Rule of law. It matters. In fact, it’s the only thing that matters in the final analysis.

I’m not sure if this has occurred to investors, or if it has, whether they’ve made the connection between immigration policy and markets, but part and parcel of the Trump administration’s strategy for curbing illegal immigration is making the US look like an undesirable, indeed a dangerous, place to live.

Here’s how Caitlin Dickerson, a Pulitzer Prize-winning journalist who covers immigration, put it during a January 23 interview with Ezra Klein:

The rule of law is a huge part of what makes the United States the most attractive country in the world for migration. And when you turn on the news and you look at what’s happening in the United States right now, it doesn’t look like a place where the rule of law is still in effect. There’s a lot of violence in the streets right now. I think that is having a significant impact on the number of people who are crossing the border. You’re not going to seek safety in a place that doesn’t look very safe.

Change a few words here and there (e.g., “The rule of law is a huge part of what makes the United States the most attractive country in the world for migration investment“) and that’s a pitch-perfect assessment of why the Trump administration’s domestic agenda poses an existential risk to the dollar and US Treasurys.

That was the subject of the latest Weekly in which I wrote, of Donald Trump’s penchant for chaos, “By the time you read this, the administration will have made headline news several more times, I guarantee it.”

About an hour after I penned those lines, video of ICE agents shooting another protester in Minneapolis spread like wildfire on social media. By Saturday afternoon, the administration was knee-deep in yet another crisis with ramifications for a must-pass funding bill.

Even if another government shutdown’s ultimately averted, the fact that we’re here again barely two months after the last shutdown is a testament to the political dysfunction Moody’s and Fitch cited while downgrading the US in 2025 and 2023, respectively. And the circumstances — the second broad-day killing of a US citizen by immigration officials in three weeks — are wildly inconsistent with what investors expect out of a stable democracy.

Early Monday, I cited the US economic policy uncertainty index while editorializing around gold’s ascent above $5,000. In that piece, I used the daily EPU series. Here’s the monthly series:

The towering spike’s obviously “Liberation Day,” but note that even in December, the post-“Liberation Day” low point, the EPU still registered 284, higher than virtually any other print excluding those around the onset of COVID looking back 125 years.

It’s a decent bet that measure will move up in January considering everything that’s happened this month. This index is based on the occurrence of terms like “uncertainty” and “economy” with one or more of the following terms: “Congress,” “legislation,” “White House,” “regulation,” “Federal Reserve” and/or “deficit.”

The dollar slipped on Monday to the lowest since before the September 2022 “wrecking ball” days (i.e., the harrowing stretch during which a hawkish Fed torpedoed the yen, euro, yuan and sterling, which was also beset by the Liz Truss debacle).

Since Trump took office this time last year, the dollar’s down almost 10% on everything from erratic US trade policy to — and even as someone who’s long warned of such things, it still feels surreal to say this — the threat of a criminal indictment for Jerome Powell.

Some of Monday’s dollar weakness was of course attributable to the prospect of coordinated intervention between the US and Japan to prop up the flailing yen. But that’s small comfort in the context of the bigger story because it put “Mar-a-Lago Accord” back in the headlines and all that entails.

Remember: The Mar-a-Lago Accord idea emanated from none other than Stephen Miran, Trump’s man on the inside at the Fed, who dissented in favor of upsized, half-point rate cuts at each of the three policy meetings he attended late last year, despite inflation running a full point above the Fed’s target.

The strikes against the US dollar and Treasurys are now too many to count. Pretty much the only thing keeping the system from imploding is the demonstrable lack of an alternative. But — and this brings us full circle — if the rule of law weakens enough in America, the lack of alternatives won’t be as much of an impediment to de-dollarization as it is in every other context.

To quote the above-mentioned Dickerson, “When you turn on the news and you look at what’s happening in the United States right now, it doesn’t look like a place where the rule of law is still in effect.” Investors, like immigrants, aren’t “going to seek safety in a place that doesn’t look very safe.” Just ask the biggest gold rally in modern history.