fell into negative territory. In the quarter where Trump was pausing, delaying, or reducing tariffs, GDP growth rose.

But let’s make one thing clear: GDP did not fall in the first quarter because firms were busy stockpiling imports ahead of the tariffs. It fell because actual, bona fide production fell. Likewise, GDP is not rising today because imports have fallen.

Economists have been raising this point for months. Tariffs are not a trade victory. They are a tax on the American people, making it harder for consumers (and businesses) to afford goods and services. This latest report is not a vindication for the White House or the New Right. It’s a case study of the simple truism that free markets work and tariffs do not.