Monday, February 16, 2026

How a child dies of measles

     “So you’re the little woman who wrote the book that made this great war!”
 
         Abraham Lincoln to Harriet Beecher Stowe, author of Uncle Tom's Cabin, 1862

Sometimes fiction is truer than mere reality. Maybe we can learn from it.

The interaction between Lincoln and Stowe probably didn't happen, even if the story persists and there is a statue in Hartford, Connecticut, of the supposed encounter.

The book, Uncle Tom's Cabin, was fiction. It depicted the harsh, cruel impact of slavery on the lives of well-drawn characters, including "Uncle Tom," a Christian preacher and slave who is flogged to death by his cruel master, Simon Legree. It fueled abolitionist sentiment in the North.

I read Uncle Tom's Cabin in high school for pleasure, and then again in a graduate school class on how history is shaped by fictionalized history.

Some of the power of The Atlantic article comes from the fact that it isn't evident that it is fiction, at least at first. I read it thinking it was straight-up journalism, a confession by a mother who had not vaccinated her children for measles. It depicts the feeling of anguish and remorse she felt as she watched her two children get desperately sick from measles. Both of her children were in pain. Both were hospitalized and near death. One child had permanent disabling brain damage, she wrote.

Click: Gifted article

She wrote:
You plant her on the couch with a blanket and put Bluey on the TV while she drifts in and out of sleep. You coax her to eat by offering ice cream, which she says feels good on her throat. She’s a tough kid, but you can tell she’s miserable—there are circles under her eyes as she complains of a headache, then grimaces when she coughs. 

Then later:

You suffer an icy moment of realization: This is a medical crisis. What you will learn later is that the tiny air sacs inside her lungs have become breeding grounds for the virus, and the inflammation generated by her immune response is inhibiting oxygen from reaching her bloodstream.

And later, in a call to the physician before the rush to the emergency room:

The receptionist responds gently, types swiftly, and then pauses. Are your children vaccinated? she asks. Her tone is flat and inscrutable, but you detect an undercurrent of judgment. You wince and tell her the truth. No, you say, no vaccines.

The Atlantic story is part of the changing reality of the return of measles. Outbreaks are in the news. 

Maybe the zeitgeist is changing. Vaccines are getting a burst of positive publicity. Medford writer, Bruce Van Zee, a retired physician, alerted me this week to news that vaccinations may have benefits beyond protection against the primary disease. From his February 13 post titled "Surprising Vaccine Benefits, he wrote:

Data extending back 25 years suggests Flu vaccine is associated with lower risks of cardiovascular disease, including heart failure, stroke and heart attack.

Dementia risk appears to be less in individuals who take a variety of vaccines including Shingles , Influenza, Tetanus/Whooping cough, and pneumonia vaccines. 

A Danish study found a 10% decrease in cardiovascular hospitalizations for those who took the Respiratory Syncytial Virus vaccine, which is one of the newer vaccines recommended by authorities.

Covid vaccines have been shown to decrease the incidence of Long Covid, a debilitating illness with physical and mental symptoms.
Zeitgeists change. Misery is the greatest teacher; people value potential reward less than they dislike pain and loss. Probably more children need to suffer and die. One in 10 people who get measles require hospitalization. Parents may need to share the experience of quarantines. Someone will write a true story of loss that matches The Atlantic article.

Possibly the plaintiffs bar will get involved. Physicians are damned if they do and damned if they don't. My experience as a financial advisor informs my thinking here. If a client made a very poor decision that cost him money, the fact that it was documented as the client's decision does not protect the financial advisor. If the decision was a poor one, how come the advisor didn't talk the client out of it?  

I can envision that the parent of a child who dies or who faces permanent, expensive disability would sue the physician who consented to the parent's vaccine refusal. The parent's written consent  won't be enough to protect the physician. After all, who is the expert here? Informed consent means informed consent, and the physician could have been more persuasive and informative in talking the parent out of refusing vaccinations. Some physician or hospital probably needs to suffer and pay. If a child victim of measles-induced encephalitis faces lifetime care of $20,000 a month, someone will be looking for a deep pocket. Lawyers may do for public health what the CDC no longer will. 

I grew up in a moment of tremendous relief that vaccines were saving Americans from infectious diseases. Whew!!! The victory was too great, too complete. Many people forgot what was gained. Too many people decided vaccines are the risk. Let the herd protect you. Or get the disease. What could go wrong?

The zeitgeist will change when people engage with the alternatives to vaccination and people suffer and die. The Atlantic article is one step in that change. But on reflection, my real bet is on the plaintiff bar. No one really consents to their child being on a lifetime of bedridden life support, not in hindsight. 



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Sunday, February 15, 2026

Easy Sunday: A guest post about losing.

 "Some days you bite the dog. Some days the dog bites you."

Sometimes things go wrong.  

I was 17, standing on a ladder, thinning the excess fruit off of pear trees in a Medford-area Naumes-family orchard, when I heard the words about biting and getting bit. Older guys, the Rasmussen twins, both students at Stanford said it. They, like me and Jack Mullen, the author of today's guest post, were on the same crew.

The Rasmussen twins looked cool to me -- so accomplished! So worldly! Students at one of the schools I hoped someday to attend! -- So I paid attention and remembered their wisdom. Sometimes you lose. Accept that.

Jack Mullen was one of the people watching when the USA's star figure skater, Ilia Malinin, the only person in the world able to spin in the air four full times in practice jumps, slipped and fell in his performance at the Olympics this week.



As a high school athlete in Medford, Jack Mullen experienced great successes, and some disappointments. Jack watched the successes of some of his classmates: All-American fullback Bill Enyart, whose Oregon State's football team defeated USC and OJ Simpson, and boyhood friend Dick Fosbury, who revolutionized high jumping while winning a gold medal. But no triumph survives future disappointment.  Sometimes the dog bites you. After two seasons in the NFL, Enyart injured a knee and had to leave professional football. Dick Fosbury ran for the state legislature in his home in Idaho and lost, and then died -- too young -- at age 76.

Mullen lives in Washington, D.C. and sent this photo of himself after he dug his car out of the snow. A small victory, until the next deep snow.

Guest Post by Jack Mullen

How to process the "Quad God'" meltdown at the Winter Olympics?

It was hard, not only for me, but for many, to explain the stunned emotions we felt as we watched Ilia Malinin, USA’S face of the Olympic Games, truncate his long program, stumble and fall multiple times, and finish eighth in the men’s figure skating competition.  

But my sadness switched to pride as an American when Ilia handled disappointment with grace and humility.

The pressure a 21-year-old feels to perform, solo, in front of a captivated live audience, along with millions on world-wide television, must be immense.  Ilia did not shy away from the many interviews in which he acknowledged the mental part of his performance that overwhelmed his years of practice and mastery of the sport. Indeed, he showed maturity beyond his years.

As I went to bed on Friday, the 13th, I realized I knew of a certain 21-year-old, a childhood friend growing up with me in Medford, Oregon, Dick Fosbury, who, somehow met his Olympic moment in front of 80,000 fans at the 1968 Olympics in Mexico City. Foz not only won a gold medal but entered the history books by revolutionizing his specialty, the high jump, in ways unimaginable at the time. 

How did Dick Fosbury meet the moment and change how athletes high jump?

Corvallis, Oregon, June 1965

I grew up with Dick Fosbury.  We both arrived in Roosevelt grade school in the third grade – Dick from Portland and me from Missouri.  Our fathers both landed jobs at Haupert Tractor Company.  Foz, or Fosdick as he was called then (nicknamed after a character the Lil’ Abner comic strip), engaged, like many Medford kids of that era, in multiple sports. We were teammates in football, basketball, track and even baseball from the fifth grade through high school.  None of our friends or teammates took any notice of Fosbury developing mental toughness.  How could we? He was awkward, dropped passes I threw him in football and basketball and never seemed to improve.  

The only sign of any athletic ability came between the fifth and sixth grade at Roosevelt when he improved from high jumping 3’10” in the fifth grade to 4’6” in the sixth grade.  Four feet was the magic barrier that I couldn’t conquer. Fosdick left all of us sixth graders in the dust.

Early in high school, Fosbury plateaued while clearing the height of 5’4”, that is until in his sophomore year, at a meet in Grants Pass. There, he ditched his scissors and roll style and went over the bar sideways-backward, improving six inches to 5’10’, his new personal best.

Dick Fosbury’s unique sideways-backward style garnered local attention, even a UPI photo spread around the country, but not much else until he arrived in Mexico City as the third qualifier on America’s Olympic high-jumping team.

Not many of the 80,000 plus fans at the estadio Olimpico had ever witnessed someone leap over the high-jump bar backwards. YouTube shows the crowd laughing and cheering each time Fosbury jumped. Dick Fosbury jumped to a 7’4 ¼ Olympic record height.  His style of jumping, known as the "Fosbury Flop," is now the universal style of high jumping. 

Dick Fosbury obtained instant world-wide fame from his unique Olympic win. The adulation was overwhelming.  I suppose to try to feel grounded he came from Corvallis, where he was still a student at Oregon State, to visit me at my fraternity house at the University of Oregon. He was the same, easy-going Dick Fosbury I knew before. What I recall from that visit was that he said he treated jumping in the Olympics like any other track meet.

The Olympic moment wasn’t too big for Dick Fosbury. I only wish that in Ilia Malinin’s mind, he was competing at any other event and not in front of the world. One lesson Ilia Malinin left us with is that, after all, we are all just humans.



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Saturday, February 14, 2026

Conservative media is not happy with Trump

Old-school conservative media dislike Democrats on principle. 

But they don't like Trump on principle, either.

Old-school conservatives are not MAGA.

Most right-wing media is Trump-cult populist. They are cheerleaders, with an audience to coddle. These media include Fox News, One America News Network, Newsmax, Breitbart, The New York Post, The Daily Wire, and 99 percent of material on social media, including Trump's posts on Truth Social. These are not conservative; they are Trump.

The Wall Street Journal and Reason magazine are old-school conservative. The WSJ is well known as a newspaper of business, but it also reports on, and editorializes on government. Reason magazine is libertarian in outlook. It publishes six to 12 news-opinion articles a day. The WSJ is internationalist in outlook, seeking global business prosperity and American engagement with the world. Reason voices the isolationist, mind-our-own-business segment within American conservatism. Both the WSJ and Reason represent policies and tone that would be familiar to small-government, low-tax, separation-of-powers, pro-business, states-rights federalism that characterized the GOP from the end of World War II until the Tea Party, Sarah Palin, and Trump.

This morning's WSJ has this newsy editorial, publishing facts well-hidden from consumers of Trump-friendly populist media:
Click: gifted article

Trigger warning to Republican readers: The editorial is heresy. Trump is lying to you:
No matter how often President Trump insists his tariffs are taxing foreigners to enrich the U.S., economic studies keep showing that Americans actually pay the bill. On Thursday it was the New York Federal Reserve’s turn. In an analysis on the bank’s website, four researchers write that last year “nearly 90 percent of the tariffs’ economic burden fell on U.S. firms and consumers.” . . . 

The figures for November suggest the tariffs had “an 86 percent pass-through to U.S. import prices,” the researchers say. “Our results show that the bulk of the tariff incidence continues to fall on U.S. firms and consumers." . . . 

Don’t forget the economic dynamism that’s wasted when companies devote time and talent to reacting to Mr. Trump’s mercurial tariff whims, or hedging against them, or trying to guess what the next one might be. The tariffs are economic losers, and in November voters may show they’re political losers too.

Reason magazine can be summarized by sharing yesterday's daily email, which listed the day's articles. All eight articles object to Trump's policies. The links are live, but simply scanning the titles of the articles reveal their drift. Reason magazine is free and available to everyone.

The ATF Created a Backdoor Gun Registry. Lawmakers Want an Explanation.

Federal law bans the creation of a gun registry, but regulators made one anyway.

By J.D. Tuccille


Kristi Noem's Response to ICE Killings in Minnesota Exposes Conservatives' Double Standard on Gun Rights

The Second Amendment protects your right to carry a gun at a protest.

By Steven Greenhut


How Much Is Kristi Noem's Alleged Adultery Airplane Costing You?

If the DHS secretary is actually having a high-flying affair with Trump adviser Corey Lewandowski, the taxpayers are the ones getting screwed.

By Eric Boehm


The Feds Used Threats To Silence Their ICE-Tracking Speech. Now They're Fighting Back.

A lawsuit argues that Pam Bondi and Kristi Noem coerced Apple and Meta to censor two popular ICE-monitoring tools, which violates Americans' right to freedom of expression.

By Autumn Billings


The Cowardice of the Republican 'Tariff Skeptics'

Finally given a chance to influence trade policy, the vast majority of House Republicans decided it was more important to keep President Donald Trump happy.

By Eric Boehm


A Federal Judge Explains Why Trump Can't Jail Legislators for Producing a Video That Offended Him

U.S. District Judge Richard Leon notes that Sen. Mark Kelly's comments about unlawful military orders were "unquestionably protected" by the First Amendment.

By Jacob Sullum


Trump's $10 Billion Lawsuit Against the BBC

A federal judge has set the date for the president's push to punish a news organization he dislikes, again.

By Reem Ibrahim


The El Paso Drone Scare Is the Future of National Security Paranoia

Fear over mysterious objects in the sky keeps disrupting society.

By Matthew Petti


The Wall Street Journal and Reason magazine generally reflect the values and policies of Barry Goldwater, Ronald Reagan, Bob Dole, the Bush presidents, and Mitt Romney. The Trump-GOP now rejects those presidents. They are RINOS -- Republicans in Name Only. The WSJ and Reason are RINOs, too.

The WSJ and Reason magazine are stranded, without a party to promote, but they have not capitulated to Trump nor given up. They are still embers of "conservatism."  Nearly all Republican officeholders and voters evolved from Reagan-Romney to Trump, loyal to the GOP brand not it principles. But the transition is not complete. There are still voices in the wilderness.



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Friday, February 13, 2026

How to launder money: a guide.

It is tax season.


You are watching the mail for your Social Security statement, your bank and brokerage reports, your 1099s, and the confirmation letters from nonprofit organizations verifying your charitable gifts.


The USA had a well-founded reputation for voluntary tax compliance. It was the law. The IRS had means to check up on you. And paying one's taxes was a cultural norm, the legal, patriotic thing for good Americans to do.

President Trump is eroding that public trust by flagrant self-serving grift: free planes, getting billion-dollar investments in his imaginary crypto coins, and his own tax returns that showed he paid exactly $750 in total taxes while living and spending like a billionaire. This week he adds a claim for a $10 billion settlement from his own IRS appointees, a settlement that will come to him tax free, which he can then publicly give away in an act of self-declared "charity." That would give him charitable deductions for use in eliminating billions of dollars in taxes on any taxable income his businesses generate that he could not hide in some other way. Clever! So generous!

In a 2016 debate, Hillary Clinton challenged him for his history of not paying taxes. Trump did not disagree. Instead, he explained: "I'm smart."

Trump encourages and enables a new norm for filing an honest tax return: Only saps pay taxes. He has fired the IRS auditors who audit complicated returns.

College classmate Erich Almasy's guest post is a mix of serious and satire. I consider it a version of Jonathan Swift's "A Modest Proposal." It is a commentary on the Trump grift and loopholes to hide money that Trump has inserted into the law. Erich does it in the form of instructions on how to be just as cynical, dishonest, and unpatriotic as Trump. Erich and his wife Cynthia Blanton, also a classmate, live in San Miguel de Allande, in Mexico.
Almasy

Guest Post by Erich Almasy
Money Laundering

Do you have an illegal business somewhere in the world that generates a lot of cash? Need to find a place to put it where it can earn even greater Ill-gotten gains? I have just the place for you. It’s called the United States.

"What?" you say. How can that be? Isn’t the United States a country of laws? Doesn’t the FBI force Swiss banks to reveal miscreants like Bernie Madoff? Doesn’t the Treasury Department require a filing by banks of any suspicious transactions involving over $10,000 in cash? Isn’t the DEA going after drug cartels and dealers who amass huge amounts of cash? Hasn’t the United States Congress placed sanctions on Russian oligarchs? Didn’t the U.S. discontinue denominations over $500 in 1969? Well, yes, but that hasn’t stopped any and all of these people from laundering money here in the good old United States. How, you ask? Let me count the ways.

*** 1. Real Estate: Until the Biden administration, real estate transactions in the United States did not require disclosure of the beneficial owner. They could be bought by numbered or shell corporations. One estimate claimed that more than 1,300 (over 20 percent) of all the Trump Organization’s condos were purchased this way. In 2017, USA Today reported that more than 70 percent of Trump properties sold in the previous twelve months went to limited-liability companies, whose owners’ names were not disclosed.
 
The United States was not the only country with this situation. In Canada, specifically British Columbia, nearly 40 percent of property in Vancouver had no listed owner other than a company. A new publicly searchable database established under the Land Owner Transparency Act (LOTA) ended this opacity. However, in the United States, the Corporate Transparency Act, which does the same, was suspended by the Trump Treasury Department in March 2025. Trump also canceled the Anti-Money Laundering rules that required real estate professionals to report on all-cash transactions involving legal entities or trusts. So, it is safe to park your illegal cash in real estate again. 


*** 2. Cryptocurrency: Technically, purchasing crypto is not anonymous but “pseudonymous” since all transactions are supposed to be recorded on a public blockchain ledger that could theoretically be traced to a bank account or name. Major platforms, such as Coinbase and Robinhood, even have KYC (Know Your Customer) rules. However, decentralized exchanges (DEXs) often use Uniswap or PancakeSwap, which do not require user accounts. Bitcoin can be purchased anonymously through ATMs. P2P (Person-to-Person) marketplaces offer direct purchases with no-name transactions. Privacy coins are cryptocurrencies designed to be anonymous. The large number of crypto transactions that appear to be made through the Tor browser on the dark web suggests a desire to mask and launder funds. The vast majority of respected economists believe that crypto’s sole purpose is to launder money. But, hey its legal. I know this because Trump, his sons, and his administration say so.
*** 3. Venture Capital: Private Equity, and Hedge Funds: Got a spare $20+ million lying around that you don’t want anyone to trace? Just set up a numbered corporation through a bank account in the Channel Islands or in the South Pacific island country Vanuatu, and invest in a private equity fund. By law, private equity funds are not required to disclose their funding sources publicly. Theoretically, they must comply with anti-money laundering (AML) laws, but there are significant loopholes, such as offshore private vehicles, like the one we just set up. Venture capital firms and hedge funds are covered by pretty much the same rules.

With this primer, you can now launder money: Set up a Middle Eastern private equity fund; create your own cryptocurrency fund, coins, and laws; and sell real estate to the Russian Mafia. Just as your favorite politicians do.



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Thursday, February 12, 2026

Crime down in 2025

Crime dropped between 2024 and 2025. That is good for America.

It is also a pending political problem for Democrats.

Trump will take credit for the drop.

I expect to see more charts like these in Republican ads this fall:

Sharp drop last year in homicides


And this one, charting a drop in all crime categories:

Drop in all crime categories in 2025

Crime data is complex and cannot be summed up by a simple statement that crime declined immediately after Trump took office. Crime has been trending down from the Covid years of 2020 and 2021. Closed schools and businesses, and a country in lockdown, created idle hands so crime rates peaked. 


Moreover, Canada showed the same trend, and Trump can't take credit for that.

Source: Major Cities Chiefs Association

Trump is already selling the message that rough policing and removing immigrants are responsible for reduced crime. It will be a persuasive message if Democrats fall into the trap of being defined as anti-police. 

Trump succeeds by being a fierce partisan with blunt, absolutist positions -- tariffs on every country, pardon all J6 criminals, deport everybody here illegally, climate change is a total hoax, "wonderful clean coal," and don't wait around for consultants, just bulldoze the East Wing of the White House because he can. To the delight of his base, Trump isn't nuanced.

Tempting as it is for a Democrat to be the opposite of Trump on crime and immigration enforcement, that is a fatal misstep and exactly what Trump wants. He wants Democrats to be his opposite -- in other words -- to favor open borders, and ignore street crime, lawlessness, and disorder. It is going to require some courageous and deft Democratic candidates and message-leaders to voice a middle ground of better policing. It will require a message of nuance. 

Democrats face a test. Is there someone among the potential candidates for president who sees the requirement to be not-Trump, while avoiding being Trump's policy opposite. There is a middle-ground in the U.S. that wants ethical, professional policing, and which wants immigration to be well-regulated and some -- maybe many -- current immigrants to stay. But not all of them. Americans do want some deportations. It will require the oratorical skills of a Bill Clinton or Barack Obama. It will take someone who can take a position that seems to meet voters where they are: angry about ICE, but smart about it. It won't be the kind of position that gets enthusiastic clicks. It will seem mushy. Nuance and moderation looks weak when Trump is shaping the issues. 

That Democrat has a difficult task, and angry voices within the parry will make the task harder. A Democrat who can succeed in this environment would have rare political talent that I do not see quite yet on the party's bench. It may be there. I hope so. The situation requires it.



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Wednesday, February 11, 2026

Watergate déjà vu

"If you took all the girls I knew when I was single
And brought 'em all together for one night
I know they'd never match my sweet imagination
Everything looks worse in black and white."

   
    Paul Simon, "Kodachrome," 1973

I remember the Watergate era, 1972 to 1974, as a story with a happy ending. 

American democracy was preserved. Justice was done. Republican senators did the right thing and told Nixon that he had crossed the line, and must leave. Nixon's co-conspirators went to prison. This memory isn't my "sweet imagination." Things really did work out for America.

The Epstein matter is in progress. The outcome is unknown. Reality feels gritty and sleazy. Real life plays out in black and white.

The Epstein matter reminds me of Watergate. Both instances start with denial by the president.

The Watergate and Epstein denials fell apart because some people were caught, proving something needed explanation. Police arrested men who were burglarizing the Watergate offices of the Democratic Party. The men had incentives to talk.  Ghislaine Maxwell faces almost 20 more years. She had a story to tell. The coverup required keeping people quiet and documents secret.

In both instances the crime was too awful to confess. Nixon's campaign burglarized the DNC on instructions from Nixon's top people. That is a felony. A high crime. Donald Trump is up to his eyeballs in evidence showing he was part of Epstein's circle of participants in sex play with underage girls. 

The "limited hangout" approach failed in both cases. The slow dribble of revelations preserves the drama in an unfolding mystery. A metamessage emerges, that the president is fighting to hide the truth. He must be guilty of something. Nixon needed to claim "I am not a crook." Trump is in the same position, slowly retreating behind the moving wall of new revelations.

Trump is losing credibility, even with deep MAGA believers. People see things. Images of Trump and Epstein ogling women at a party. Emails and documents mentioning Trump. Video footage showing Trump bragging about behavior and desires that fit the Epstein narrative. It looked bad twenty years ago.

It looks very bad in the context of the Epstein revelations.

Click: One minute

We don't yet know exactly what Trump is guilty of, but it is undeniable that Trump was deep inside a culture of sexuality and privilege of wealthy men with young girls.

The Nixon and Trump presidencies lost critical public support because the public was offended by a matter of personal behavior. Evidence that Nixon had corrupted the Department of Justice, the FBI, and the CIA didn't move the needle of support. Knowing that Nixon swore casually and frequently, did. Nixon leaned on people's respect for the office, if not himself personally.


Americans of polite sensibilities, good Republican churchgoers, were offended that Nixon swore in a sacred space.

Trump's well-established dalliances with models, beauty queens, and porn stars did not have the creepy illegality of sex acts with 12-and-13-year-olds, and this week, a new email the addition of a nine-year-old to Epstein's harem. The revelations passed a tipping point. Wyoming Senator Cynthia Lummis (R) announced that the news about models in their young teens had her questioning "what the big deal is?" Now she says she knows. A nine-year-old victim crosses the line for her.

John Dean narrated the story of Nixon's involvement in the immediate aftermath of the Watergate burglary. Ghislaine Maxwell is no John Dean. Her incentive is to lie, but the open quid-pro-quo "I will absolve you, President Trump, if you pardon me" is so open that it has no real value other than to document that Trump would happily corrupt the pardon power for personal gain. Both cases rely on documents, not testimony. Watergate had tapes. Epstein has emails, texts, and videotape. The documents paint a picture that even a Wyoming Republican officeholder cannot ignore.

I would have preferred that Trump lose credibility and power because of his crimes against democracy. That is his affront to the republic. Maybe Republican officeholders and Fox News viewers will rediscover that they care about laws and the Constitution and limits on presidential power once Trump is gone from office. But for now, the Epstein revelations that Trump is even sleazier than people realized is a catalyst for Trump's losing public support. It will serve.



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Tuesday, February 10, 2026

The dollar has lost value.

Americans have gotten poorer. 

The dollar buys less in the marketplaces of the world than it did a year ago.


This is a five-year chart of the U.S. dollar. It rose as the U.S. recovered from Covid shutdowns and hit a high at the end of Biden's term. It has fallen 10 percent since Trump's inauguration, with a sharp fall after Trump announced "Liberation Day." tariffs.

A falling dollar helps some people and hurts others. An economist sorts this out in a guest post.

Jim Stodder is a college classmate. After his junior year, he left college for a decade to knock around as a roughneck in the oil fields. Then he returned to formal studies and received a Ph.D. in economics from Yale. He taught international economics and securities regulation at Boston University. He has his own website at www.jimstodder.com.

Stodder

Guest Post by Jim Stodder
                       The Dollar Matters

The U.S. dollar has fallen by about 10 percent relative to major currencies since Trump’s 2025 inauguration. As we will see, there are good reasons for this. The currency markets bet “real money” – trillions wagered on the future value of the greenback. The dollar regained a few percent with Trump’s late January announcement of Kevin Warsh as his choice for Fed chairman when Jerome Powell’s term ends in May. But many commentators are concerned that Warsh may be swayed by Trump to cut interest rates, despite his previous reputation  as a monetary "hawk" – i.e., tough on inflation.

Most Americans earn their dollars through labor, and want them to be worth as much as possible. That’s why the Trump administration – and every U.S. administration – announces a “strong dollar” policy. That is usually BS, because most U.S. exporters benefit from a cheaper dollar. Trump, who is very pro-manufacturing, understands this, but he can’t say it too loudly. So he lets Scott Bessent, his treasury secretary, go on about our strong dollar policy.

Yahoo Finance

 Most U.S. exports – goods and services – have exchange rate sensitivity (economists call it an exchange rate elasticity) greater than one. This means that if the value of the dollar goes down by one percent, the quantity of U.S. exports goes up by more than one percent. Recent estimates of exchange rate sensitivity of demand for U.S. exports are much greater than one in the long run – between 1.75 to 2.25.

You might think that means that the U.S. trade deficit will shrink – and that is what Trump clearly believes. But this ignores the effect on imports. With a weaker dollar, imports will cost the U.S. more. Good, you say, then we’ll buy less of them. But some imports are vital inputs that are too important to do without (like Chinese rare earths). So a weaker dollar’s effect is ambiguous, and recent studies show it does not improve the U.S. trade deficit.

I taught international economics for many years to aerospace engineers in big companies, including United Technologies, Sikorsky, and GE. They understood their jobs will be more secure and their salaries will grow if the U.S. dollar got a bit weaker. Not only does it help such companies’ exports, it also pushes up the dollar value of their foreign investments. Let’s say GE has a plant in Poland worth $10 billion where it makes turbine blades for its jet engines. If the U.S. dollar loses half its value, that plant is now worth $20 billion. More U.S. inflation would be a small price to pay!

When Trump yells about the Fed keeping interest rates too high, he knows perfectly well – as does everyone on Wall Street – that a lower interest rate almost always means a weaker dollar. That’s why Trump’s pestering Fed Chairman Powell for not cutting rates has spooked financial markets this year. Foreigners won’t want their savings in U.S. dollars if that currency is falling or likely to fall – and neither will an American who has other options.

Big international banks like Citibank and Goldman Sachs have a more complicated relation to the value of the dollar than do export manufacturers. Whatever they gain from the rising value of U.S. exports they are likely to lose even more from lower foreign investment in the U.S.

This is especially true because the U.S. has run an overall trade deficit since the early 1990s. Trade deficits mean we have to pay for those goods and services by selling financial assets to foreigners and/or by borrowing money from them. This is contrary to the intuition of most Americans, but it is a consequence of the strong dollar – strong enough to be the main reserve currency for most countries.

Think about it – if another country keeps most of its foreign exchange (or FX, as the financial bros say) in U.S. dollars, that usually means it’s selling more to the U.S. than it buys from the U.S. The world as a whole has a big surplus with us, so about 60 percent of all FX reserves are in dollars and nearly 90 percent of FX transactions use dollars, even if only as the "middle term" between other currencies.

So Trump faces an obvious conflict around the U.S. dollar. On one hand, he wants a weaker dollar to promote U.S. exports and (he hopes) shrink our trade deficit. On the other hand, he wants a strong dollar because it gives the U.S. power over other countries - like the assets of Russia or Iran frozen by the U.S. Those assets are largely in dollars, even if they are stashed in European banks.

Faced with this conflict, Trump’s loyal economists have different ways to "square the circle." Take the “Mar-a-Lago Accord” of Stephen Miran, a Trump appointee who just left the Federal Reserve Board. This would involve either taxing foreigners for the privilege of holding U.S. Treasury bonds, or else forcing them to convert the U.S. bonds they hold – mostly with maturities less than 30 years – to ultra-long maturities of up to 100 years.

Either of these means lower net payouts on those bonds – an explicit breach of their contract with the U.S. So this would have to be forced on them by threats. Some "accord!" It’s just one more way Trump is ripping up the worldwide military and economic alliances the U.S. has built over the last 80 years.

A final word about the short-term prospects of the U.S. dollar. Dollar FX may decline, but no foreign currency can take its place in the near future. The Central Bank of China controls the yuan’s value too closely and won’t allow it to exchange in large amounts. So, it’s no good for big international settlements. The Eurozone economy is about 75 percent as big as the U.S., but its bond market is about 1/3 the size. And the bond market of its biggest economy, Germany, is about 1/10 the size. 
So, as Margaret Thatcher used to say, “There is No Alternative” -- The world is stuck with the dollar as the reserve currency, at least for now. But Trump’s weakening of the U.S. dollar is still weakening something else – our nation as a whole.


 

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