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Berlin’s Biggest Rearmament Since the Cold War

Posted July 21, 2025

Matt Insley

By Matt Insley

Berlin’s Biggest Rearmament Since the Cold War

Germany’s ruling coalition fell apart at the end of 2024.

When voters showed up in record numbers for a snap election in February 2025 — 82.5%, the highest turnout since reunification — it was clear the public wanted change.

Friedrich Merz and his Christian Democratic Union (CDU) seized the moment, winning a narrow victory.

As Jim Rickards, Paradigm’s macro expert, observes: “When a country faces political fracture and economic stagnation, it’s a sign the system is reaching its breaking point.”

Jim nails the root cause: Germany’s economy is running on empty.

“They’ve hollowed out their industry, outsourcing engines to Hungary, just like the U.S. sent manufacturing to Mexico and China. The reason? Energy costs are simply too high.”

And it’s no coincidence that this crisis follows the sabotage of the Nord Stream pipelines in 2022, which cut off cheap Russian gas supplies. “Germany’s self-inflicted energy crisis killed its industry,” says Jim.

The fallout has been ruthless. Jim calls out the so-called “Green New Scam” for pushing up energy costs and shuttering factories.

That combination, he says, has shrunk the middle class and fanned political unrest: “When policy failures devastate an economy, don’t be surprised when voters turn to alternatives — sometimes far from the mainstream.”

Your Rundown for Monday, July 21, 2025...

The End of an Era: U.S. Defense Freeloaders No More

Jim sees the global picture: the model of globalization that shaped the post-Cold War world is now fraying.

“Globalization’s triumph over nationalism is energizing a nationalist revival as nations reassess their own interests,” he notes.

Enter Chancellor Friedrich Merz, who is steering Germany in a new direction. Merz isn’t interested in following the traditional pro-American path.

His top priority? “Strengthen Europe as quickly as possible so that, step by step, we can really achieve independence from the USA.”

At the same time, Merz questions NATO’s future, calling for a stronger European defense and warning that ongoing U.S. tariffs could cost Europe $408 billion in the next four years.

On the defense front, Merz is direct: “We know we have to do more on our own and we have been free-riders in the past.”

Jim agrees, while reminding us that “NATO is only as strong as its weakest member.”

NATO’s cracks are showing, and if Europe doesn’t step up, the alliance risks unraveling altogether.

Now, Germany is embarking on its most ambitious military rebuild since the Cold War, backed by constitutional reforms to allow massive borrowing.

As Jim summarizes: “The days of Europe riding America’s defense coattails are ending. A more sovereign Europe, for better or worse, is emerging.”

Germany’s political and economic shifts aren’t just local; they could reshape transatlantic relations and the future of globalization.

Market Rundown for Monday, July 21, 2025

S&P 500 futures are up 0.20% to 6,345.

Oil is up 0.15% to $67.44 for a barrel of WTI.

Gold is up over 1% to $3,395.40 per ounce.

But Bitcoin is down 0.15% to $118,775. 

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