The Plan (Reviving American Industry)

The Plan (Reviving American Industry)

“We wanted flying cars, instead we got 140 characters.”

So read the subtitle of a 2011 report from Founders Fund — a venture capital firm co-founded by Peter Thiel.

(Recall this was a time when Twitter was still called Twitter and tweets were limited to 140 characters.)

The report’s thesis? Computers were getting faster, cheaper, better. But in the realm of “real stuff,” human progress was nearing a standstill.

As Thiel summed it up to an audience at Stanford University in 2012, “Whether we look at transportation, energy, commodity production, food production, agro-tech, nanotechnology — that with the exception of computers, we’ve had tremendous slowdown…

“I believe we are in a world where innovation in stuff was outlawed. It was basically outlawed in the last 40 years — part of it was environmentalism, part of it was risk aversion. And all the engineering disciplines that had to do with stuff have basically been outlawed one by one.”

Thiel’s lament more than a decade ago launched a vigorous debate among venture capitalists and tech investors. Real stuff or digital stuff? Atoms or bits?

Which was more deserving of scarce capital?

Thiel’s nudge notwithstanding, the majority still overwhelmingly favored bits. Less complexity, much less cost. Bits won out nearly every time.

And why not? Bits are what made Google and Facebook such juggernauts during the 2010s.

It’s no coincidence that the victory of bits over atoms took place at the same time that American industry (and the American middle class) was hollowed out — seemingly for good.

But in 2025, the Silicon Valley crowd is quickly coming around to Thiel’s view…

“You can’t really offer your citizens much if all you’re asking them to do is sit around, trade crypto, watch Netflix and order Uber Eats.”

So says Gregory Bernstein, CEO of an investment firm called The New Industrial Corporation. Bernstein is also the co-organizer of a conference called Reindustrialize 2025.

Held last month in Detroit — perhaps the city most symbolic of America’s industrial decline — it brought together Silicon Valley investors and senior Trump administration officials. As Bernstein explained it to The New York Times, an economy based on building things is more compelling than one based on intangible services.

About 1,200 people were on hand — double the attendance of the first such gathering last year. Organizers say there was a waiting list for in-person attendance. More than 16,000 watched online.

“It has become high status to invest in manufacturing,” said Christian Garrett, a partner at 137 Ventures, during an after-party — promising that the deals emerging from this conference would result in high-tech, “high status” jobs for blue-collar folks.

This paradigm shift is no secret to anyone who watched the first-ever Paradigm All-In Summit yesterday.

It brought together three of Paradigm’s leading experts — Jim Rickards, James Altucher and Enrique Abeyta. Together, they’re all in on an investment idea they agree holds the key to this transformation…

… not least because of an announcement they expect from the White House no later than Tuesday.

We’ll remind you once more about the profit potential they anticipate — 1,494% by next year… 3,523% by the end of Trump’s term… 18.015% by the end of this decade.

Paradigm Mastermind Group members are already getting in on this play. And so are the people who acted on yesterday’s All-In Summit.

If you missed this exclusive event, we’re making a replay available for a limited time. Again, we’re expecting an announcement from the White House by Tuesday at the latest — so the window for maximum gains is closing quickly. Follow this link to give it a look right away.

Mr. Market “Prices in” the Tariffs

On the day after Donald Trump’s tariff regime formally took effect, the U.S. stock market is staging a modest rally. It seems the tariffs have already been “priced in.”

After four months of Trump ramping up and backing down and ramping up again… and about a dozen country-by-country negotiations… the tariffs look something like this, according to the folks at Statista…

As for that Russian “exemption,” don’t be fooled. While a deadline has passed, Trump is still threatening 100% “secondary tariffs” against any country that buys Russian energy.

He’s already jacked up the 25% tariff on India to 50% because India’s oil imports from Russia have skyrocketed since 2022 — which prompted an interesting exchange between Trump and reporters earlier this week.

In any event, the S&P 500 registered a teensy loss yesterday and as we check our screens today is up nearly two-thirds of a percent. At 6,379 the index sits barely 10 points away from its record close a week ago Monday.

On the other hand, the impact of tariffs on the gold market today is big.

“U.S. gold futures hit a record high on Friday after Donald Trump’s administration blindsided the global bullion market by imposing tariffs on imports of one-kilo and 100-ounce bars,” says the Financial Times.

We warned you in mid-July that something like this might be coming: What seemed like a cut-and-dried exemption on imports of gold bullion last spring was in fact a lot more fuzzy. Now the fuzz is coming into focus.

These new U.S. gold tariffs are a historic first. And they might be linked to the president’s peculiar obsession with Switzerland — now subject to one of the steepest U.S. tariffs in the world, 39%. Switzerland is the world’s biggest exporter of refined gold.

U.S. gold futures soared to a record $3,534 earlier today. That’s an enormous premium over the spot price — the price we usually report from day to day — which sits at $3,392. Meanwhile, the spot price of silver is up ever so slightly to $38.29.

Bitcoin has staged a modest rally this week, recovering to $116,348 this morning.

After a nonstop whacking that began last Friday, crude is on track to end the week at $63.62, a two-month low.

The Ultimate Insider Trading

In the absence of any major economic numbers today, it’s worth recounting a bit of history.

It’s been a week since the U.S. Bureau of Labor Statistics issued a punk jobs report for the month of July — prompting the president to call the numbers “rigged” and to fire BLS commissioner Erika McEntarfer the same day.

“It has not been a good decade for the BLS in the ‘trust’ department,” writes Eric Salzman for Matt Taibbi’s Racket News project.

Salzman jogged your editor’s memory about two incidents I’d chronicled in these pages — both of which raise serious questions about who might have early access to BLS data, and who might be trading on it.

The first occurred on Dec. 13, 2022. Sixty seconds before the BLS reported the monthly inflation numbers, stock and bond futures rallied huge.

This sort of activity is the bailiwick of the Commodity Futures Trading Commission — which did bupkis.

“The CFTC could have rounded up all the Futures Clearing Merchants and had them divulge which clients placed the trades,” Saltzman writes. “It might have taken subpoenas and some investigative work, but the government has folks who do that sort of thing. As far as we know, this was never done, or at least disclosed…

“Either somebody at BLS leaked the report, or it was a very senior official from either the Federal Reserve, the Treasury Department or the president and/or his senior economic advisers. The odds point to the former. Either way the BLS seemed to want no part in finding out the answer to this mystery.”

Then came the “Super User” scandal of April 2024.

It turned out the BLS had “Super Users” who got access to sooper-seekrit tranches of economic data that they could trade on. Not necessarily early data, but granular detail not available to the public.

Seems some flunky economist at the agency was sending this data to Wall Street firms including JPMorgan and BlackRock — evidently in hopes of landing himself a cushy job at one of those Wall Street firms.

The now-looking-for-work Ms. McEntarfer was in charge of the BLS at the time. Her excuse was layered in bureaucratese: “It was an idiosyncratically collected group of emails of people who had been asking him questions that he put together against policies and procedures that BLS outlined, so yeah, it was limited to one person and ceased at the moment its attention was brought to the agency.”

Sixteen months later, the unanswered questions still boggle the mind. Among them, writes Salzman: “How many times did this ‘idiosyncratic’ behavior take place, who did it take place with and what was discussed in each of these idiosyncratic exchanges? What did the members of the Super User group do with the information that they knew was material and nonpublic? Why did the employee provide this service?

“The timing and optics of Commissioner McEntarfer’s firing could have been much better, but it’s past time to clean house at the BLS,” Salzman concludes.

And, we might add, the Census Bureau, the Bureau of Economic Analysis and the Federal Reserve.

Worth recounting again: In 2016, the European Central Bank undertook a study of the trading patterns related to 21 market-moving indicators in the United States between 2008–2014.

Among fully one-third of the indicators studied, there was strong evidence of unusual pre-announcement price action in stocks, bonds and futures.

Traders acting on this early information might have pocketed an extra $20 million a year trading S&P 500 futures alone.

How much might they have pocketed since?

“It’s Your Uncle Sam. Can You Venmo Me $20?”

It’s come to this…

“The Treasury Department wants you to Venmo it to help with the $36.65 trillion national debt,” says The New Republic.

Yes, above and beyond what you already pay in taxes.

Or you can use PayPal, if you like.

For real.

The concept of everyday folks donating to help pay down the national debt isn’t entirely new. A 2023 NPR piece quotes a Treasury Department official as saying the first known voluntary donation to the federal government goes all the way back to 1811 — $5, or about $100 in today’s money.

The Treasury set up a formal account to accept donations in 1843. In 1961, it set up an account to accept donations earmarked specifically for paying down the national debt, and no other purpose.

And in a shockingly internet-savvy move for a government agency, the Treasury set up a webpage in 1996 titled “Gifts to Reduce the Public Debt.” There, you could initiate a bank transfer to help Uncle Sam get out of hock — or to be more precise, slow down the pace at which he’s getting into hock.

Subsequently, you could also use a debit or credit card. And now, PayPal and Venmo.

Going back to 1996, the Treasury says it’s accepted $67.3 million in donations.

Which the Axios website tells us covers about 20 minutes of the federal government’s debt accumulation.

Mailbag: Jobs, Hertz

On the subject of the government’s suspect job statistics, a reader writes…

“Dave, I was listening to public radio’s Marketplace yesterday and heard the normal liberal kvetching about Trump and his firing of the BLS director. But one point was worth additional consideration.

“With the halt of illegal immigration (they didn't use the first word), we do have a pause or even a decrease in the number of people in our workforce. I do sense that employers are also holding steady by neither hiring nor letting employees go as everyone sorts out the changes from Trump’s tariffs and such.

“With illegals leaving or being deported on top of this, it raises the question of what is a good metric for labor (unemployment rate, employment increase/decrease, participation rate, etc.).

“So maybe a low level of gross job creation is not really a bad number when over a thousand workers, albeit illegal low-wage workers, are departing each week. Of course that assumes the BLS is picking up on that somehow.

“As a possible comparison we may look to Japan which also has a very low emigration level and an aging population/workforce. Possibly a future warning for the U.S., but we do need to understand the underlying issues in our labor statistics, however ‘adjusted’ they may be from time to time.”

Dave responds: Two factors have thrown government labor statistics into a cocked hat since 2020 — the rise of work-from-home amid COVID and, as you point out, the enormous influx of migrants both legal and otherwise.

The pandemic also marks a turning point in response rates from businesses to surveys conducted by the Bureau of Labor Statistics. That is, they’re dropping like a rock.

Even a private statistics business, nimble and responsive to the needs of its customers, would have trouble adjusting to this confluence of circumstances.

But a lumbering government agency? Hopeless…

“Man! I will NEVER rent from Hertz again and neither will any of my friends after I show them your report,” a reader writes after last Saturday’s edition — about how AI is dinging car-rental customers for nonexistent damage charges.

“The blatant, smug indifference of the employees and their unwillingness to rectify the problem makes that whole company a pariah.”

“While I'm generally a fan of AI, too many companies appear to be ignorant of the damage it results in to their PR,” writes another.

“When I read about the Hertz debacle you wrote of and as someone who has dealt with AI customer service often, the only thing it tends to do is make me angry and not want to have anything to do with that particular company. All too often they are using AI to shield themselves from any type of customer interaction while patting themselves on the back at how much $$ they are saving.

“While I don't know if Verizon qualifies with the AI thing, their lousy customer service has resulted in a whole lot of customers shouting, ‘I can't hear you now!’

“Until the overpaid CEOs figure out customer service means just that, many of us won't be using their service, and I include Hertz in that choice as well.”

Dave: OK, you left the door wide open for me to toot our own horn a bit.

When you call or write to Paradigm Press customer care, you won’t be dealing with AI. Yes, if you use our web form, you’ll get an autoreply saying we’ll get back to you — but that’s just to let you know that your inquiry got through to us.

Once we get back to you, you’ll be dealing with a human — and not someone overseas. We don’t offshore our customer service; it’s 100% located in Paradigm’s home base of Baltimore.

Could we cheap out and go the AI route? Of course — but subscription revenue from readers like you furnishes the overwhelming share of our revenue. It’s in our interest to treat you right.

We prosper when you prosper — as it should be.

Have a good weekend,

Dave Gonigam
Managing editor, Paradigm Pressroom's 5 Bullets