I have to tell you, I looked at the newsfeed
this morning and for a second I thought I was
reading a script for some, I don't know, some
satire show that went completely off the rails.
Right. You have the Department of Justice actively
fighting with its own political base. The Department
of Homeland Security has literally turned the
lights off. Yeah. And the economy is making people
furious regardless of who they voted for. It's
definitely one of those weeks where reality feels
a bit too on the nose, isn't it? It really is.
It's chaotic, but there is, well, there's actually
a very specific logic driving all of this. That
is exactly why I wanted to do this deep dive
today. We have a really interesting mix of sources,
the latest from the political wire on the just
the absolute mess in D .C. And we're pairing
that with some heavy economic theory from Daniel
Lacalle over at Hedge Eye. And the mission here
is pretty simple. I want to figure out how we
got to a place where the government is paralyzed,
yet the voters are the ones paying the price.
That's the right way to frame it. Because if
you only look at the headlines, the shouting
matches, the shutdowns, it just looks like incompetence.
Right, just chaos. But when you layer in Lacow's
economic critique, you realize it's actually
a structural trap. We're seeing a collision between
political survival tactics and economic reality.
And well, right now, economic reality is winning.
OK, before we get to the economics, we have to
talk about the political survival part or the
lack of survival. I'm looking at these reports
on Attorney General Pam Bondi, and I'm confused.
Usually when an attorney general gets in trouble,
it's the opposition party attacking them. But
Bondi is getting absolutely hammered by the fart.
Right. Why is her own side coming for her? That
is the unique twist here. Usually the party circles
the wagons. But in this case, the criticism is
coming from inside the house and it's loud. How
loud are we talking? I mean, you have influential
conservative voices like Eric Erickson explicitly
saying she should resign or be fired. You have
Tim Pool calling her handling of the department
miserable. And I saw that clip from Fox News
where Lisa Kennedy called her a shrieking Karen
after the House judiciary hearing. That is, I
mean, that is aggressive even for cable news.
It's personal. So what is the actual grievance
here? Is it just that she's not performing well
on TV? No, no, it's much more substantive than
that. It boils down to promises made versus,
you know, promises kept, specifically regarding
the Epstein files. The Epstein files. Right.
The base was promised a scorched earth approach,
full transparency, names named. Instead... Bondi
claimed she had a client list, then later said
she didn't. Oh, no. It left a lot of right wing
pundits who had hyped this up looking like they'd
been, you know, hung out to dry. So it's a transparency
issue. Precisely. And look at Representative
Thomas Massey. He's a Republican and he is furious.
OK. His argument is that the redactions Bondi
is enforcing aren't protecting victims. They're
protecting the perpetrators. Right. The source
notes that right now only Ghislaine Maxwell is
in prison sitting in a club fed type facility
in Texas. while over two dozen high -profile
names in those files are still blacked out. And
Massey sees that as a cover -up. Exactly. He
sees it as the DOJ running a cover -up and Bondi
is the face of it. Okay. But then there's this
other layer that feels, well, frankly illegal.
The spying allegation. This isn't just about
redacted files. It's about who is looking at
them. This is where it crosses from political
disappointment to a real constitutional issue.
The sources indicate that members of Congress
are allowed to view the unredacted files in a
secure setting. But Bondi is apparently tracking
exactly who looks at what. Wait, what? She literally
showed up to a hearing with a printout of Representative
Pramila Jayapal's search history. That seems
insane. You have the executive branch monitoring
the legislative branch's investigation into the
executive branch. It's a massive separation of
powers violation. And that's why you're seeing
such a weird alliance forming. You mean Jayapal
and - Exactly. You have Pramila Jayapal on the
far left screaming about privacy. But you also
have Speaker Mike John - a conservative Republican
condemning this as spying. Wow. When you manage
to unite Jayapal and Johnson, you know you've
really stepped in it. You really have. The DOJ
is effectively at war with Congress. Meanwhile,
over the Department of Homeland Security, nobody
is home. The funding lapsed at one second past
midnight on Saturday. Right. And for the listeners
who follow this stuff, we don't need to explain
that TSA agents are working without pay or that
lines might get long. We know the drill. Sure.
We've seen this movie before. Yeah. But the politics
of this shutdown feel different. Usually, the
party making demands caves pretty quickly because
they don't want to be blamed for closing the
government. But the Democrats seem perfectly
happy to let this drag on. Why aren't they nervous?
Well, it comes down to the polling on their specific
demands they aren't just asking for more money
they have a very specific list of reforms for
DHS and the public support for these items is
astronomical like take body cameras for ICE agents
for example I saw that number in the notes and
I thought it was a typo 92 % support in this
political climate I didn't think we could get
92 % of people to agree that the sky's blue it's
a unicorn number in politics But it shows that
the public deeply distrusts the opaqueness of
these agencies. And it's not just cameras. Look
at the demand regarding warrants. Democrats are
demanding that ICE end administrative warrants
and switch to judicial warrants. 50 % of the
public supports that versus only 37 % opposed.
Can you clarify that distinction? I think a lot
of people hear warrant and assume a judge signed
it. What is an administrative warrant? It's essentially
a permission slip The agency writes for itself.
An administrative warrant is signed by an immigration
official, not a judge. So not a real judge? No.
It doesn't give them the legal authority to enter
a private home without consent, though they often
act like it does. The Democrats are saying, no,
if you want to enter a home, you need to go to
a real judge and show probable cause just like
the police do. And apparently most Americans
agree with that. Right. And then you have the
training issue. After the hiring spree a few
years back, there are a lot of inexperienced
agents in the field. Eighty percent of the public
says better training is crucial. So the Democrats
are looking at these numbers. They're looking
at. 92%, 80 % and thinking, why should we fold?
The voters are on our side. OK, so that explains
the stalemate in Washington. But I want to zoom
out to the people actually voting. We have this
really compelling study in the stack about low
knowledge versus high knowledge voters and how
they're reacting to the current administration.
This is fascinating data. The study categorized
voters based on a simple test. Did they know
which party controlled the House and the Senate?
If they got both right, they're high knowledge.
If they got both wrong, low knowledge. Your knowledge
voters are turning on Trump hard. A 25 -point
drop in support. Compare that to the high -knowledge
voters where the drop was only 12 points. Now,
it's easy to be dismissive and say, well, they
don't follow the news, so who cares? But these
people vote. They do. So why is that group specifically
abandoning the president? Because they aren't
ideological. They aren't watching the judiciary
hearings or caring about administrative warrants.
They are elastic voters. Elastic voters. They
voted for Trump because they were angry about
the price of eggs under Biden. Now they are angry
about the price of eggs under Trump. They are
purely anti -incumbent. And this is where we
have to bring in Daniel LaCalle's economic theory.
Because the question is... Why are the eggs still
expensive? Why does the voter keep getting crushed
regardless of who wins? And Lacal argues that
we need to stop thinking of inflation as some
kind of weather event or, you know, a supply
shock. He comes from the Austrian School of Economics
and his thesis is that inflation is a deliberate
policy choice. It is a tool. A tool for what?
For defaulting on debt without admitting it.
Think of it this way. Let's say the government
owes $35 trillion. That number is fixed. If the
government prints a massive amount of money and
causes, say, 20 % inflation, the value of that
$35 trillion drops by 20 % in real terms. They
still owe the same number of dollars, but those
dollars are worth way less. So it's a trick.
Yeah. They are paying back their lenders with
watered down money. Exactly. It is a silent tax
on everyone who holds dollar savers, workers,
pensioners. Lacalle calls it a transfer of wealth
from the middle class to the state. So the government
gets to spend money it didn't earn. And you pay
for it through higher prices at the grocery store.
That makes sense why the low -knowledge voter
is so angry. They might not understand the Federal
Reserve's balance sheet, but they know their
paycheck doesn't go as far as it used to. Right.
They feel the theft even if they can't articulate
the mechanism. And Lacoste's point is that as
long as the government refuses to cut spending,
they have to use inflation to keep the system
running. Which means they are structurally committed
to making voters angry. That's the trap. Which
puts the politicians in a bind. You have an economy
that naturally creates angry voters. You can't
fix the economy because you're addicted to the
spending. So what's your next move? You try to
rig the election rules so the angry voters can't
hurt you. That's the pivot. If you can't win
on results, you try to win on mechanics. We see
this clearly with Trump's recent announcement
about an executive order for voter ID and banning
mail -in ballots. Can he even do that? I thought
elections were run by the states. He can't. You're
right. The Constitution is very clear. Article
1, Section 4 gives that power to the states.
Right. There is precedent from Judge Caller -Cattelli
establishing that the president can't just rewrite
election laws via EO. An executive order directs
federal employees, but federal employees don't
run the polling places in Wisconsin or Georgia.
So if he knows He knows he can't do it. Why announce
it? It's theater. It's for the base. The SAVE
Act failed in Congress, so this is him signaling,
I am trying to fix this, even if legally it's
a dead end. It keeps the core supporters engaged.
Right. Even while those low -knowledge voters
are drifting away. But while the EO might be
theater, the map oars are very real. We're seeing
redistricting fights flaring up again in Virginia
and Florida. Redistricting never really sleeps.
In Virginia, you have a referendum that could
allow Democrats to redraw the map, potentially
flipping two to four seats. And in Florida? In
Florida, DeSantis is looking to push a new aggressive
map to gain three to five GOP seats. So in the
grand scheme of the house, they just cancel each
other out? Roughly, yes. Aaron Covey from the
Cook Political Report says the net result could
be anything from Republicans plus seven to Democrats
plus four. But there is a huge risk here that
the source call The Dummymander. The Dummymander.
I love that term. Walk us through a scenario
of how that backfires. Okay, so imagine you're
a Republican strategist in Texas. You want to
squeeze out one more seat, so you draw a district
that is 52 % Republican and 48 % Democrat. Looks
safe on paper. Right. But then demographics shift.
Right. Maybe suburban women turn against the
GOP or Latina voters in that district don't break
your way. Suddenly that 52 % drops to 49 % and
you lose the seat. By trying to be too greedy,
you created a district that was vulnerable to
a wave election. You trapped yourself. It's high
stakes gambling with geography. Speaking of which,
I want to talk about this dot war between Nebraska
and Maine, because this is the pettiest, most
fascinating chess match I've seen in a while.
It really is. So for listeners who don't know,
Nebraska and Maine are the only two states that
aren't winner take all. They award electoral
votes by congressional district. Nebraska has
a blue dot in Omaha. that often goes Democrat.
Republicans want to change the law to make the
whole state winner take all to wipe out that
blue dot. And Maine said, not so fast. Right.
Maine Democrats basically said, if you delete
your blue dot, we will switch our state to winner
take all and delete our red dot in the rural
second district. Mutually assured destruction.
Exactly. Mathematically, it's a wash. But the
source brings up a really provocative what if
here. What if? What if we went the other way?
What if every state used the Nebraska and Maine
system. Instead of the current winner -take -all
system, that would be chaotic. It would be chaotic,
but think about the incentives. Right now, if
you're a Republican running for president...
You never visit California. You have zero chance
of winning the state, so you ignore it. Sure.
But if California awarded votes by district,
suddenly you're campaigning in the Central Valley,
in Orange County, in rural Northern California,
because those are winnable districts. And a Democrat
would actually go to Texas to campaign in Austin
and Houston and Dallas. Exactly. Currently the
election is decided by maybe 500 ,000 people
in seven swing states. Everyone else is a spectator.
Under a district system, you would have a true
national election. Candidates would have to compete
for votes in every corner of the country. That
would completely change the money game. You can
just dump all your ads into Pennsylvania. It
would force them to broaden their appeal. But
of course, the parties hate that idea because
it introduces uncertainty. They prefer fighting
over the predictable swing states. So let's try
to tie all this together. We have a Justice Department
at war with Congress over transparency. We have
a paralyzed DHS because the public doesn't trust
the agency's basic operations. We have politicians
trying to rig maps to insulate themselves from
voters. And underneath it all, we have an economic
engine that is dissolving the voter's wealth
through inflation. And that economic piece is
the keystone. As long as the government relies
on the inflation tax to pay its bills, as Lakell
describes, they are guaranteeing that the public
will be poorer and angrier. It sounds like a
trap. The government creates the inflation to
survive financially, but that same inflation
kills them politically. It creates a cycle of
instability. Voters get angry, they throw out
the incumbent, the new guy comes in realizes
he can't cut spending without causing a revolt,
so he prints money too. And the cycle repeats.
Inflation stays high, voters get angry again,
and the cycle repeats. We usually assume that
politicians are masters of self -preservation.
I mean, that's their one skill, right? Right.
But if the only way they know how to govern is
by devaluing the currency, which guarantees they
get fired by the voters, are they actually structurally
incapable of saving themselves? That's the terrifying
question. Is the modern political model essentially
a suicide pact with the economy? And looking
at the headlines this week, it's a... It's hard
to argue otherwise. A suicide pact with the economy.
Well, that is certainly something to think about
the next time you're at the grocery store staring
at the price of eggs. We're going to leave it
there for this deep dive. Thanks for listening
and good luck out there.