The latest CPI numbers came out for May 2026, and it wasn’t a pretty picture.  The CPI went up 0.5% in the month of May.  It spiked higher to an annual price inflation rate of 4.2%.  This is more than double the Fed’s supposed target of 2%.

We can blame the war against Iran for some of this spike in higher prices.  We obviously feel it at the gas pump.  But before you fully blame the inflation problem on the war, consider that even the CPI less food and energy was up 0.2% for the month.  The CPI less food and energy now stands at an annual rate of 2.9%.

So, even taking out food and energy, we are still at 2.9%.  This is interesting, but there is no reason to take out food and energy when considering the hurt it is doing to the average American.

With this news, gold and stocks went down in price.  Both already had a rough week, so maybe it is just a continuation of that.  But the prospect that the Fed cannot lower its target rate – and might even have to consider raising it – does not bode well for asset prices.

Several years ago, the Fed announced that it wanted to average 2% over a period of time instead of just targeting 2%.  But they never specified over how much time, and this was said when consumer prices were supposedly going up less than 2%.  Now that price inflation is above 2% (and has been for several years), we don’t hear about this averaging any more.

When the Fed was lowering rates in 2024 and 2025, Powell kept saying that we were on target to get to the 2% inflation mark.  How’s that working out?

Good Luck, Warsh

Kevin Warsh just assumed the position of Fed chair on May 22, 2026.  He hasn’t been in there a month, and he already has a disaster on his lap.

It seems almost impossible at this stage that the Fed would lower its target interest rate.  But that is what Trump has been calling for.  It is what Trump was hounding Powell for.  Remember all of Trump’s insults and name calling towards Powell.  If anything, it seems Mr. “Too Late” Powell was too late in hiking rates.

While the economic conditions are devastating for the American people, and will continue to get worse for now, it will be hilarious to watch Trump become even more unhinged.

Trump reminds me more of Biden every single day, and it isn’t just because of the mental decline.  Like Biden, Trump thinks if he can just repeat something often enough, then it will just be assumed to be true.  Biden kept repeating “safe and effective”.  Biden would tell us that the economy was doing well.

Trump says we have beaten Iran.  Trump keeps saying that we are the hottest country and that the economy is doing great.  After the CPI numbers came out today, Trump said that inflation would fall like a rock as soon as the war is over.

Even assuming this were true, what if the war isn’t over for years?

What is Trump going to do when the economy is doing terrible and the Fed can’t feasibly lower rates because inflation is running high?  That is the situation we are in now except the economy could get far worse.

Will Trump start attacking Warsh just as he did with Powell?  Trump appointed Jerome Powell in his first term, but it didn’t stop him from attacking Powell when it became convenient.  If Trump immediately starts attacking Warsh, it won’t be a good look for Trump.  Of course, not much is a good look these days for Trump.

What if There is a Recession?

The stock market has still been hitting all-time highs recently, in spite of the war against Iran and the higher oil prices.  But there has also been a lot more volatility.  The American middle class is not doing nearly as well as the stock market, but even the stock market may not hold up much longer.  Some of this will depend on the actions from the Fed.

We seem to be getting closer to a 1970s type situation of stagflation.  What happens when the economy starts going into a recession but the Fed can’t easily lower rates because of price inflation?

Does the Fed just ignore it and allow the rate of price increases to potentially go even higher?  Does the Fed fight inflation (which it helped cause) and actually allow a deep recession?

This is also where the spending and debt burden become a major problem.  The Fed has returned to mild monetary inflation at this point.  Does Warsh and the Fed even have an option of being like Paul Volcker in the early 1980s and having a really tight monetary policy?  What would this do to the exploding debt and the interest payments?

This is why the American middle class is going to continue to struggle for the foreseeable future.  We need a drastic reduction of federal spending, which is nowhere in sight.  We need a drastic reduction in regulations.  We need a somewhat stable monetary policy to stop the continued price inflation.  Thomas Massie was fighting for these things, and the voters are kicking him out of office.

We certainly shouldn’t count on any politicians or Fed officials to make things better.  We can only hope that they won’t make things dramatically worse.

I once thought that, if only a libertarian could get a national audience to deliver a libertarian message, then we could really move the country into a libertarian direction.

Perhaps I was a bit naïve.  But I wasn’t completely wrong either.  Our country has shifted slightly in a libertarian direction.  Unfortunately, the policies coming out of Washington DC generally do not reflect the subtle change in public opinion.

My theory was put to the test.  It was shortly after I thought this that Ron Paul ran for president as a Republican in 2007.  He really did get a national audience because he was permitted in most of the debates.  His total talking time was generally just a few minutes in each debate because of the size of the field and a favoritism towards letting certain candidates talk more.  Still, he had a little time to deliver a libertarian message to a national audience.

One could argue that the majority of people didn’t watch the debates.  It could be argued that Ron Paul didn’t have the name recognition that some of the other candidates had.  But for anyone who cared to pay attention, the message was there.  In interviews, Ron Paul would often cite books, authors, and websites as a reference.  Where else on national television would you hear references to Austrian school economics?

From 2007/ 2008, we got the Ron Paul revolution.  It was a revolution of ideas.  He ran again in 2011/ 2012.  When you couple this with the growth of the internet and social media, there is no excuse for almost anyone to not be familiar with libertarianism.

Maybe the Libertarian Party hasn’t always been the best representative of the libertarian philosophy, but again, anyone who has any curiosity and does any research can become quite familiar with libertarianism.

Moving the Needle

The Ron Paul revolution made a difference.  There was definitely a small segment of the population who turned to libertarianism and never turned back.  It may be 2% of the population.  It may be closer to 5% of the population.

Even more, it moved the needle in public opinion in other ways without necessarily fully converting people to libertarianism.  Ron Paul’s campaigns called attention to the Federal Reserve.  He laid the groundwork for making it acceptable to be a Republican and oppose war.

In many ways, Ron Paul set the stage for Trump’s somewhat anti-war message in 2015/ 2016.  Trump was able to say on a debate stage that Bush lied us into war in Iraq.  This was during the Republican primaries.

There is now a certain faction on the political right who oppose Trump’s war in Iran.  While it is depressing to see how many right-wingers have just gone along with Trump and the Fox News talking points about Iran, it is at the same time encouraging that a portion of the right is still opposed to war.

The Depressing Parts

I know several people, including at least one closer friend, who were all-in for Ron Paul in 2007/ 2008.  Yet, I would no longer consider them to be libertarian in any significant way.  The crazy thing is that I see these people go in completely different directions.

I have seen several people who supported Ron Paul who are now total leftists.  And I don’t just mean libertarians who identify more with the left than the right.  I mean they are leftists without much libertarianism at all.

I also know people who supported Ron Paul who are Trump/ MAGA supporters.  And I don’t just mean they voted for Trump.  I mean that they still ardently support Trump, even after the war against Iran started.

This is depressing indeed.  Maybe it is a testament to Ron Paul on how he was able to bring people together.  In some ways, it shows that a lot of people are seeking honesty and someone who is real.  That’s the good news.

The bad news is that these people don’t really have libertarianism in them.  I, personally, don’t understand how someone could have been so supportive of Ron Paul and his message at one time and now completely abandon the philosophical principles that Ron Paul preaches, even to this day.

It just shows that there is something to the argument that only a small percentage of the human race is disposed to libertarianism.  I’m sure you know people who are libertarians who have siblings who do not share their political views.  We are all exposed to different and unique experiences in our lives, but there is no question that your genetic makeup plays a role in your politics.  Some people will never be libertarians no matter how much evidence and persuasion is involved.

Getting More Liberty

The other piece of good news is that we don’t need a large percentage of the population to adopt libertarianism to at least move in a more libertarian direction.

You can convince a majority of people that the U.S. government shouldn’t be going around starting unprovoked wars.  It doesn’t mean that people will generally favor an end to all government welfare.  It doesn’t mean that they will advocate for a total split between education and the state.

The reality is that most people will never be hardcore libertarians.  They just don’t have the genetic makeup for it.  But we don’t have anything close to hardcore libertarianism in the United States or anywhere else in the world with a significant population.

You don’t have to be a hardcore libertarian to recognize that our government shouldn’t be bombing Iran, kidnapping foreign leaders, locking us up for a virus, and spending $7 trillion per year.

We can have a decent and mostly civilized society without adopting hardcore libertarianism.  Imagine how much better most Americans’ lives would be if the U.S. government weren’t fighting wars, funding wars, and creating money out of thin air to pay for it.  Imagine if the U.S. government spent half the amount it does right now and we had zero inflation.  Our living standards could be enormously higher than what we have now.

This does not mean we should abandon a hardcore libertarian message.  In some ways, it is more important than ever.  We should sell the benefits of liberty, but we should also appeal to people’s morality.  We shouldn’t be wasting money on missiles to attack Iran, but more importantly, our government shouldn’t be murdering people in Iran in our name.

We can gain far greater liberty by selling a libertarian message.  We don’t need a majority of the population to become libertarian, as that is probably not possible.  But we need that libertarian message to move people in that direction, and I believe it has already happened to some degree.

If you explore alternative media in the world of finance and economics, you probably see enough opinions about the U.S. dollar and its role as the world’s reserve currency.  There is certainly a lot of talk that the dollar is losing this status, and there are many reasons to believe this.

It has long been my opinion that the U.S. dollar is losing its status as the world’s reserve currency, but that it will happen slowly and without any one date marking the event.  I don’t think another fiat currency is going to replace the dollar, and I don’t even think that gold will return to its status as the world’s reserve currency, at least any time soon.  Central banks may increase their gold reserves, but gold will not function as a common medium of exchange any time soon.

Instead, we will just see no dominant money in the world.  If China and India want to trade, they will use yuan and rupees.  They don’t need dollars as a middleman.  This works as long as currencies are somewhat free floating.

The Numbers

One of the main statistics to look at when looking at the status of the U.S. dollar in the world is the amount of U.S. Treasury debt held by foreign countries.  Since World War 2, the U.S. dollar has been the dominant currency, and many foreign central banks want to have dollars for reserves.  Let’s look at the actual numbers.

The two biggest players of the 21^st century have been China and Japan.  Japan’s holdings have actually increased slightly over the last year.  It now holds about $1.2 trillion in U.S. government debt as of March 2026.

China, on the other hand, has steadily decreased its holdings.  It is down to about $650 billion.  If you look back to early 2022, China had over $1 trillion in U.S. debt.  It has slowly sold off some of this debt, or perhaps they just don’t roll over maturing debt.

Russia never held anything close to this amount, but over the last five years Russia has gotten rid of most or all of its U.S. debt.  This is no surprise given that the U.S. government froze Russian assets and heavily sanctioned the country.

You have to believe that Chinese officials see this and realize they are vulnerable to the same treatment.  Instead of announcing a major dumping of U.S. debt, the Chinese have just quietly and slowly reduced its holdings.

Japan

While the United Kingdom also owns nearly $1 trillion in U.S. Treasury debt, I am going to pick on Japan here.  It is hard to know what the Japanese are thinking.  Do they just not think that the U.S. government would do them harm (since nuking 2 cities in 1945)?

There is a lot to admire about Japan and the culture there.  There is very low crime, and from what I’ve heard the place is very clean.  It is obviously a technological giant.

From my perspective, the main problem with the Japanese culture is that perhaps they are too trusting and obedient.  This is the case when it comes to other governments, and it is also the case with their own government.  Of course, this is a problem everywhere.

The Japanese people obediently buy up debt from their own government in spite of the massive debt that has been built up.  Japan has almost defied economics by maintaining extremely low interest rates while continuing to inflate the currency and rack up massive debt.  They just need the people there to continually buy up more debt at low interest rates.  It is almost an exaggerated version of the United States in this respect.

There is probably a better chance that the Japanese will become a lot less trusting of the U.S. government (as opposed to their own government).  Maybe that has already happened, but it isn’t reflected by the government/ central bank holdings of U.S. debt.

If Japanese officials do decide to lighten the load, I expect they will do something similar to China and just let maturing debt go without rolling it over.  They can gradually reduce exposure to U.S. Treasury debt.

Conclusion

A chart of the major foreign holders of U.S. Treasury securities does not paint a clear picture for us.  Some countries are slightly increasing their holdings while others are decreasing.

Ultimately, it will be the U.S. government and the central bank (the Federal Reserve) that will determine the U.S. dollar’s status.  As of right now, it doesn’t look good.  There is no sign that the increasing spending, debt, and inflation are going to stop.

This could be painful for Americans in the short run as things get more expensive.  We already see that wages are not keeping up with consumer prices, and this is with the U.S. dollar still in relatively high demand throughout the world.

When foreign central banks finally do abandon U.S. Treasury debt and the U.S. dollar, it will be painful but necessary.  It might actually force Congress to get the fiscal house in order.  This obviously isn’t possible through electoral politics at this point.

I would be lying if I said that Thomas Massie’s loss in the primary didn’t bother me.  I wish I was writing this article in celebration of a Massie win against the establishment.

I feared that Massie would lose this one.  He was going up against a lot.  There have been allegations that there was voter fraud in this election.  I can’t completely discount the possibility of significant voter fraud, but the more likely explanation is just that an enormous sum of money was spent against Massie while Trump heavily campaigned against him.  Trump is not popular in general with the American people, but he is still highly popular (for some reason) amongst Republicans.

When Trump says that the 2020 election was stolen from him, voter fraud may or may not have made the difference.  But there is no question that the game was rigged against him when you have most of the major establishment media, pop culture, corporations, and even the government itself working against you.

The game was likewise rigged against Massie in this primary.  Ed Gallrein, his empty suit of an opponent who refused to debate, was funded by a few billionaires who care more about Israel than they do about Americans. His campaign was much like Biden in 2020, as he stayed in his theoretical basement.  At least Biden came out to debate.

It’s almost amazing that Massie got 45% of the vote.  It was the most expensive primary in history.  Trump spent more time bashing Massie than he has done with any Democratic congressional candidate.  He even sent Secretary of War Crimes, Pete Hegseth, out on the campaign trail to defeat Massie.  Again, it was completely rigged.

The Good News

If it weren’t for the Republican baby boomers, who sit there dutifully listening to Fox News and repeating the talking points, Massie would have won easily.

I hate to make an optimistic case based on the death of a large group of people, but let’s just say the trend is in our favor.  And we don’t have to wait for an entire generation to die off before we can gain any liberty.

We have to look at gains in liberty like compounding interest.  If you get 2% per year, it doesn’t seem like a lot, but it compounds over time.  Trump and his Israel-first backers had to pour a lot of energy and money into defeating Massie.  Massie still got 45% of the vote in a conservative district.

Also, I have been hearing about how the Trump-backed candidates have been doing well.  Yeah, this is in Republican primaries.  Wait until the general election where the Republicans are going to get destroyed.  It probably won’t happen in Kentucky’s District 4, which is very red, but it will happen in swing districts.

I don’t think I could ever vote for a Democrat, especially for national office, but I would consider making an exception in this case if I lived in District 4 in Kentucky.  It would be hilarious if the Republicans lost this seat.  Unfortunately, it is probably too red for that to happen.

Massie 2028?

There have been calls for Massie to run in 2028.  This could be for Congress, but it could also be for president.  It seems hard to believe that Massie could win the Republican vote for president in 2028 after losing a congressional primary.  But Massie is probably one of the few people at this point that could build a coalition similar to what Trump did in 2024, minus the hardcore war hawks.

If the Republicans get obliterated in the mid-term elections this November, which I fully expect will happen, it might change the views of some Republicans who are still holding on to Trump.

Trump is deeply unpopular outside of the Republican Party at this point.  Candidates are going to have to start distancing themselves for any chance to win in a general election.  And this is with an economy that is still humming along.

Imagine how unpopular Trump will be if price inflation continues to accelerate and we go into a recession or depression.  He might end up with an approval rating somewhere around 20%.

As of right now, Massie would not be able to pull off an upset in a presidential primary.  Let’s give it 2 years and see where we are.

The most important primary race of the year is on May 19, 2026.  It may be the most important Congressional primary of the decade.

The primary election for Kentucky’s 4^th Congressional District is where Thomas Massie is trying to retain his seat.  Massie is a Republican who votes mostly as a libertarian.  His Republican opponent is an establishment plant who won’t debate and won’t do any challenging interviews.

Donald Trump and his Israel-first backers are going “all in” on this race.  They will spend something like $10 million or more to try to oust Massie, which is an astounding amount for any election, let alone a primary.

Some say it is because Massie was the main pusher for releasing the Epstein files.  But it is probably a broader reason than that.  Massie has refused to be bought and paid for by the Israeli lobby.  He opposes war and the reckless spending.  This tells you a lot about where Trump stands.  Trump is expending more resources and energy in trying to defeat Massie than he is in trying to defeat any Democrat.

Therefore, it isn’t Massie’s one vote that bothers Trump and the war hawks so much.  It is the fact that he is calling out what is happening.

The Trump Influence

It has been pointed out that the Trump-backed candidates have generally been winning this year.  And some of those candidates may actually be better on some issues than their opponents.  This seems to point to a lot of influence by Trump, which is true.

Here’s the problem.  These Trump-backed candidates have been winning in Republican primaries.  They aren’t winning in the general election.  Some districts are so red that they will go Republican no matter who is on the ballot.  So, the primaries do matter.

But overall, I believe the Republicans are going to get wiped out in November.  Trump has betrayed his so-called America First agenda.  He has certainly betrayed any mention of bringing greater peace to the world.

Trump is still very popular within the Republican Party.  But that is barely one-third of the voting population.  Most Democrats and independents hate him.  There are libertarians and libertarian-leaning Republicans who voted for Trump in 2024 who don’t like him now because of all of his betrayals.

If you live in a solidly red district and get Trump’s endorsement, then you are likely to win.  But the people who are seeking Trump’s endorsement now are going to be running away from him in the general election.  And they may be running away from him completely in the future.

What’s at Stake?

The primary election is likely to be very close for Massie.  It is possible he may lose even after winning easily in past elections.

If Massie loses, it will show that elections can be bought.  It will show that the establishment media still has a great deal of influence.  It will show that the establishment still has a great deal of control.  Most unfortunate, it will show that a great number of Americans can still be fed propaganda with lies and that it works.

How can someone win a primary election against an incumbent by not debating and not taking any kind of real stand on any issues?  Apparently, it may only take Trump’s endorsement and a whole lot of money.

On the other hand, if Massie wins, it will be a victory for liberty.  It will be a victory for alternative media and against the establishment media.  It will give permission to Republicans in Congress that maybe they can and should start separating themselves from Trump.

Everything about Trump should be repudiated at this point.  He has shown himself to be a total liar and a war criminal.  He is anything but America First.  He is deeply unpopular, as he should be.

Thomas Massie didn’t need this grief.  He could have compromised his principles.  He could have just not pushed so hard on Epstein and toned down some of his criticisms.  But he didn’t.  He actually wants the American people to do better.  He actually has morals and principles, which is why Trump and the establishment oppose him.

I will be watching closely on Tuesday.  Let’s hope that Massie can pull through on this one and deliver a strong defeat to the ruling elite.

The latest consumer price inflation numbers came out.  The CPI was up 0.6% in April and now stands at 3.8% year-over year.  This is the highest it’s been since May 2023.

Before anyone quickly blames the higher price of oil, the CPI less food and energy came in at 0.4% for the month and 2.8% year-over-year.

So, even if you ignore the price of oil from the disastrous war in Iran, consumer price inflation is still running somewhat hot and is above the Fed’s supposed target of 2%.

This isn’t looking good for the Fed.  As I’ve explained in other posts, the price of oil alone shouldn’t drive consumer price inflation higher over a sustained period of time.  With consumers spending more on energy and gasoline, they will be forced to cut back elsewhere.

This could put deflationary pressure on other goods and services, but this is assuming all else remains equal.  The money supply rarely stays the same.

Real Wages

Along with the CPI report came news that the real average hourly wages for workers fell by 0.5% for the month.  Real wages are now down 0.3% on an annual basis.

How’s that for America First?  How’s that for Making America Great Again?

The average American is slightly poorer than one year ago.  And that is going by the government’s own data.

The military-industrial complex has gotten richer with the war in Iran and bombings and conflicts elsewhere. Some of the U.S. energy companies might be benefitting from the higher price of oil.

There are many people who are benefitting from foreign conflicts, higher oil prices, and even higher inflation.  The American people in general?  Not so much.

The average American is struggling while Trump and his war buddies are insisting that bombing Iran was really necessary because they were going to get a nuclear weapon by next weekend.

MAGA Approval

You have to give some credit to those who are still faithfully backing Donald Trump at this point.  They are not afraid to be completely humiliated and look foolish.  They just keep insisting that it is all part of a grand plan to make America great.  Trump is playing 10-D chess at this point, and nobody can understand it.

I’m not sure it would have been possible for someone to have mapped out a worse plan for Trump at the beginning of his second term.

I can just imagine one of his advisors: “Here’s the plan.  We’re going to bomb at least 7 countries in your first year back in office.  We are going to drastically increase spending and the debt even though DOGE will have identified a whole bunch of waste and corruption.  We are going to raise and lower tariffs almost every day and keep the whole business world guessing.  We are going to arrest legal immigrants who are critical of Israel.  And we are going to provoke Iran into destroying our military bases in the Middle East and have Iran control the Strait of Hormuz, even as you threaten to wipe out their whole civilization.  Sound like a plan?”

Maybe Trump will set a record for the lowest approval rating for any president in history.

When his war buddies finally decide to stab him in the back, Trump’s approval rating might get to 20%.  I don’t think the people who voted for him who no longer support him will be returning to his camp.

Trump has completely betrayed America First.  He completely lied any time he talked about bringing peace.  His whole presidency is a giant disaster.  And now we have falling real wages for American workers on top of it all.

The rot didn’t start with Trump, and it won’t end with Trump.  But he will rightly take some of the blame for our economic woes.  Even as we suffer the consequences, at least we can laugh at the downfall of his presidency.

U.S. stocks indexes are at or near all-time highs as the conflict in Iran and around the Middle East enters into the third month.  Stock investors seem to not care too much about what is happening in the Middle East.

The S&P 500 keeps posting record highs.  The Dow is almost back at 50,000.  Pam Bondi won’t have to trouble herself with the Epstein files again.

As I warned after the war against Iran began, war is not necessarily bad for stocks.  If you look back to 2003 with Iraq, it was actually the end of a bear market in stocks.  I’m not saying that war is necessarily good for stocks either, but it doesn’t seem to hurt them as long as the fighting is taking place somewhere far away.

However, I do think that investors are overly bullish here.  The death and destruction in Iran is tragic, but that in itself would not impact investment much in the United States.  But with the conflict, we have a drastic reduction in the supply of oil coming out of the Middle East.

Higher Oil Prices and Stocks

While war itself is inflationary, which can be good for stocks, rising oil prices is not by itself inflationary.  An increase in the supply of money is the inflation.  And the Fed is actually pursuing a slightly tighter monetary policy than it otherwise would have because of the spike in oil prices.

With the higher costs of energy, it actually can have a deflationary effect elsewhere.  If you have to spend 50% more to fill up your car, you might decide not to eat out as much.  You might decide to forego that nice jacket you saw in the store.

If anything, higher oil prices give us a better chance of a recession because it reduces the living standards of most people.  They are forced to save less or cut back in other places.

This can include having less money to buy stocks.  And, of course, it can also hurt businesses that sell services and products where there is reduced demand.

Even if the War Ends

The messages coming out of Trump and his administration are completely erratic.  They are usually untruthful at this point.  One day, we are close to an agreement.  The next day, Trump is threatening to end an entire civilization.  The next day, we are close to an agreement again.

One day, the Strait of Hormuz is supposedly opening up.  The next day, Iran says it is still closed and will stay closed until the U.S. calls an end to the war.

It is funny (in a sick way) that the main goal of the Trump administration now is to open up the Strait of Hormuz.  The Strait was open in February until Trump and Israel started bombing Iran for no legitimate reason.

The market reacts to all of this news and goes up and down, along with oil prices.  But it is kind of ridiculous at this point because almost everything is a lie.  Trump will just make up that we are close to an agreement even when there haven’t been any talks with Iranian officials.

Even if the war ended tomorrow, there has been much damage done.  Iran now controls the Strait of Hormuz and will probably continue to charge a toll to go through.  Even if shipping got back to where it was in the next few months, that is a lot of time to pass for a severe reduction in the flow of oil.

The marketplace is amazing at adjusting to these things, so things could get better in a relatively short amount of time.  But still, how can investors say that we are no worse today (in terms of company profitability) as compared to two months ago?

Stocks vs. the Economy

Again, this is with the best-case scenario with the war ending and the Strait of Hormuz opening up.  What if the conflict gets worse?  What if most of the bombing is over but we still get a closed Strait for the next several months or longer?

If the average price of gas goes to $5 per gallon (and we are getting close), how is that consistent with all-time highs in stock indexes?

The market can stay irrational longer than we can stay solvent.  But at some point, reality is going to hit.  Stocks are not a reflection of the overall economy at this point.

If this conflict doesn’t come to an end soon, it will be hard to believe that stocks will keep roaring higher.  Investors are happy right now.  The average American isn’t happy with increased prices at the pump.  There is a disconnect.

The Federal Open Market Committee (FOMC) released its latest statement on monetary policy.  The Fed is keeping its target of the federal funds rate the same, which is in a range of 3.5% to 3.75%.

There were 4 dissents to the FOMC statement, which is something of a new phenomenon with the Fed.  The Fed has typically voted mostly in unison, with maybe the occasional dissenting vote.

However, there was only one vote against keeping rates steady, instead preferring to lower the target rate by 0.25%.  The other 3 dissenting votes agreed with keeping rates the same but “did not support inclusion of an easing bias in the statement at this time.”

In other words, these three members don’t want to signal a looser monetary policy in the future.

Energy Prices and Inflation

The statement acknowledged that, “Inflation is elevated, in part reflecting the recent increase in global energy prices.”

Of course, real inflation is an increase in the money supply.  Higher energy prices make life more expensive for the average American (and non-American), but it isn’t a general rise in prices due to the increase in the money supply.  Generally speaking, if you have to spend more to fill up your car, then you will spend less somewhere else.  This means that, all else being equal, other prices should come down.

Therefore, the higher energy prices due to the war in Iran is not necessarily a good reason to keep rates where they are.  There are other good reasons to keep rates where they are, especially since we haven’t seen 2% or lower consumer price inflation for many years now (the supposed target of the Fed).

The higher energy prices give the Fed an excuse to not be too loose with its monetary policy, just as the tariffs did before.

Perhaps there is some irony in the fact that Trump continually calls for lower rates when he is in office, yet his actions are giving the Fed excuses to not lower rates.

The Fed Balance Sheet

While the Fed magician is waving one hand around and pulling a rabbit out of a hat, the other hand is doing something else.

The financial media is generally taking a position that the Fed is being tight with its policy, or at least not any looser.

However, while the Fed says it is not lowering its target rate, it is slowly starting to inflate its balance sheet again.

Since December 1, 2025, the Fed has added over $170 billion to its balance sheet.

Sure, this is not a huge amount compared to what we saw in 2008 or 2020, but the trend means something.

The Fed is quietly inflating again.  They know there is a risk out there after having an inverted yield curve in 2023 and 2024 and previously draining a couple of trillions of dollars off the balance sheet.

It is amazing that things have held up for this long, especially as the government continues its reckless spending and debt accumulation.  Perhaps that is what is keeping the bubble going for now.

We’ll see if this economy can defy economic law and keep chugging along.  It doesn’t mean that the average American is doing well.  But somehow, stocks keep going higher, and unemployment remains relatively low.

Will the Fed be able to continue to walk this tightrope between consumer price inflation and a weakening economy?  Stock investors seem to think so.

On April 18, 2025, I posted an article titled “The Leftists Who Cried Wolf (Trump)”.  In it, I wrote that the left had shattered their credibility in opposing Trump by exaggerating and making up stories.

I wrote: “For some people, including some people who don’t care much for Trump, it has destroyed the credibility of the Trump haters who make up fake stories.  And it should destroy their credibility.  The problem is that we shouldn’t necessarily always believe the opposite of what they say.”

This is a problem with both Team Republican and Team Democrat.  The party loyalists typically just take a stance against what the other team says.  If Trump says that taking hydroxychloroquine may help against COVID, then the Democrats must oppose it.  If leading Democrats say that Iran was not an imminent threat, then Republicans often feel the need to take the opposite position.

One side could say that puppies are cute, and the other side would feel compelled to take a different position.

To be sure, there are people in both parties that do not do this, but these are also the people who are often criticized by the “leadership” in their own party.

Trump the Authoritarian

The problem right now, especially with the war in Iran, is that we don’t have enough meaningful opposition to the war and Trump in general.  The meaningful opposition is coming from libertarians, independents (who often have libertarian leanings), and people from within the Republican Party.

It is a lot more meaningful right now when Tucker Carlson and Alex Jones speak critically against the war in Iran.  When Hillary Clinton criticizes the war, it is completely meaningless.  She would have supported it if Biden were president.  She would have been capable of waging such a war if she were president.

Even the voices of the left in general are far less significant because of their previous hysteria over Trump.  It’s not to say that these voices are completely meaningless and without significance.  But if the left had been more honest about Trump up until now, then they would have more credibility, and their opposition to Trump now would mean more.

To be clear, I am not criticizing the left for having criticized Trump in the past.  I am criticizing the left for making up fake stories about Trump and opposing even the good things that Trump said.

The people who were more honest about Trump, whether they ultimately supported him or voted for him or not, are the most important voices now.  Their criticisms of Trump and the latest war are much more meaningful.

Regrets in Voting for Trump?

I very hesitatingly voted for Trump in November 2024.  There were many areas where I disagreed with Trump.  There were many things I didn’t like from his first term.  But there was a group of people surrounding Trump near the end of the campaign who seemingly offered something different.  They were not libertarians, but many of them had libertarian leanings in certain areas.

These people included Tucker Carlson, Tulsi Gabbard, RFK Jr., Elon Musk, Vivek Ramaswamy, and even, to a lesser extent, JD Vance.  At least they did not represent themselves as neocons.

To be sure, the Democrats did play a role in my vote.  We were coming off of the Biden regime where we got continued COVID insanity, vaccine mandates, war in Ukraine, and devastation in Gaza.  And Kamala Harris said she wouldn’t have done anything different.  This was far from an exhaustive list either.

I knew Trump had hostilities towards Iran just based on what he did in his first term.  I have known for a long time that he is bad on economics.  He is a spender (with other people’s money).  He favors tariffs, which are taxes.  On foreign policy, Trump was inconsistent in the things he said and did, but he seemed better than most of the alternatives, and there was at least a little bit of hope that the people mentioned above might influence him in being less interventionist.

I made a choice to vote for Trump knowing what I knew at the time.  I knew he was also capable of being a disaster, which is what has now happened.  Maybe he was lying the whole time.  Maybe he is just easily influenced, and the war hawks have learned that they just need to constantly kiss Trump’s butt and tell him how great he is in order for him to do their bidding.

It’s hard to say that I regret voting for Trump because I made the choice based on the information I had at the time.  If I had known then what would happen in his second term, I definitely wouldn’t have voted for him.  But I didn’t know, so I made the best choice I could make at the time given the information that I had.

Staying Honest

I look back at my post on April 18, 2025, and I realize I had already turned on Trump.  I was highly critical of his administration arresting legal immigrants for their speech against Israel, which started very early in Trump’s second term.  Trump started his insane tariffs in April 2025.  I also recognized that he was already bombing Yemen.  It turns out that a total of 7 countries would be bombed in Trump’s first year back in office (Yemen, Iraq, Iran, Syria, Nigeria, Somalia, and Venezuela).  There was also no peace in Gaza or Ukraine.

I turned hard against Trump as soon as he started betraying his talk of America First.  I recognized his turn to authoritarianism early on.  Many Trump supporters have been late to the game on that, but I would encourage anyone who supported Trump to oppose him now.  It is better late than never, and we need all of the opposition we can get.

If Trump’s approval ratings manage to fall below 30%, that will be something else to see.  Trump can cite a CNN poll saying he has 100% support from MAGA, but that doesn’t mean much if there are fewer MAGA people than before.  Also, perhaps Trump is too stupid and into himself to realize that he didn’t win in 2024 because of MAGA alone.  He needed people who do not have a strong affiliation with either major party.

I know many people who voted for Trump in 2024.  Most of these people wouldn’t identify as MAGA.  They would never be wearing a MAGA hat.  They didn’t consider themselves MAGA in 2024.  But they voted for Trump for varying reasons.  I personally know at least 4 people, possibly more, who voted for Trump in 2024 and are highly critical of him today.

This is why the Democrats are going to win big in the 2026 mid-terms.  It’s not that former Trump voters will go vote for Democrats.  It is more that some of them will just not show up to vote.

We need honesty more than ever.  We need hardcore opposition to Trump, especially from those who previously supported him.  We need to repudiate all of the war making and authoritarianism from the last year. Call your Congressional “representative” and let them know that you support impeaching and removing the president for war crimes.

I have been an advocate of the permanent portfolio for over 20 years now.  It was probably around 2002 or 2003 when I first read Harry Browne’s little book titled “Fail-Safe Investing”.  I got the honor of meeting Harry Browne in 2004 during the Libertarian Party of Florida’s state convention.

I had the chance to tell him that I really appreciated his political work and that his book on setting up a permanent portfolio was really great.  He was quite kind and told me to send him an email, and he would send me an updated list of funds to consider for the portfolio.  I emailed him after the convention was over, and he replied as promised.

I haven’t exactly followed the portfolio in a rigid way through the years.  I have made modifications.  I have also used the mutual fund PRPFX, which does have some variations of its own.  PRPFX holds Swiss francs and also holds a small amount of silver.

But overall, I have used the permanent portfolio as something of a home base.  There is always a chunk of investments there for relative safety.  Of course, you can never have absolute safety with any investments.

Not Flashy

The hard part about investing in the permanent portfolio (or something similar) is that you will feel left behind at times.  This has been especially true since 2009 when the last major downturn in stocks ended.  To be sure, there have been bad periods since that time, but the overall trend for stocks has been up.

There are so many financial advisors and financial pundits out there who give you some formula for your portfolio.  Sometimes it is just a mix of stocks and bonds that changes based on your age and risk tolerance.  There are surprisingly many people who advocate that you just put everything in a no-load mutual fund or ETF that tracks U.S. stocks if you don’t need the money in the next five years or so.

This strategy has worked reasonably well since 2009 because we haven’t had a major bear market since that time.  The problem is that it doesn’t mean it will keep working well.

I always like to point to Japan – a first-world country – where the stock index peaked in 1989.  It was still down 3 decades later.

If anything even half as bad as that occurred in the U.S., many people would be financially devastated.  It would ruin a lot of plans.

We could also have other scenarios.  In the U.S. in the 1970s, stocks didn’t do well during much of that time while price inflation was raging.  Again, another scenario like that would ruin the retirement plans of a lot of people.

The permanent portfolio is dull and boring until it isn’t.  If we experience a bear market in stocks where the overall stock market goes down about 50% over the course of 2 or 3 years, your permanent portfolio will be looking good.  It may go down during that time, but it will likely be a lot less than 50%.

And one of the great things, if you can stay disciplined, is that you can rebalance the portfolio by selling off some assets that have done relatively well and buying assets that are down in price.

The Gold

The most controversial part about the permanent portfolio is the holding of 25% gold or gold equivalents.  This is why it doesn’t get much attention from the more establishment financial world.

Even here though, there are many more “mainstream” financial gurus who will now recommend holding something like 5 to 10 percent in gold just to level out the wild swings of a portfolio.

This isn’t an all-or-nothing game, or at least it doesn’t need to be.  If you are skeptical about holding 25% in gold and gold funds in your portfolio, you can always just go with 10 to 15 percent.  Just having that amount will add great diversification and help smooth out the wild rides.

War, Inflation, Lockdowns, Political Chaos

A lot has happened just in the last decade.  We have had Trump, Biden, and Trump again.  There has been political chaos.  There have been many wars and conflicts, including in Ukraine and several countries that produce significant oil.  We had COVID lockdowns.  We had a brief but significant period of high price inflation that hit around 2022.

A lot has happened, and it continues to happen.  Stocks have stayed strong through most of this, especially when there are assurances from the Federal Reserve that it will give us easy money when needed.

If you had known in 2009 what would happen – politically speaking – over the next 16 years, you might not have invested in stocks.  If you had known in 2009 what investments would do, you would have put your money in stocks for the next 16 years instead of in the permanent portfolio, if you had to buy and hold.  Actually, you probably would have bought something like Bitcoin when it was $10.

Of course, we don’t know what the future holds, and that is the reason for the permanent portfolio.  We also buy insurance for things because the future is uncertain, and we want some protection.

Overall, the permanent portfolio has done its job well.  There have been big gains over the last couple of years because the price of gold has exploded while stocks have continued to trend higher.

I am fine with a slightly lower return if it means more safety and less anxiety when the next form of political or economic chaos hits.

The permanent portfolio will continue to act as a great home base and something of an insurance policy for our uncertain future.