It has only been five days since Trump was inaugurated, but a lot has happened.  There have been so many executive orders, pardons, commutations, and other actions that I can’t comment on all of them here.  But I will hit on some of the major things I have seen.

Freeing the J6 Prisoners

A+

Trump commuted the sentences of a handful of people involved in the events of January 6, 2021.  He pardoned all the rest.  This was a very important thing for Trump to do for several reasons.  It obviously set free some 1,500 people, most of whom never should have been in jail for even one day.  It can’t erase the trauma these people went through for the past 4 years, but at least it corrects it going forward.

This was also important symbolically for Trump.  It shows that maybe he will be bolder in his second term in defying the deep state.  It also calls attention to the crimes of the establishment.  This isn’t an issue that Trump supporters should shy away from.  The only people who were murdered on January 6, 2021 were Trump supporters who were murdered by Capitol police.

Most people there that day did not go into the Capitol building.  Of the small percentage who did, most of them did not do anything other than taking a walk through open doors.  At most, they should have been hit with a trespassing fine.  It is encouraging that Trump took this action on day one.

Pardoning Ross Ulbricht

A+

Trump didn’t exactly pardon Ross on day one, but it was his first full day in office.  Trump went beyond commuting the ridiculous life sentence without parole.  Trump actually issued a full pardon.  He also called Ross Ulbricht’s mother, who has worked tirelessly over the last decade to free her son.  Trump also mentioned the “scum” who did this to Ross.  Perhaps Trump’s persecution over the last several years has made him more understanding that there is a lot of injustice out there.

This was a big win for Ross and his mother, but it is also a big win for the Libertarian Party and the libertarian movement.  Angela McCardle, who chairs the Libertarian Party, deserves a lot of credit for getting Trump to the LP convention and presenting this as an issue to Trump.  This whole thing shows that libertarians do have a significant impact and can influence change, even if they don’t win any major elections.

Forcing Workers to Return to the Office

D-

Many libertarians will disagree with this.  There is this image that there are a bunch of government workers sitting at home doing nothing.  Perhaps this is true for some people.  But there are also people who are doing what they are supposed to be doing at home.

There is also a libertarian argument that we are better off with government workers doing nothing.  In the case of the IRS, the Pentagon, and many regulatory agencies, this may be the case.  I would rather someone sit at home and get paid taxpayer money to do nothing than to create more havoc for businesses and individuals in the marketplace.

Overall, I don’t think forcing workers back to an office is a good general policy.  Maybe some people will quit because they don’t want to go back to an office.  But that shouldn’t be the way to get rid of people.  If anything, it might just force out some of the good people.

The way to handle this is to look at every department and every job to see if it is something that the government should be doing and whether the people in those positions are doing what they are supposed to do.  We don’t need to go into chaos mode by just making life more miserable for government workers.

This whole policy, which came about from Elon Musk, is contradictory to DOGE and Musk’s goal of significantly reducing spending.  Now the government has to provide office space for hundreds of thousands of people.  That is a major expense.  It will significantly increase costs to taxpayers.  And if there are government buildings sitting empty, then they should be sold and the proceeds should go to paying down the debt (or making the deficit less big).

One final point is that the government roads in every major American city are a disaster.  There is major traffic congestion during rush hour almost everywhere.  There is no market mechanism to allocate the resources (the roads).  Sending hundreds of thousands of people back to the office will make traffic that much worse, especially in Washington DC.

Temporarily Suspending the TikTok Ban

C+

This whole ban on TikTok is an egregious act against free speech and property rights.  The whole thing should be overturned.  Trump should propose legislation to completely overturn the previous legislation.  If he did this, a lot of Republicans would suddenly change their position.

The ban has almost nothing to do with the Chinese (not the Chinese government) partially owning TikTok.  It only matters in the sense that the U.S. government can’t control it and censor the content.  There are too many videos on TikTok that go against the official establishment narrative.

Trump has temporarily suspended the ban, but he should do far more.  We’ll have to see what ultimately happens and the position that Trump takes, but right now his rhetoric is all over the place.  He is better than the clown show that just left, of course, but he could do better here.

Other Items

Trump gets high marks for withdrawing from the WHO, the Paris Agreement (climate change stuff), and getting rid of some electric vehicle mandates.  Trump has also issued an order to release the remaining files in the assassinations of JFK, RFK, and MLK Jr.

Trump is also ordering an end to vaccine mandates and reinstatement (with backpay) given to those in the military who were discharged for not getting the COVID shots.

To be clear, executive orders shouldn’t really be a thing, as we are not supposed to live in a dictatorship or anything close to it.  However, many of these executive orders are simply repealing previous executive orders or refusing to enforce things that are not really derived from legislation.  And, of course, almost all of the legislation that is in question is unconstitutional in the first place.

On the foreign policy front, it is too early to say much.  It is good that Trump’s team was seemingly responsible for getting some kind of ceasefire deal in Israel/ Gaza.  Despite Trump’s bad rhetoric at times, it does seem he is more interested in peace than the criminals who just left the executive branch.

The Elephant in the Room

With all of the pardons and executive orders, the elephant in the room is the economy, and in particular, government spending.  There have been some actions from Trump that reduce the regulatory burden and some actions that might reduce spending in a very tiny way.  But the overall budget is a monstrosity that has to be dealt with at some point.

Some of Trump’s rhetoric has been good.  He has talked about getting rid of the Department of Education and getting rid of FEMA and allowing the states to do these functions.  Just the fact that Trump is talking about these things is a big positive.

In terms of overall spending though, we are looking at something like a 2 trillion-dollar deficit in this fiscal year even if there isn’t a recession.  The military, Social Security, Medicare, Medicaid, and interest on the debt make up about 80% of the total budget.  You won’t be able to get anywhere close to a balance budget without addressing some of these big things.

The economy is likely to be the big problem for Trump, as a recession looks likely.  Trump, so far, is doing a good job of fighting back against the establishment.  If the economy takes a turn for the worse, it will be interesting to see who remains supportive of Trump.  Trump really needs to avoid enacting higher tariffs, as this will just make the economy worse and give more reason to blame Trump for a bad economy.

Aside from the economy, I give Trump an overall rating of A- after just five days.  We can be sure there will be some bad things to come, but it is a good start so far.

Donald Trump has been inaugurated as president of the United States.  I am optimistic about some aspects of his presidency, and I am quite worried about other aspects.

I am optimistic about getting RFK Jr. in a position where he can have at least some influence on truly making America healthier.  Even if he just recommends not drinking fluoridated water, limiting processed foods, and getting enough Vitamin D, that will be a big improvement without any legislation or executive orders.

I am mildly optimistic that the weaponization of the “Justice” Department will be curtailed.  I don’t expect permanent changes, but I do think there will be more attention given to the evils of this department and the spy agencies.  I know Tulsi Gabbard has backtracked on going against surveillance, but I do think there is hope that she is just trying to get confirmed so that she can ultimately make a difference.

I am also somewhat optimistic that Trump will get some kind of peace negotiation with Russia and Ukraine.  I don’t expect a drastic change in foreign policy, but it might at least be good enough that the biggest atrocities come to an end.

I am worried about Trump’s talk of taking back the Panama Canal, buying Greenland, and making Canada the 51^st state.  I don’t even know that any of it will happen.  I think he is just trolling about Canada.  Still, this was not something he talked about on the campaign trail, so it makes him look really bad that he is pursuing these ideas.  It also makes it much more difficult to defend him against the left when they say he wants to be dictator and take over the world.

One thing Trump did talk about in his campaign was tariffs, and he is stilling talking about them.  I am worried this will just make prices higher.  When recession hits on Trump’s watch, he will get the blame because of his stupid tariffs.  He should be getting the blame for the massive spending in 2020 with the COVID hysteria.

With all that said, the biggest reason to cheer for Trump getting into office is the leaving Biden administration.

The Biden Legacy

Joe Biden likely has some kind of dementia.  But he is still with it enough to continue to pursue his evil policies of chaos and destruction.  He is responsible even if his handlers were putting things on his desk to sign and writing speeches for him to say.

The list of horrible things over the last four years is long.  Four years ago, I never could have imagined just how bad Biden would be.

He helped provoke the war in Ukraine, starting when he was vice president.  He could have prevented the war in 2021 just by talking with Putin and giving some assurances to Russia.  Biden continued to support and fund the evil Zelensky to perpetuate the war all the way to the end of Biden’s presidency.

Biden weaponized the “Justice” Department not just against Trump, but against Trump supporters.  He helped in the parade of lies surrounding January 6^th, 2021 by making it sound like police officers died at the hand of protesters when it was just the opposite.  There were multiple people who died that day because of the Capitol police.  The Trump supporters were duped into going into the Capitol that day.  At most, most of them should have been charged with trespassing and slapped with a fine.  Instead, hundreds of people remain in jail based on lies.  This was all from Biden and his handlers.

Biden gave us more COVID hysteria with mask mandates and vaccine mandates.  His illegal and immoral executive orders tried to force about 100 million Americans to get jabbed.  If they did not comply, they risked losing their job and not being able to support their families.  And all of it was based on Biden’s continued lies about how if you get vaccinated then you can’t get COVID, you can’t die, you can spread it, etc.

Biden signed the Tik Tok ban into law, which capped his war against free speech.  His administration ordered social media companies to censor information on the basis of fact checking.  It had nothing to do with fact checking.  It had to do with censoring anything that went against the official narrative.

Biden arbitrarily ordered the forgiveness of student loans, even though he had no authority to do so.  Even after it was struck down in court, he still kept trying to do it in slightly different ways.

Biden declared war against MAGA.  He didn’t just go after Trump.  He gave a speech with a red, ominous background talking about the dangers of MAGA.  This must have been the first time ever that a sitting president declared war against tens of millions of people who supported his opponent.

Maybe Biden will be remembered as a bumbling fool.  But in spite of his incompetence at times, we shouldn’t think his presidency was one of incompetence.  It was one of pure evil.  He purposely lied on a continuous basis about anything of significance, and his policies were put in place to stoke fear, chaos, and destruction.  He should be left to rot in a jail cell for the rest of his days, but for now we’ll have to settle for him leaving the scene in Washington DC.

We don’t know what Trump will bring and what chaos the establishment will bring against him.  Whatever you might say about Trump, I don’t think he hates America and human civilization the way Biden does.

There are hardcore Donald Trump fans, and there are hardcore Donald Trump haters.  There are people who are neither, and probably more than what is portrayed.  For many people, including me, there are things to like about Trump and things to not like about Trump.

I feel like this is a continuation of the first Trump term.  Every time he does something good and I praise him, he goes ahead and does something or says something bad.  And whenever I am really down on him and ready to lump him in with all of the other criminal politicians, he does something good.

Trump’s Empire

I have been really down on Trump for the last few weeks.  Out of nowhere, he starts talking about buying or annexing Greenland, Canada, and the Panama Canal.  I don’t think he’s serious about Canada, but I don’t think it is a joking matter.

Trump likes to troll people, and it can oftentimes be funny, especially when the person on the receiving end deserves it.  Trump was trolling Trudeau, which is fine.  The problem is, you don’t need to insult the entire population of Canada while doing it.

It would be foolish for anyone who wants smaller government to want to acquire Canada.  Do you want to adopt their socialist healthcare system too?  How many electoral votes do you want to hand over to a population that heavily leans left?

Regardless of strategy, all of this talk about taking over other countries is just plain wrong.  It is bullying, even if you are joking about it.

I defend Trump against so many false allegations coming from the left.  Yet, it is hard to defend Trump now when leftists are saying, “See, I told you he wants to be a dictator and take over the world.”

I have been on the verge of asking for a refund.  Even though I strongly disagree with Trump on tariffs and don’t fully agree with him on immigration and foreign policy, I generally thought he was much better than the alternative.  If he enacts higher tariffs, it will be bad, but I can’t complain that I didn’t know he would do it.

On the issues of Greenland, Canada, and the Panama Canal, he didn’t talk about this stuff in his 2024 campaign.  Before Trump even becomes president again, I have been on the verge of completely disavowing him and saying that I regret my vote.

Just When I Think You Couldn’t Possibly Be Any Dumber

You go and do something like this…..and totally redeem yourself.

Except, unlike Dumb and Dumber, Trump actually did redeem himself.

Before Trump has even taken office, it looks like he might have brokered a ceasefire deal in Israel and Gaza.

Maybe it isn’t accurate to say he brokered a deal.  Trump’s envoy was probably given instructions to tell Netanyahu to accept the ceasefire deal or else he would regret it.

You see, Biden has been saying for a year about how the Israeli state needs to cool things down and be more responsible.  Without the political correctness, this means that they should stop killing so many people in Gaza.  But it’s a joke because the Biden administration has been sending weapons and money to Israel to do this.  If you want him to stop the killing, then stop sending him the weapons and money to do it.

On the other hand, Trump will talk about Israel being our greatest ally and how Hamas better release the hostages or else there will be hell to pay as soon as he becomes president.  Yet, I have a feeling that behind closed doors, Trump’s people were telling Netanyahu to agree to the ceasefire.  Biden could have done this all along.

The reason I have this feeling is because Netanyahu could have agreed to stop the fighting and get a return of the hostages a long time ago.  But he didn’t because he knew the money and weapons would keep flowing from the U.S. government.  The only explanation for his sudden change in heart is because Trump’s people told him what to do.

I have no idea if the ceasefire will stick or what will happen.  But the mass killing of innocent people in Gaza needs to stop.  If Trump pulls this off, it will be a great victory for innocent life.

I don’t want to start praising Trump too much though or else he will do something really stupid next.

The latest consumer price index numbers came out for December.  The CPI was up 0.4% for the month, while the year-over-year now stands at 2.9%.

The median CPI was up 0.3% for the month, with the year-over-year median CPI at 3.8%.

But that’s not the end of the story.  The financial media and investors celebrated because the “core” CPI is improving.  From this CNBC article:

“Economists prefer looking at a measure known as ‘core’ CPI, which strips out volatile food and energy prices, for a more accurate reading of underlying inflationary dynamics.  There, the picture is better: Core CPI fell to 0.2% on a monthly basis in December, after having been stuck at 0.3% a month since August.  The annual core inflation rate fell to 3.2% from 3.3%.”

So, if you don’t eat and don’t use energy, then things are improving.  Except, even using core inflation, it is still well above the Fed’s target of 2% price inflation.

On this supposedly good news, stocks soared higher.  The Dow was up over 700 points.  The Nasdaq rose over 400 points.  Bitcoin went back above $100,000.  Even gold had a good day for investors.

This is almost nonsensical.  I think the only reason stocks soared higher is because they had been beaten down a bit recently.  Maybe this would have happened without any inflation report.  It’s just one of those things that we can’t know.  But logically speaking, this really shouldn’t have been great news for the markets.

Still a Recession

It doesn’t really matter that much what price inflation does at this point.  It matters temporarily for how much we have to spend as consumers.  But for the markets and the economy as a whole, it won’t impact whether or not we get a recession.

The recession is baked into the cake.  It is a done deal unless the Fed wants to go the hyperinflation route.

The yield curve is starting to normalize after being inverted for nearly 2 years.  The Fed’s balance sheet is down over $2 trillion from its ridiculous peak in 2022, and the money keeps rolling off in spite of the Fed lowering its target interest rate.

Donald Trump is getting a recession.  If he enacts his stupid tariffs at just the right time, he will take a massive amount of blame for the recession.  In some ways, he should get blamed, but not because he will be president in 2025.  It’s because of the big spending and money printing that he helped endorse in his first term, particularly in 2020 with virus hysteria.

We need massive federal government spending cuts.  We need massive government deregulation.  We need for the Fed to stop running the printing presses on ludicrous speed whenever there are bad economic times.

The Everything Bubble will finally come to an end.  It is just a question of whether the Fed will try to blow it up again and how quickly.  The people who are banking on the stock market always going up 8 to 10 percent per year over time are in for a lesson.  There will be a reversion to the mean.

Javier Milei is the president of Argentina.  He assumed office in December 2023, just over a year ago.

Milei has been open about his ideological beliefs, including his self-described anarcho-capitalist beliefs.  Milei has taken inspiration from and praised Murray Rothbard.

To be fair, he seems to think of anarcho-capitalism as a theory to follow, but was not making any claims about eliminating the state when he was running for president.  His policy proposals have sought to cut government in a lot of places, but not eliminate it entirely.

Hans-Hermann Hoppe is a writer and well-known advocate of anarcho-capitalism within the libertarian movement.  He has been sharply critical of Milei.

Both men have exchanged name calling.  Hoppe has referred to Milei as a showman and a clown.  Milei referred to Hoppe as an idiot, or at least that seems to be the best translation from Spanish.

On Israel

Javier Milei has been a strong supporter of the Israeli state.  He sees what the Israeli state is doing to the people of Gaza as self-defense as opposed to murder.  On this, he is completely wrong.  What Milei is saying about Israel is completely inconsistent with libertarianism.

There is obviously a deep history with Israel and the Palestinians, but nothing justifies the intentional mass murder of any innocent person, let alone tens of thousands of innocent people.

On the issue of Israel, I side with Hoppe.  He is right to criticize Milei.

The good news is that Argentina is a relatively poor country and doesn’t have a lot of resources to fund or arm Israel the same way the United States government does.  Milei’s views on Israel are close to meaningless except any possible influence he may have on a broader number of people.

I have heard some libertarians say that perhaps Milei has taken this pro-Israeli state position just so that he isn’t a target of the Western establishment, most particularly the U.S. government.  It is always dangerous to oppose the U.S. regime, so he might just be saying what needs to be said so that they leave him alone.

I don’t really subscribe to this theory, although I can’t completely discount it.  Still, I don’t think it justifies someone advocating for mass murder.

If Milei really was just saying this to keep the establishment off his back, he probably wouldn’t have said it as forcefully as he did.  He could have just issued some boilerplate statement saying that his administration supports Israel’s right to defend itself and left it at that.

So, on this point, I think Hoppe’s criticism of Milei is fair, even though Argentina has almost no impact on the issue.  Milei’s expressed views on Israel are not consistent with anarcho-capitalism or any form of libertarianism.

On Economic Reforms

When it comes to Milei’s policies within Argentina, Hoppe has also been a critic.  I believe this is a mistake.  Just because Milei is wrong on Israel, it doesn’t mean we should criticize him unfairly.

I don’t think anyone expected or should have expected Milei to try to eliminate government once taking office.  He never campaigned in that way, and there is no way he could push through such an agenda.  Milei is obviously just trying to cut government where it is politically possible and in ways that won’t make things substantially worse in the short run.

Any time you cut government jobs and government spending, there is going to be pain for certain people.  But there was already great pain in Argentina from the rampant inflation.  This interview from Tom Woods’ show celebrates the victories for liberty in Argentina.

In just over one year, Milei has made substantial cuts to government spending and regulation.  These are real cuts.  They aren’t like the phony cuts that come out of the United States where they will only increase a department budget by 2% instead of the baseline 4%, and therefore it somehow constitutes a cut.

Milei is producing real reform in Argentina by significantly reducing the price inflation rate, balancing the budget, and making an overall better climate for business.  It is already having real and positive impacts for the people of Argentina.

I never expected Milei to eliminate the central bank, and I am cynical of whether that should even be the goal of a libertarian in such a position.  He should continue to free up the market and allow competing forms of money.

It is easy to make perfect the enemy of the good.  While I don’t excuse politicians who don’t actually cut government, I do sympathize with those who seek to bring greater liberty in an utterly corrupt system.

Compare the United States

Imagine being a libertarian elected to the presidency of the United States.  You aren’t going to tear down the whole system overnight.

There are a lot of immediate changes you could make such as stopping wars and withdrawing troops from all over the world.  You could pardon people who were convicted of federal crimes that were victimless crimes.

On the economic front, I believe it would be bad policy to just immediately announce the end of the central bank.  What would happen to the dollar and the banking system overnight?

Most of our contracts are in dollars.  Think about people’s paychecks and their mortgages and their other bills. Everything is in dollars.  Ending the central bank overnight would cause complete chaos.  You would almost instantaneously lose all political support because we would be thrown into chaos.

Markets can adjust quickly, but to do something like this overnight with little warning would surely cause chaos.  What happens when your money isn’t in your checking account?  How do the truckers get paid who deliver the food to our stores?

In the 2008 financial crisis, many libertarians just flippantly said that there should be no bailouts, including for the banks.  But what about the banking customers?

We have the FDIC, which can’t cover the existing deposits through the Treasury without some kind of monetary inflation.  I don’t believe the FDIC should exist, but we live in a world now where it does exist.

If there had been no bailouts in 2008, then major banks would have gone under.  People would have gone to the ATM or submitted a payment for a bill, and the money wouldn’t have been there.  To just flippantly say that there should have been zero bailouts does not address the ramifications.

If there had truly been no bailouts and no monetary inflation in 2008, everything would have been thrown into chaos.  I don’t mean the chaos that was already happening in the stock market and housing.  I mean that the entire currency system likely would have collapsed.

People can get mad about the bailouts, but they would have been a lot more upset if they couldn’t access their bank account.  They would be even more upset if food wasn’t getting delivered to the grocery stores.  I feel that this point was never adequately addressed by libertarians or others who insisted on zero bailouts.

Philosophy Versus Governance

This is not an excuse to all of the horrible politicians in history and out there now who have talked a good game about liberty but given us more government.  These people should not be excused.

It is also not a call to abandon libertarian philosophy in any way.  In fact, I believe we need to more often state our goals of what a libertarian society would look like.

I don’t want people advocating for school vouchers because they are a step in the right direction.  Oftentimes, school vouchers just get the government involved in how private schools are run.  If you are going to push school vouchers, you at least need to continually repeat that the ultimate goal should be eliminating the state from education.

At the same time, we shouldn’t be politically stupid and cause our own self destruction.  If a libertarian actually gets elected on a libertarian platform, it would not be a good look to throw everything into chaos overnight by announcing the end of the central bank.

You start with the easy and significant cuts in government spending and government regulation.  On bigger issues of the FDIC and the central bank, you need to free up the market, allow for competing currencies, and let the market push those things out of existence.

If Milei had governed as Hoppe has suggested he should, he probably would have lost immediate support, and it might have given libertarianism a bad name.  You can’t take decades or centuries of statism and completely overturn it in one night, or even one year.

On economic policies, I think Milei should be praised for all of the good things he has done.  We can criticize him where he is bad, which can include economic reforms that don’t necessarily achieve greater liberty.  But just know that he is in a tough position, and we can’t just expect him to take a hammer to every government program immediately.  He does have to retain the general support of the Argentinians to make lasting change in favor of liberty.

There have been multiple times now that Donald Trump has said that the late 1800s were a time of great economic prosperity.  He has said this in defense of his proposals to dramatically increase tariffs because tariffs were a main source of “revenue” for the government in the 19^th century.

Trump is correct that the late 1800s were a time of great economic prosperity.  We are obviously wealthier now in many aspects because of technology and the compounding growth that has occurred over more than a century.  So, I would not want to trade places with someone living in 1890.  I want my smartphone, my air conditioning, and my electricity.  But the economic growth and increases in living standards during that time was quite astounding.

The problem is that the late 1800s were not great because of tariffs.  They were great in spite of tariffs.  Do you know what else was the case in the late 1800s?

• There was no Federal Reserve.
• There was something of a gold standard for the dollar.
• There was no federal income tax.
• There was no Medicare, Medicaid, and Social Security.
• There was no vast empire with military bases all over the globe.
• The overall federal budget was a tiny fraction of what it is now.

Federal Spending is the Key

One thing that Elon Musk has gotten completely right is his comments on federal spending.  He has pointed out that all spending is a tax of some sort.  All of the money spent has to be obtained by taxing, running up debt, or inflation.

In 1940, total federal spending was approximately $9.5 billion.  This was for an entire year.  If you go back to 1901, spending was about $525 million.  In 2025, the U.S. government is running a deficit of well over $5 billion in ONE SINGLE DAY.

There has been a lot of inflation during that time, which has robbed us of our purchasing power.  But let’s look at things with inflation-adjusted dollars.

In constant FY 2017 dollars, total outlays in 1940 were $155.2 billion.  Using that same metric, today’s spending is over $5 trillion.  Spending in 1940 was vastly greater than in 1900.

In today’s dollars, the federal government is spending well over $6 trillion per year.  It could easily hit $7 trillion this year or next year.

It is hard to get a really accurate comparison because of inflation, but the overall federal budget around 1890 was probably around 1% of what it is now.  The same could be said for regulations and the overall footprint of the federal government.

Tariffs With Spending Cuts

If Trump wants to cut 99% of the federal budget, then I will accept his higher tariffs.  In fact, I’m in a good mood today.  I’ll take a total cut of 80% in federal spending.  We can just go back to the beginning days of Bill Clinton’s presidency when the federal budget was just over $1.4 trillion.

If that happened, we would see a real economic boom like nothing in our lifetimes.  The tariffs would still have an impact, but there would be so much business flocking to the United States it would more than offset taxes on foreign goods, and we could get rid of just about every other federal tax.

Trump is severely confusing cause and effect with correlation.  The tariffs in the 19^th century aren’t what made America great.  It was the very tiny footprint of the federal government as compared to now.  There was no massive welfare/ warfare state.  We didn’t have all of these so-called intelligence agencies and all of these departments in place that now make our lives worse.

The Mistake of Tariffs

Tariffs are taxes on imported goods and services.  They will make consumers poorer than they otherwise would have been.

Trump says that other countries are ripping us off, but he doesn’t really specify how.  They are ripping us off by selling us inexpensive consumer goods?

Trump thinks his threat of tariffs will bring people to the negotiating table.  This may be true.  You can also threaten to hurt someone physically and it might get them to negotiate.  It doesn’t make it right.

If Trump is so concerned about fairness, why doesn’t he offer to reduce all tariffs to zero for any country that agrees to do the same for U.S. goods?

Where exactly does Trump get the constitutional authority to arbitrarily make tariffs whatever he wants them to be for whatever country he wants to threaten?

This has the potential to backfire in a big way for Trump.  We had an inverted yield curve for almost 2 years.  It is now starting to normalize.  This is a major warning signal for a recession ahead.  And although the Federal Reserve is cutting rates, it is also continuing to reduce the size of its balance sheet.

The timing might be that Trump hikes tariffs while a massive recession starts.  Tariffs are bad economic policy, but the recession is baked in anyway.  We will get one with or without new tariffs.

But the optics will be quite bad for Trump and his tariffs.  He hikes tariffs and then we get a massive recession.  How will he react?  Will he repeal the tariffs in shame?  Will he double down on them?

I believe that Trump actually does want to make America great again.  But he is going down the wrong path with tariffs.  It has the potential to really backfire on him.

Trump does not understand economics, and neither do many of his supporters.  They understand that outright socialism is bad, but they don’t understand the harms of protectionism.

The events in our world are determined by the actions of billions of human beings.  Therefore, it is impossible to predict the future with any great degree of certainty.

Still, predictions are useful in analyzing where we are and where we are likely to go.  We should also explore what’s possible just so that we can be prepared in case certain things happen.

Economic Recession

I was wrong about this in 2023, or at least my timing was wrong.  I thought that a recession would start before the November 2024 election.  If it has already started, it isn’t evident yet.

We had an inverted yield curve in all of 2023 and most of 2024.  It is now normalizing.  This is the common occurrence before a recession begins.  Many people say this time is different.  They point to different factors.  I don’t believe this to be the case.

2025 may be the year that we hit a deep recession.  It will be thrown in Trump’s lap, just as price inflation was thrown in Biden’s lap.

Trump is partially to blame for the next recession.  He was part of the problem in 2017 to the end of 2020.  He was especially bad in 2020 when the establishment suckered him in on the virus hysteria.  Trump promoted all of the massive spending and bailouts, which accompanied the massive monetary inflation from the Fed.

This held off the recession in 2020, but just made the misallocations that much more severe.  Now we will pay the price.

It won’t be a good look for Trump if he hikes tariffs and then we are hit with a deep recession.  Tariffs are bad for the economy, but the economy is already set up for a recession without higher tariffs.

Government Spending

The federal government is running deficits that are beyond imaginable.  It is hard enough to grasp how much a billion dollars is.  Now just consider that the government is running a deficit of over $5 billion per day.

I believe Elon Musk and Vivek Ramaswamy are serious about cutting spending.  The problem is that it is ultimately Congress and the president that determine the spending.  The only way Elon and Vivek will be somewhat successful is if they get public opinion on their side and Americans pressure their “representative” to actually make cuts.

My guess is that the whole DOGE thing will be a mixed bag.  I think we will see some success in cutting around the margins.  We aren’t going to see a trillion dollars cut from the budget.

About 80% of the federal budget is military, Social Security, Medicare, Medicaid, and interest on the debt.  Unless there are going to be massive cuts (hundreds of billions of dollars per year) to the military, then we aren’t going to see anything significant.

If DOGE can somehow get rid of the Department of Education, this would be a big win, at least symbolically.  I think they should put some focus there.  Most government education spending is done at the state and local level anyway.

Foreign Policy

Trump has been a disaster since getting elected in November, at least with his rhetoric.  He jokes about Canada becoming our 51^st state.  He says “we” should take back the Panama Canal.  He also says we should take over Greenland.  Where does he even get that from?

Trump may be better on foreign policy issues than the average establishment political figure, but why is he making these reckless statements?  Just like talking about tariffs, he thinks it is a way to bring people to the negotiating table.  But what if someone calls his bluff?

Is Trump going to go to war over the Panama Canal?  Will he send the army in to take over Greenland?  If he does anything close to this, he is going to lose a lot of support from his base.  And where is he getting the money for these new adventures?

Trump’s nominees for his cabinet are mostly a disaster on the foreign policy front.  They are not “America First”.  They are “Israel First”.  This spells trouble ahead.  Even some of the people he is nominating are not great on Ukraine.

I think the war in Ukraine will start to wind down, but it is because Russia has the greater military might than Ukraine, even when Ukraine is funded and armed by the U.S.  I hope Trump is right that he will end the conflict right away, but I can’t be so sure.

The only way Trump is going to get Putin to agree is by giving some kind of assurance that the U.S. will not admit Ukraine into NATO.

I don’t think there will be a clean peace agreement right away when Trump takes office, but I do have hope that the conflict will slowly come to a close.

There is reason to hope that there will be less foreign conflict under Trump, but Trump needs to tone down the rhetoric.  He needs to stop making threats.  He is probably not prepared to back up his threats with action, which is what we should hope is the case.

Other Items

I believe that RFK Jr. will be approved as the next Secretary of Health and Human Services.  I don’t think we will see Fauci go to prison.  I don’t think there will be really major changes, but there could be some positive changes.  I believe they will recommend that fluoride not be added to our tap water, and I believe that many local governments will follow the recommendation.

The best thing about Kennedy is that he is bringing awareness to the issue of health.  This is where real change is made.  There are more people today than a year ago who are conscious of what they are eating and putting in their bodies.

There is a decent chance that Tulsi Gabbard will get confirmed as director of national intelligence.  I think she will help put an end to the political lawfare we have seen over the last few years.  The problem is that I don’t know if she will be able to make permanent changes that will prevent another corrupt administration from returning to the policies of 2021 to now.

It will be the same with the FBI and CIA.  Trump seems to be doing a little better with not appointing people who hate his guts.  We should expect improvement with the intelligence agencies with the recognition that there will still be major abuses.

I believe Trump will commute the sentence of Ross Ulbricht as he promised to the Libertarian Party.  If he doesn’t, then libertarians who have been somewhat sympathetic to Trump are going to turn on him hardcore, just as they should.

Trump will probably pardon the J6ers, but I don’t know if he will pardon everyone.  We hear reference to the non-violent J6ers as deserving a pardon, but I haven’t seen evidence of violence on J6 except for the Capitol police.  There were some windows that were broken, but even here I don’t know that it wasn’t undercover federal agents.  Unless there is hard proof that someone committed initiatory violence, they should be pardoned.  And even if there is evidence that someone shoved a police officer for no reason (or something like that) or broke a window, how many years in prison should they get?  There are very violent criminals who get less time.

And finally, we have the establishment media.  They were the big losers of 2024.  I expect they will not make major changes.  Some media pundits will pretend to be sympathetic to Trump at times just because they know how much public opinion has turned against them.  We can also expect that there will be budget cuts for some of the networks.  They will not get the surge in popularity that they got with the first Trump term.  There aren’t a lot of people (although there are some) who want to hear about the next Russia collusion story.

Conclusion

We have no idea what will happen in 2025.  In July 2024, a bullet one inch over would have drastically changed everything.  These are the highly unpredictable events.

I am being realistic, but I do have cautious optimism for a little more peace in 2025.  On the economic front, watch out, and don’t be heavy in stocks.

Vivek Ramaswamy has created quite a stir with his comments regarding culture and immigration.  It has sparked a lot of debate within the MAGA movement.

Vivek had a post on “X” (Twitter) explaining why he thinks top tech companies hire foreign-born workers over Americans.  He goes on to state that it has to do with culture.  The American culture celebrates mediocrity over excellence.

https://twitter.com/VivekGRamaswamy/status/1872312139945234507?mx=2

He says, “A culture that celebrates the prom queen over the math olympiad champ, or the jock over the valedictorian, will not produce the best engineers.”

Vivek goes on to cite 1990s sit-com television shows as an example.  He states, “A culture that venerates Cory from ‘Boy Meets World’, or Zach and Slater over Screech in ‘Saved by the Bell’, or ‘Stefan’ over Steve Urkel in ‘Family Matters’, will not produce the best engineers.”

I completely understand and sympathize with Vivek’s points, although I don’t fully agree with them.  I also disagree with many Trump supporters in what they are saying in response, specifically as it regards immigration.

Intelligence Isn’t Everything

Vivek himself was the valedictorian of his high school graduating class.  I once listened to his speech.  He had rhetorical talent back then.

I didn’t watch much of “Boy Meets World”, so I can’t comment on that example.  But I did watch “Saved by the Bell” and “Family Matters”.  Vivek is celebrating Screech and Steve Urkel.  These characters were apparently book smart but were considered nerdy.

But I think these are the wrong examples.  They weren’t just nerdy.  They were dorky or beyond.  In fact, they were a social nightmare in polite society.  They didn’t know how to behave properly in a social environment.

It is one thing to be book smart, but you aren’t going to have much influence on society if you have no social skills.  Vivek of all people should know.  He is a very smart guy, but he also knows how to talk to people.  He was a salesman for his message all the way back to when he was a teenager.  If Vivek were just book smart with no rhetorical skills, he would barely have any influence on society right now.

It is a good thing to have good rhetorical skills if you are using them for good purposes.  The evil establishment uses propaganda to enhance their own power, but we need rhetoric and salesmanship to sell good ideas.  I want Vivek to be a good salesman when it comes to reducing the size and scope of government.

Vivek is not Screech.  He has some of Zach Morris in him.  This enables him to sell his ideas and have influence on other people.  This is something that Screech could not do effectively because of his lack of social skills.

I also don’t agree that our society completely ignores or makes fun of the so-called nerds.  Maybe valedictorians in high school are not the most popular kids in school, but sometimes they are.  And adults outside of school will often praise the intellectually talented students.

It is also ok to celebrate characters like Zach Morris and A.C. Slater.  Slater was the jock, but being athletic is also a skill and talent.  It may not build bridges or solve math equations, but it is a form of entertainment for people, and it is a skill.  There are kids who work hard at their sport, and it can set good habits for life, and there is nothing wrong with appreciating these skills.

Politics and Intelligence

Something I harped on during COVID hysteria is the idea of intelligence.  Perhaps we should distinguish between intelligent and smart.  There are many highly intelligent people who did very well in school, yet they can’t think straight on basic issues.

It tended to be those considered intelligent and well-educated who were the most authoritarian during COVID.  They are quite good at math and biology when it comes to reciting a textbook, but they were the first ones to follow orders and mask up and “vaccinate”.  They trusted the experts, or at least the experts that were put out by the establishment media.

It is easier to train a smart dog.  That is attributed to Michael Malice.  If you tell a dumb dog to “sit”, he won’t listen.  If you tell a smart dog to “sit”, he will obediently sit down.

For liberty, we don’t necessarily want obedience.  We want peaceful people, but we don’t want obedience when it comes to infringing on people’s liberty.

This is where Vivek needs to be careful.  Immigration is not just about bringing talented people to fill jobs that Americans are supposedly too stupid or lazy to do.  There is also a question of preserving liberty.

Just because someone is a good producer and doesn’t collect welfare, it doesn’t mean they are advocating liberty.  I don’t want an engineer or doctor coming to the United States only to support the next authoritarian for political office.

We hear about the education, the skills, and the work ethic in Asian countries.  Maybe there are certain things to admire or emulate.  Yet, most of these places are poorer than the United States.  The reason highly intelligent Indians want to come to the United States is because they can more easily thrive in the United States as compared to India.  There is a lack of respect for property rights in India.

There is more wealth in the U.S. as compared to China and India because there is a greater respect for free markets in the U.S.  There is a greater respect for property rights and free association.  It is extremely difficult to start a business in India.

Even in Japan, where the people tend to have a strong work ethic, there is a statist mentality that holds back the people and the economy.  They are highly intelligent, but they also tend to be quite obedient, which means falling in line with government authoritarianism.

Singapore is a very rich country with a strong economy.  It isn’t just because the people there work really hard.  It is because there is a relatively free market system that enables business to flourish.

I am not worried about producing the best engineers.  I am worried about having an environment where good engineers can be free to do good work.

MAGA Economics

In general, Trump supporters are not very good on economics.  They understand that outright socialism is bad.  They understand that over regulation can be bad.  Unfortunately, they don’t understand the benefits of the free market when it comes to dealing with other countries.

Some of the people getting upset at Vivek’s comments are disagreeing with him only because it is possibly encouraging immigration that would “steal American jobs”.

First, nobody has a right to any particular job.  It is the employer who owns the job.  It is the employer who is paying out the money to the employee.

Just as many Trump supporters misunderstand the issue of tariffs, they also misunderstand the whole purpose of jobs.  They see jobs as an end result.  They don’t see jobs as being a means to an end.

The purpose of human beings working is to produce goods and services.  This is what enables us to live, and beyond that, to live well.  We either have to grow our own food and hunt for our own food, or we have to have someone else do it for us.  Just about everything we own was produced by someone.  The services we get are produced by someone.

The purpose of a job is to produce.  Sure, those working jobs are producing in order to be able to consume the production of others.  But we all rely on this production to give us wealth.

If we just look at jobs as the end goal, then this is working against the actual goal of producing greater wealth.  If we just focus on the jobs, it will be detrimental to wealth production.  It will make us poorer.

If a peaceful immigrant enters the United States to work (and not collect welfare), then this should not hurt the economy.  (I am not considering the discussion above about possibly changing the politics of the country in the long run.)

A new person entering the country creates his own demand.  He needs to buy food and other things, which means there will be additional work to be performed to satisfy his wants and needs.

Still, let’s even imagine an immigrant who comes to the U.S. to work and consume very little.  He keeps all of his money under a proverbial mattress or he sends it to his home country.  This is actually a benefit to our society.  He is producing wealth while consuming very little.

If an immigrant is willing to move to the United States and work for less money than any American would, then this will actually mean lower costs for the company.  It will ultimately mean lower prices (than otherwise would have been) for certain products and services.

Many Trump supporters cannot understand this or the similar issue when it comes to tariffs.  If you impose taxes on foreign goods, it might mean that there will be more American jobs to produce those particular goods.  It will also mean those Americans can’t do something else.  It will also mean higher prices for American consumers.

If you can prevent immigration to save 1,000 American jobs, is it worth it?  If you can impose tariffs to save 1,000 American jobs in a particular industry, is it worth it?  What if it means paying twice as much for a smartphone?  What if it means that every American buying a new car has to pay $500 more?

At least give me a number on what makes it worth it.  What if every new car in the country would cost $500 more on average but it saved a total of 10 American jobs?  Is that a good policy according to the protectionists?

You would be better off paying those 10 people $10 million per year each and getting the lower price of the cars for millions of Americans.

Libertarianism and Immigration

There are several different issues merging together here.  There is immigration.  There is culture.  There is politics and economics.

It is very hard for libertarians to discuss the issue of immigration because we live in such a statist system.  Immigrants (legal and illegal) get massive government welfare.  Even the ones with work visas get welfare.  It is also an unfair system at times because those that follow the law often have to wait a long time to get approved if they are ever approved, while some people just walk across the border.

I think libertarians can have different points of view on the issue of immigration.  One thing we should all agree on is that there shouldn’t be government welfare, especially for those entering the country (legally or illegally).  If everyone entering the country were doing so for work and opportunity, then it seems to solve a large chunk of the problem.

No matter where you fall on this issue, it is important to emphasize that all government welfare should be eliminated.  That is the culture that really needs changing.

After making some revisions, Congress has passed another monstrosity of a spending bill.  Even though Trump is not yet president, it shows of the battles to come.

Trump is more of a populist than a fiscal conservative.  If it is a conflict between the two, he will pick populism.

There a lot of bad Republicans in Congress.  We already knew that.  Mike Johnson is one of those people.  He is severely compromised.  The only reason he occasionally appears to be on our side is because of public pressure.  He will lie when necessary.

If there are going to be any significant cuts to the federal budget in the years ahead, it is going to come from overwhelming public opinion.

For this week, I encourage people to push politics aside to the degree that they can.  We can wish for peace.

It is a time to reflect and spend time with family.

Merry Christmas to you and your family and loved ones.

The Federal Open Market Committee (FOMC) released its latest policy statement to finish out 2024.  The Fed reduced its target federal funds rate by 25 basis points.  It now sits between 4.25 and 4.50 percent.  This move was widely expected.

What wasn’t expected was Jerome Powell saying that inflation is still a challenge and the Fed’s so-called “dot plot” indicating that we should expect fewer rate cuts next year than what was previously anticipated.

This sent markets in a tumble, with the Dow losing over 1,100 points and the Nasdaq down over 700 points on the day.  Gold was also down considerably, as the U.S. dollar rose.  The euro is getting quite close to being on par with the U.S. dollar.

So, even though the Fed cut rates like stock investors wanted, we should now expect two more rate cuts next year instead of four.  What’s to say it can’t go back to four at the next Fed meeting?

A Contradictory Policy

While the Fed continues to cut its target rate, and nearly everyone commenting on it assumes a looser monetary policy, the Fed actually has a tight monetary policy right now.

In the FOMC’s Implementation Note, it clearly states that the Fed will continue to reduce its holdings of Treasury securities by $25 billion per month and mortgage-backed securities by $35 billion per month.  If you look at the Fed’s balance sheet, this is indeed what is happening.  Approximately $60 billion is coming off the balance sheet each month.  This is monetary deflation.

This is the whacky world we have been living in since 2008, where the Fed controls the short-term interest rates by paying banks interest on their reserves.  The interest rate function has become somewhat independent, at least for now, of the money supply.

As the Fed’s right hand is lowering interest rates, the left hand is doing something else.  The left hand is sending us into a recession.

Of course, the recession is baked into the cake because of prior monetary inflation, but the push for deflation now will make a recession more inevitable in the near future.

The Yield Curve

After about two years of inversion, the yield curve is finally returning to “normal”.  It is still very flat, but the long-term rates are now slightly higher than the short-term rates.  The yield on a 30-year bond is about 30 basis points higher than the yield on a 3-month Treasury bill.

The inverted yield curve has been an accurate predictor of recessions.  Yet, every time it happens, we hear that this time is somehow different.

Before you think we have escaped recession, it is important to know that the recession comes after the yield curve has been inverted and then returns to normal.  In other words, the recession should be coming very soon if we aren’t already in it now.

Meanwhile, the Fed is deflating the money supply in the face of this.

The Fed could reverse course quickly, but it would be too late at this point, unless they plan to go wild like 2020.  Even then, it might not be enough to stop the oncoming recession.

Once the recession comes, Jerome Powell’s words from today will be meaningless.  The dot plot will be meaningless.  We could see the equivalent of four rate cuts in one meeting if things get bad enough.

If you think the plunge in stocks was bad on Wednesday, wait until a recession becomes evident.  There are going to be staggering losses.  Depending on how aggressive the Fed’s initial response is, we could see a stock market plunge of 75% in the next few years.