There was a recent episode of the Choose FI podcast discussing the middle-class trap.  I have been a long-time listener of the podcast.  FI stands for Financial Independence.  I have praised the podcast in the past, so it pains me to have to write this critique.

The name of the episode was “Deep Dive: Putting the Middle-Class Trap to Bed”.  The host, Brad, and his guest, were in agreement that the middle-class trap is essentially a myth.  I absolutely despised this episode, and I thought it showed a lack of empathy and showed they were somewhat out of touch with reality.

There is much discussion in the financial independence community on the middle-class trap.  For purposes here, the middle-class trap refers to the typical middle-class person or family (by American standards) who follow the guidelines of building wealth by buying a house and contributing to retirement accounts.  Even though their net worth may be high, they do not feel wealthy and have a feeling of being trapped in their lifestyle.  Their net worth is largely inaccessible.

Think about a person who has $500,000 in a 401k plan and $500,000 in home equity and not much else in terms of financial assets.  On paper, they are a millionaire.  Yet, day-to-day, they don’t really have much liquid money.  They pay their mortgage, pay their other bills, and contribute to their retirement, but they don’t have much, if anything, left over.  They really don’t feel wealthy at all unless they plan to sell their house and cash-in on their retirement, if that is even possible.

Trust the Statistics?

When I listened to this Choose FI episode, I genuinely felt like I was being lectured to by a politician.  We were told this middle-class trap is all a myth.  Supposedly this episode was putting this discussion to bed.  It was supposed to be the final word, I guess.

It reminded me of a politician saying, “You just don’t understand how good you’ve got it.  Inflation is low.  Unemployment is low.  GDP is growing at a healthy rate.  It doesn’t matter how you feel.  The statistics say you are doing well.”

Maybe that wasn’t the intention of Brad in this episode, as he usually is rather humble.  But that is the vibe that I got listening.  He said, maybe you “feel” this way, but that is not actually the case.  In other words, he is saying that he knows about everyone’s situation better than they know themselves.  He uses the term “feel” a lot here, as if to dismiss what people are actually going through.

They also used these absurd examples of people who made a middle-class income and are now millionaires. Of course, this assumed that a couple started contributing 20% to their retirement plans when they were young and kept doing it the whole time.  It assumed they got raises equivalent to inflation along the way.  It also assumed investing 100% in stocks and getting the returns of the bull market of the last 20 years.  One of the examples discussed a couple who spent $45,000 per year.  What world does this take place in?

It’s not that the examples weren’t realistic.  I’m sure you could find someone who fits these examples.  The problem is that they aren’t typical.  I don’t even think they are typical within the FI community.  These examples might resemble 5 to 10 percent of the population, at most.  What about everyone else?

The Problem with Retirement Accounts

In the podcast, they incorrectly said that you can access your 401k.  They talked about ways to avoid paying a penalty.  The penalty is really just an additional tax, which you can also pay to withdraw money before 59 ½.

This is not true for many people.  If you still work for the same employer that sponsors your 401k plan, then you are not typically allowed to withdraw “your” money.  You can sometimes take out a loan, but then you would immediately have to start paying yourself back (into your locked account) with interest.

You may also be able to take a withdrawal if you can prove some kind of financial hardship, but that is meant for people who are in special circumstances of financial hardship.

The reality is that, if you are still working and younger than the age requirement, you typically can’t access the money in your 401k plan.  The same would go for most pension plans.  Unless you are ready to quit your job and take the 10% extra tax, then “your” money is not accessible at this time.

Retirement Assumptions

One thing I realized in listening to this episode is that there was a major disconnect.  Just because this is a FI podcast, it doesn’t mean everyone is FI.  It doesn’t mean that everyone has retired early.

A lot of the discussion was based on the notion that someone is already there.  It is not recognizing the fact that many people are trying to do “the right thing” by buying a house and putting money into retirement accounts.  When doing that and supporting a family, there isn’t a lot left over for their bank account.  This is the trap.

Think about the difference between these two people who are each 40 years old.  You have one person with $500,000 in a retirement account that can’t be accessed and essentially no liquid savings.  You have another person with $250,000 in a retirement account and another $250,000 that is easily accessible in brokerage and bank accounts.

On paper, these two individuals have the same net worth.  Neither are close to retirement yet.  However, they are in very different situations.

The person with no liquid savings is living on the edge.  A major house repair will require credit cards or a loan.  There is certainly no option of not working unless he plans to quit his job and tap his retirement and pay the additional tax, which isn’t usually a good idea.

The person and his family with $250,000 in easily-accessible money is in a completely different situation. They have the freedom to take a nice vacation for the family.  They have the option of investing in a side business.  They have the option of paying cash for a new roof.  They have the option of taking a one-month leave of absence to take the kids to Europe if the employer would allow.  The list can go on and on.

The person with the substantial liquid savings has a lot more options, even though his net worth on paper is the same.  I’m sure you could come up with your own list of things where one is far advantageous over the other.

Most people who are younger than 59 ½ are not retired.  That includes people listening to financial independence podcasts.  The middle-class trap doesn’t really apply to someone who has $2 million in a 401k plan if they are already retired.

I think Brad and his guest missed the mark in a major way.  It sounded way too elitist.  “Just start putting away 20% when you’re young.  Keep getting raises that at least keep up with inflation.  Invest everything in stocks.  Make a great return, as stocks always go up in the long run.  Retire early.  There is no middle-class trap.”  That is the summary of this episode.  It all sounds so easy, but I think many Americans “feel” differently because they are living a different reality.

It was 249 years ago that the American colonists declared their independence from the British crown.  In 2026, we get to celebrate 250 years.

There is a lot to celebrate, and there is also a lot to not celebrate.  The spirit of independence and liberty has somewhat lived on for two and a half centuries.

At the same time, it is hard not to notice people lighting off fireworks and celebrating our freedom while we live in a semi-authoritarian state.  Just in the last few months, we have seen higher tariffs, higher debt, higher spending, bombing Yemen, bombing Iran, and an ever-expanding surveillance state.

It is hard to say precisely, but when the colonists fought for independence, the British crown was taking perhaps around 1% in taxes.  Now, the national government spends nearly $7 trillion per year.  If you include state and local government spending, government at all levels is consuming nearly 40% of our income.  When you factor in regulations, the story is far worse.

Is this really what the colonists declared independence for?  With all of the problems with a king thousands of miles away, I think I would gladly take the taxation of the British crown from 250 years ago.

The United States Were Great

Most people think of the U.S. Constitution as the foundation of our country since the beginning.  When the colonists won independence, they lived under the Articles of Confederation.  Actually, that was effective from 1781 to 1789.  There really was no national government from 1776 to 1781 because the colonists were at war and not following the dictates of the British crown.

One of the criticisms of the Articles of Confederation is that the national government was too weak and impotent.  Of course, this should be considered its strength for anyone who cherishes liberty.

The Constitution was generally a well-written document, but it did centralize power.  Now we have the largest and wealthiest empire in history.

The relatively capitalist system led to great wealth.  Unfortunately, since liberty was not guarded closely, it has led to great wealth for the U.S. government, which has enabled it to intervene in countries all over the world.

We are a long way from the Articles of Confederation and a loose alliance between the states.  The United States – plural – has become the United States – singular.  The United States were great.  The United States is not great.

American Spirit

Even with this monstrosity of a national government, there is still something special about America.  Sure, things have changed, but there is still a certain spirit of independence and rugged individualism.

Americans are far more defiant than most other people in the world.  There is less obedience and less trust in authority figures.  This may sound hard to believe, but there is even greater brainwashing in other parts of the world.

Even with the Covid lockdowns and vaccine mandates, there was a sizeable percentage of the population that refused to go along.

And if you think things have gotten continually worse, that is also not the case.  The government is as big as ever, but there is actually less trust today in politicians than was the case 50 years ago.

There is still great propaganda that comes out of the establishment media, and many people still buy it.  But there are fewer people today who buy the propaganda than what was the case 20 years ago or 60 years ago.

How many people were questioning the Federal Reserve system in 1960 or 1990?  It was almost nobody.  Today, you can find videos and discussions everywhere.

If the government tried to enact a draft for another Vietnam-type war, how successful do you think that would be?

How many people talked about a deep state 20 years ago?

How many people homeschooled their children in 1980 as compared to now?  It was barely legal to do in 1980.

Sure, there are many reasons to be pessimistic, and it is certainly a tragedy that we have lost so much liberty. Still, there is reason for optimism.

For liberty lovers, July 4^th shouldn’t just be about recognizing how much liberty we have lost.  We should still celebrate the liberty that we have and the possibilities for what lies ahead.

Unbelievably, U.S. stock indexes are at or near their all-time highs.  The S&P 500 closed at a record on Friday, well above the 6,000 mark.  The Nasdaq is above 20,000 again.  The Dow is sitting close to 44,000.

It was only on April 2, 2025 (the day after April Fool’s Day) that Trump announced his liberation day tariffs.  It was supposed to liberate us Americans from inexpensive foreign goods.  The S&P 500 was down nearly 18% for the year in April as stocks sold off.

It looked quite disastrous for investors in April, but things have turned around as quickly as Trump changes his tune on various issue positions.

In terms of tariffs, Trump has certainly walked back from where he stood in early April.  It was somewhat of a self-correcting mechanism, as he received instant feedback from the marketplace.

But let’s be clear that increased tariffs are still an issue.  In fact, on Friday when stock indexes were hitting all-time highs, Trump announced a breakdown in trade talks with Canada.  Many people don’t know that Canada is the U.S.’s largest trading partner.

The fact that investors brushed off this news tells you one of two things.  Either investors aren’t too concerned about increased tariffs (as long as they are not obnoxiously high), or they don’t take Trump’s announcements seriously.

Tariffs Don’t Generally Cause Recessions

Tariffs are a tax on imported goods.  They can certainly make life more expensive for the people in the importing nation.  Sometimes they simply reduce trade, as people seek alternatives to what they otherwise would have purchased.

So, tariffs do impact our living standards.  We are generally wealthier when we have the advantages of open trade.  It is better to trade with 8 billion people than 340 million people.

With that said, higher tariffs or taxes do not generally cause recessions.  Just look at the markets right now.  The tariffs are lower now than what Trump announced in early April, but they are also higher now than when Trump took office.  Yet, stock indexes are near all-time highs.

If all you have are higher tariffs or any kind of taxes, people can generally adjust as long as the future is somewhat predictable and the rates aren’t overly confiscatory.  If the government implements a 90% income tax on every dollar of income, that will obviously destroy nearly everyone’s living standards who lives under that regime.  But that isn’t really a recession.  It is just a step turning the country into a poverty-stricken, third-world country.

Recessions are not really thought of as a permanent decline in living standards.  A recession is supposed to be a correction.  It is a reallocation of resources, as resources had been previously misallocated in places that weren’t in accordance with consumer demand.

What Causes Recessions?

Recessions generally happen because of tampering with the money and price of money (interest rates).  In our modern world, central banks control the base money supply and, to a certain extent, interest rates.

When the central bank creates money out of thin air and artificially lowers interest rates to help the government finance its deficits, this creates bubbles and misallocations of capital.  It sends false signals to market participants, including consumers, sellers, and entrepreneurs.

You can call this the Austrian Business Cycle Theory or whatever you want, but it is generally the central bank in today’s world that causes recessions.  The recession, or correction, is the readjusting of resources after the damage has been done.  The recession is when things seem to be the most painful, but it is actually correcting the past mistakes, or at least trying to.

Sometimes recessions can lead to more central bank intervention, which ultimately makes the problems even worse down the road.

Government taxes and regulations make us poorer, but this is on a consistent basis.  Barring any shocking and sudden changes, government policies do not really cause recessions other than the fact that they legalize the monopoly over money by the central bank.

The Coming Recession Doesn’t Need a Trigger

All of this is to say that we don’t need a trigger event to cause the next recession.  We don’t need an announcement of a breakdown of trade negotiations.  We don’t need another war.  We don’t need a tax hike.  A recession will come when the malinvestments have been exposed and people run out of money or the will to keep the bubble economy going.

When the 2008 financial crisis happened, there actually wasn’t really a triggering event.  Financial institutions began to collapse because they had too many bad loans and weren’t getting repaid.  But this was the recession.  This is how the misallocation of resources manifested in that recession.  There was a massive housing bubble, and people took out loans for houses that they couldn’t repay.  As soon as housing prices started to go down, the loans started to go bad.

We already had an inverted yield curve in 2023 and much of 2024.  It has somewhat normalized, although short-term rates are still close to long-term rates because the Fed is not cutting its target rate.

It is somewhat amazing that stock indexes are hitting all-time highs, and it seems that any sign of a downturn is short-lived.  It has made investors incredibly complacent.  We have to come to expect that any downturn in stocks will just turn around within months.

At some point, this will no longer be true.  The 2008 financial crisis is now almost 17 years old.  Someone who is 30 years old today was only about 13 years old when that happened.  Most 13-year-olds are paying attention to friends and activities and certainly not financial markets.  Someone who is 30 today has never really experienced a hard downturn in U.S. stocks that has lasted more than a few months.

This will not continue forever.

“No matter whom you vote for, you always wind up getting John McCain.”  ~Tom Woods

The U.S. is now at war with Iran.  We will have to wait and see if it escalates into something more serious.

After Israel attacked Iran, the U.S. initially denied involvement.  Many people warned that the U.S. is obviously involved, yet some Trump defenders tried to deny it.  Now that the U.S. government has bombed Iran, these people look foolish.  Of course, even if the U.S. government hadn’t directly bombed Iran, we know that it provides funds, weapons, intelligence, and defense for Israel, so it is still foolish to say that the U.S. wasn’t involved.

Iran sent in 14 missiles into Qatar where American military bases reside.  This was Iran’s “retaliation”.  It is reported that Iran actually let officials in Qatar know about the missiles in order to avoid casualties.  The real reason is that Iranian officials want to be able to tell the Iranian people that they retaliated without escalating the war.

This act by the Iranian government destroys the myth that Iran is trying to obtain a nuclear weapon so that they can use it against Israel and the United States.  The people in Iran, including government officials, don’t want to be obliterated.  That’s why they announced the missile attack in Qatar.  That is also why they wouldn’t nuke the U.S. unless they felt they were going to imminently die anyway.

This accusation that we can’t let Iran get nuclear weapons is foolish.  The only country to actually use nuclear weapons is the main one dictating that Iran can’t have nuclear weapons.

Iran doesn’t want war.  It is obvious by its actions.  Why would they have ever offered to negotiate if this was the case?  The only reason it would use nukes is if it was backed into a corner.  Of course, even if Iran had nukes, there would be no way to use them to strike the United States.

The Sloped Roof Theory

We get all of these ridiculous and unsubstantiated claims about Iran.  One of the latest is that they want to assassinate Donald Trump.  Of course, it is actually Trump who has been threatening to assassinate the leader of Iran.

When Trump was shot in the ear in July 2024, do you think there is a better chance that the CIA was behind it or the Iranian government?

It is unbelievable to hear all of these clowns say that Iran wants to assassinate Trump.  Yeah, I suppose it was some Iranians who came up with the sloped roof theory.  That’s why the Secret Service couldn’t be stationed on the roof from where Trump was shot.

How can anyone actually say this with a straight face?

Ted Cruz said that Iran wants Trump dead.  That’s his proof that Iran wants to assassinate Donald Trump.  If that’s his proof, then half of Democrats in this country want to assassinate Trump.  They would say that they prefer if he were dead.

These claims are completely laughable and ridiculous.

Sponsoring Terrorism

Another claim the war hawks like to throw out there is that Iran is the number one sponsor of terrorism.  They say this with absolutely no evidence to back it up.  It is also a very subjective claim.

You can call this “whataboutism” all you want, but the hypocrisy here is stunning.  The U.S. funded Osama bin Laden.  The Israelis funded Hamas (probably with U.S. funds).  The U.S. helped foment war in Syria which has now been taken over by a known terrorist.  We all should know who the number one sponsor of terrorism actually is.  It is the entity with the biggest budget in the world.

Even if Iran is helping to fund “terrorists”, it is completely subjective.  One person’s terrorist is another person’s freedom fighter.  If the U.S. didn’t keep bombing and occupying other countries, maybe some of this terrorism wouldn’t exist.

Iran’s Threats

People like to say that Iran wants to wipe Israel off the map.  They want to wipe America off the map.  They chant “death to America”.

Some of these claims are only loosely true.  There was a translation of it being said that they want Israel wiped off the map, but this was clarified a long time ago by Iranian leadership saying that they want to get rid of the state of Israel or the Zionist regime.  They mean no harm to the Jewish people.  Anyway, this statement is now 20 years old.

Maybe you think that in itself is unacceptable, but it doesn’t mean Iran will actually do anything.  Of course, Netanyahu actually does want Iran wiped off the map.  He wants it part of Israel.  He is actually attacking Iran with missiles and bombs.

Did you know that there are Jews who live in Iran?  The numbers used to be far larger, but there are some who are still there.  Sure, they must follow the laws there like everyone else, but they are allowed to practice their religion and generally live in peace (when they aren’t being hit with missiles from Israel).

Most Iranian people don’t hate Americans, but they hate the American government, and rightly so.  There is a long history going back to at least the 1950s where the U.S. government toppled the Iranian leader.  It is probably not a regular thing for Iranians to be chanting “death to America”, but who could hardly blame them at this point?  If your neighborhood was being bombed by another country, you don’t think you would hear some of your neighbors calling for death to the country bombing you?  We can already hear some Americans calling for death to Palestinians without that happening.

The Iraq Playbook

In 2015, one of the things Trump said in his campaign for president is that Bush lied us into war in Iraq.  Trump was able to get the Republican nomination in spite of this, or maybe because of this.

Now, Trump is acting like Bush.  The same lies we heard about Iraq are being repeated with Iran.  They are not always exactly the same, but they are incredibly similar.

If you are not old enough to remember the leadup to the Iraq war in 2003, it was all about how Saddam was a bad man and that he might use weapons of mass destruction against us.  It was actually sold as a defensive move to pre-empt any attack from Saddam.  But no matter what Saddam did or said, it was never enough to prevent being attacked.  It was always portrayed as “Saddam is stalling” or something like that.

Once U.S. troops actually invaded, the story changed quite a bit.  It went from WMDs to liberating Iraq.  The narrative shifted to it being about humanitarianism, even as tens of thousands of people were being killed and cities being destroyed.

Another parallel here is that they use multiple arguments at the same time.  They like to shift the argument whenever one of their arguments is challenged.  If you say that even U.S. intelligence has said that Iran doesn’t have a nuclear weapon or the capability to get one in a short amount of time, then the argument will change.  They’ll say that you love Iran or that you love terrorism or that you think it’s ok for Iran to have a nuke.

The arguments constantly shift with multiple pieces of propaganda.  Most of it is lies or things that can’t be proven.  They like to demagogue anyone who questions it.  “Oh, so you think Iran is a great place?”  “Oh, so you think it’s ok to fund Muslim terrorists?”

Wait, what happened to the argument that Iran was about to get nuclear weapons and use them against the United States?

It is the same act as 22 years ago.  Either Trump is just another neocon war hawk or he is very easily duped.  It is probably both.  Either way, Trump is a war criminal and has completely betrayed the people who voted for him in the hopes that we might get some peace.

Even if the war with Iran doesn’t escalate much from here, it is still absolutely inexcusable what Trump has done.

The latest FOMC statement came out.  It was no surprise that the Fed is keeping its federal funds rate the same, which is a range of 4.25% to 4.5%.  The Fed is also maintaining its same pace of reducing its balance sheet.

It was noted that the FOMC members are concerned about elevated inflation and possibly lower economic growth.  Those two things conflict in the Keynesian world view, which tends to be the view of Fed members.

If you have elevated inflation, then you are supposed to have higher economic growth.  Of course, that is what the 1970s disproved, but the Keynesians carry on almost as if the 1970s never happened.

So, the Fed is saying there is a higher chance of stagflation than before.  But this doesn’t indicate where they are headed.  Higher or elevated inflation would indicate a tighter Fed policy ahead.  Lower economic growth would indicate a looser Fed policy ahead.

This is probably why the markets reacted the way they did.  Stocks were generally up after the initial announcement and then lost steam through later afternoon.

The Fed is the Tail, Not the Dog

The economy is the dog wagging the tail.  The Fed is the tail.  It’s not that the Fed doesn’t have an impact.  The Fed’s very existence has an impact.  That is what holds together the banks and the U.S. debt with these economic conditions.  There is no way the U.S. government could have $36 trillion in debt without a central bank or some entity that can legally create money out of thin air.

With that said, the Fed is not really dictating the current economy beyond its past actions.  The Fed certainly helped create this mess of debt, asset bubbles, and misallocated resources.  But the Fed is now in a position where it is almost forced to react to what the economy is doing.

You shouldn’t expect any big moves from the Fed until we see big moves in the economy.  Big moves in the economy could mean a significant change in price inflation, higher unemployment, or a crash in stocks.  Of course, the Fed will always intervene if there is a meltdown in the bond market or with the major financial institutions.

Mr. “Too Late” Powell (not my nickname for him) isn’t going to do anything wild.  He will continue to blame the tariffs for elevated price inflation, even though price inflation was a bigger problem in 2022 and 2023 than it is today.  It’s not that he is wrong in saying that higher tariffs will likely lead to higher prices.  It’s just that the Fed is the biggest culprit of price inflation in existence.

Yield Curve Control

It looks like the economy is humming along for now.  Don’t forget that the yield curve was inverted in 2023 and most of 2024.  It is finally normalizing somewhat, even if it is still flatter than normal.

The thing that is keeping the yield curve from fully normalizing are the really short-term yields like the 1-month yield and the 3-month yield.  These are the yields most directly controlled by the Fed.

This is interesting to note because the recession after an inverted yield curve comes after the yield curve has normalized.  But this is often not just because long-term yields have gone up.  It is more typically because short-term yields have gone down because of Fed rate cuts.  In other words, the Fed is usually cutting rates prior to the start of a recession (or when the recession becomes evident) because they are anticipating one.

If the Fed would just cut its target rate by about 50 basis points, that would almost fully normalize the yield curve.

So, I wouldn’t let the lack of Fed action fool you.  Just imagine that Powell and company had cut by 25 basis points in each of the last two meetings.  This would be fully in line with a normalizing yield curve and a recession shortly ahead.

The Fed’s lack of action here shouldn’t fool us.  Just because they don’t see a recession ahead, or they don’t want to cut rates for political reasons, or they are worried about inflation, or whatever, we shouldn’t ignore the previous inversion of the yield curve.  It doesn’t look promising in the short run ahead, even though the stock market keeps humming along.

Bitcoin is part of the Everything Bubble.  It is not a form of money in most cases.  It is a speculative asset, although even the term “asset” is a stretch.

When the Israeli government attacked Iran, it sent stocks down.  Bitcoin was also down.  Gold was up.  This means that people still view gold as the ultimate safe haven.

After Iranian officials announced they were still open to negotiation, this was taken by many to mean that the conflict may be contained and that it wasn’t likely to expand into a massive war.  Stocks were up on Monday, largely because of this sentiment.  Bitcoin was also up.

Not Digital Gold

The point here is that Bitcoin is not digital gold.  It is not a form of money except in very rare circumstances.  It certainly isn’t a widely used form of money.  Things aren’t priced in Bitcoin.  They are priced in dollars.  Bitcoin is also priced in dollars.

Sure, the same thing can be said for gold because the government has effectively banned it as a common form of money.  But gold has a long history as a form of money, and it is still used as a store of value.  It also has other uses.

Bitcoin is a good store of value as long as the dollar price is going up.  But Bitcoin is heavily tied to the Nasdaq and tech in general.  If the tech bubble portion of the Everything Bubble pops, it is likely that Bitcoin will follow.

In fact, it is possible that Bitcoin could get hammered even more than the Nasdaq.  At least companies like Apple and Nvidia still have assets and earnings.  What does Bitcoin have?  It really has no uses at all other than faith by quasi-libertarian tech nerds who claim it can change the world and that it fixes all of our problems if we would just let it.

Bitcoin probably won’t go to zero because there will always be a small group of people who will die on the hill of Bitcoin.  They will always be there to buy, sell, and hold Bitcoin.  They will trade it between each other just to make sure it has some kind of monetary value.

You can certainly make money (in dollars) by speculating in Bitcoin, but it would be a mistake to think of this as an investment.  If the tech bubble collapses, Bitcoin could easily lose 90% or more of its value in terms of dollars.

The Israeli government has started a war with Iran by striking inside Iran with missiles.  Israeli officials have been saying for decades that Iran is just weeks or months away from getting a nuclear bomb.

After the initial attack, Marco Rubio came out and said that the U.S. is not involved in the strike against Iran.

So, the U.S. government gives money to Israel, gives weapons to Israel, gives intelligence to Israel, and commits to defending Israel as its closest ally, but we can be assured that the U.S. is not involved here.

Meanwhile, Trump comes out and posts that Iran should have made a deal sooner.  Maybe Trump should have told Israel that they would be on their own if they attacked Iran, but no such thing happened.  In fact, it is reported that the U.S. is assisting Israel in shooting down Iranian missiles as part of Iran’s retaliatory strike.

It’s interesting that Trump talks about negotiating with Iran.  It is like negotiating with a bank robber who is holding a gun to your head.  You tend not to have a lot of negotiating power at that point.  You basically have two choices.  You can give the person holding a gun to your head what they want, or you can refuse and try to defend yourself.  It isn’t really a negotiation for Iran.

“Iran Can’t Be Allowed to Have Nukes”

It’s amazing watching politicians and the media state over and over again that Iran can’t be allowed to have nukes.  They never even question the premise, and it is hard to imagine if anyone openly challenged this premise.

Why can’t Iran be allowed to have nukes?  And who says?

So, the U.S. government gets to dictate who gets to have nukes?  There is only one government on planet earth that has ever used nuclear weapons against a civilian population, and it wasn’t Iran.

There are now people saying that if Iran was allowed to get nukes that they would use them on Israel and the United States.  I mean, maybe now that Israel and the U.S. have essentially declared war on Iran and threatened to bomb them into the Stone Age.  But if these two countries just completely ignored Iran, why is there this assumption that Iran would strike?

Of course, even if Iran got nukes, it probably wouldn’t be capable of delivering a strike on the United States.

But is anyone actually dumb enough to believe this would happen if Iranian officials did have the capability?  They know that they would be obliterated 100 times over if they ever did that.

There are these great lines about Iran funding terrorism.  Maybe they funded Osama bin Laden.  Oh wait, that was the U.S. government.  Maybe Iran funded terrorists who took over Syria.  Oh wait, again, that was the U.S. government.

Also, let’s all remember the Libya model, where they agreed to give up their weapons.  After that, Obama and Hillary marched in there and killed Gaddafi.  With that example, why would any country openly give up their weapons to please the United States government?

At Least We Don’t Have Kamala?

One thing that Trump supporters have said is that Trump didn’t start any new wars in his first term in office.  Of course, he continued many of the wars and he also got close with Iran by assassinating an Iranian official.

But here we are less than 5 months into Trump’s second term and we have seen Yemen bombed and now a war with Iran.  Plus, Trump has not been able to end the war in Ukraine, and he continues to fund the slaughter of tens of thousands of innocent people in Gaza.

If this is a peace president, I don’t want a peace president.

It is even hard these days to hear Trump supporters who may be a little disappointed with his foreign policy say that at least we don’t have Kamala.

There have been a few good things out of Trump’s presidency the last 5 months, but it all seems to be diminished quite a bit when we are facing major wars and conflicts.  Sure, it might be great that Trump has curtailed DEI policies, but does that even compare to getting in a new war?

What is the line in the sand for the hardcore Trump supporters?  What if we get into a world war with Russia or China?  What if nukes are flying across continents?

Will the Trump supporter being incinerated by a nuclear bomb yell one last time, “At least we didn’t get Kamala”?

The latest CPI numbers came out, slightly better than expected.  For May 2025, the CPI was up 0.1%, with the year-over-year now at 2.4%.

The median CPI for May came in at 0.2%, which is a lower reading than we have seen in a long time.  The year-over-year median CPI sits at 3.5%.

Prices aren’t going down.  They are still going up – by 2.4% per year if we trust the government’s statistics.  The rate of price inflation is going down, but prices are still going higher on top of the already high prices we have seen.  But many will celebrate this news and say that inflation is going down.

The economic picture seems to be looking up after a couple of brutal months.  In April, there was major turmoil in the equity markets, largely because of Trump’s erratic tariff policy.  Things have seemed to calmed down, and the markets are going back up near their all-time highs.

But we are still facing higher tariffs than we were three months ago, and you have to imagine there have been a lot of supply disruptions and misallocation of resources with businesses trying to figure out what they can and can’t feasibly import and export.

The Balance Sheet and the Yield Curve

The other statistics don’t lie.  They still don’t look good for the economy ahead.  It will be amazing if Trump can somehow manage to get an economy that at least bumps along.

The Federal Reserve’s balance sheet is still going down in accordance with its current policy.  It is still over $2.5 trillion higher than it was at the beginning of March 2020.  But it has also gone down by about $2.3 trillion since its peak in 2022.

In other words, we are still in monetary deflation mode, in spite of what is happening with interest rates.

The yield curve was mostly inverted for 2023 and most of 2024.  It has slowly begun to normalize.  The 30-year yield is just under 50 basis points (half a percentage point) higher than the 3-month yield.  That isn’t much, but it also isn’t inverted any longer.

Mr. “Too Late” Powell (Trump’s nickname for the Fed chair) is probably too late by establishment standards.  It may or may not be a political thing, but it is a bit surprising that the Fed hasn’t been more aggressive in lowering its target rate.  When the Fed does resume with its rate lowering, it will drive down short-term yields.

The yield curve and the monetary deflation are signaling a recession ahead.

Is it possible that this economy will defy the odds?  Will the trend break and we somehow won’t get a recession?

I can’t say it is impossible, but I also can’t deny the reality that these are indicators of a recession.  In spite of the strong equity markets over the last few weeks, I am still expecting a recession ahead.

On April 2, 2025, I wrote the following:

“If there is a fallout between these two personalities, then watch out.  The danger is that Trump gets rid of Musk and steps up his status as war criminal and chaos maker.”

I knew there was a high risk of a fallout between these two.  It descended even faster than I could have imagined.

I wrote an article on June 4, 2025 about Musk coming out against the “big beautiful bill”.  Sometimes I wait a few days to write and publish an article just to gain more perspective on the facts.  Perhaps I should have waited with this article on Elon Musk.  A lot happened right after I published it.

Elon Musk and Donald Trump have several things in common.  They also have some things that aren’t in common.  Aside from being wealthy and well-known, they are both infamous for their use of social media.  They like to post things, oftentimes without giving it a lot of thought.

After Elon publicly started criticizing the BBB, which he was right to do, things got personal very quickly.  I have heard Trump say much worse things about people, but he still couldn’t resist going after Elon for attacking his BBB.

Bringing in the Epstein Files

The final icing on the cake was when Elon posted that the reason the Epstein files weren’t released is because Trump’s name is in them.

I thought this was a mistake by Musk.  It makes it really tough to ever repair this relationship.

We already know that Trump knew Epstein.  The question is whether Trump was actually involved in trafficking anyone or having a relationship with any underage girls.  Just because Trump’s name is in the files doesn’t mean he necessarily did anything criminal or immoral.

If Elon is suggesting that Trump did do something immoral and criminal regarding Epstein, it kind of makes Elon look bad too because he had stayed quiet about it.  So, if Trump had requested more DOGE cuts in legislation, Elon would have stayed quiet about Trump’s criminal behavior?

This is why this somewhat vague post was a mistake.  It would have been best for Elon Musk to keep hammering away on government spending.  It would have been even better if he had just kept going after government spending while ignoring any personal attacks from Trump.

But, these two can’t help themselves.

It has been reported that Musk has since deleted this particular post.

A good general rule in life is to wait to post or say something, especially when you are emotional.  If you just give it 24 hours, you will gain a lot more clarity.

A Trump Nickname

Trump is known for giving his enemies nicknames.  If his enemy ends up being an ally, then he will drop the nickname.

Lil’ Marco is now the Secretary of State.  Remember Low-Energy Jeb and Lyin’ Ted Cruz?  Of course, there is also Sleepy Joe and Crooked Hillary.

You have to wonder if Trump will come up with something for Elon.  Maybe “Crazy Elon”.  Maybe “Maniac Musk”.

The problem for Trump is that Elon is too much like himself.  Elon will likely not stay quiet.  He owns X (formerly Twitter).  He has over 200 million followers.  He also has the truth on his side when it comes to government spending and this bloated spending bill.

Trump may win this battle with a majority of his supporters, but you have to believe that some hardcore fiscal conservatives, along with some libertarians who loosely supported Trump, will side with Elon Musk on this issue.  Even if it is just 10% of Trump supporters who side with Elon, that could mean a 5% drop in Trump’s approval ratings.

A Trump nickname might not have the same impact as what he has been able to inflict in the past.

Understanding Economics

The big difference here between Trump and Elon is that Elon understands basic economics.  He understands that tariffs harm American consumers.  He understands that we need a reduction in government in order for our economy to thrive.

I am giving Trump the benefit of the doubt here by saying that he is economically illiterate.  If Trump does understand economics, then he is lying and doing great damage to the country for political or other reasons.

If Trump wanted to enact significant cuts to the budget, especially the waste and corruption exposed by DOGE, he could do so.  If he made this a signature issue, it would force the hand of the Republicans in Congress, who are mostly awful people.

Clint Russell had a nice post about this situation.

I've realized today that many republican voters don't actually care about the national debt.

It seems like they are siding with Trump because they don't think Elon could possibly be this upset about a spending bill.

I promise that if you really understood how your lives will be…

— Clint Russell (@LibertyLockPod) June 6, 2025

I would just add that our lives could be so much better with a massive reduction in government spending.  It’s not just about avoiding hyperinflation and/ or default.  Our standard of living could be vastly better if we saw a significant reduction in government spending.

One other important point is that this isn’t just about balancing the budget.  It is about the government consuming our resources.  To paraphrase Ron Paul, I would rather an unbalanced budget with $1 trillion in total spending than a $6 trillion budget that is balanced.

Elon Musk, whatever you think of him, is trying to do a service for humanity by making this a big issue.  He understands that we need to address government spending if any of us are going to prosper in the long run.

Elon Musk had previously hinted that he wasn’t too pleased with the spending coming out of Washington DC, even with the Republicans controlling a majority in the Congress.  But he was still somewhat subtle and was trying to stay positive about the work done by DOGE.

Now that Musk has left as something of a temporary government employee, his frustration has come out.  And it has come out quite strong.

I have been speculating about possible trouble in paradise between Musk and Trump.  It’s not that two big personalities can’t get along and work together.  The problem is that they have very different visions.

Trump talks a good game at times about fighting off the deep state and getting our economy in order, but then he supports his “Big Beautiful Bill”.  The BBB is certainly big in its spending.  It is beautiful for the establishment and the ruling elite, but it is not so beautiful for the average American who is getting ripped off.

On June 3, 2025, Musk started off with this X post (tweet).

I’m sorry, but I just can’t stand it anymore.

This massive, outrageous, pork-filled Congressional spending bill is a disgusting abomination.

Shame on those who voted for it: you know you did wrong. You know it.

— Elon Musk (@elonmusk) June 3, 2025

“I’m sorry, but I just can’t stand it anymore.  This massive, outrageous, pork-filled Congressional spending bill is a disgusting abomination.  Shame on those who voted for it: you know you did wrong.  You know it.”

Musk had many things to say that day.

Mammoth spending bills are bankrupting America!

ENOUGH https://t.co/65bQQfthGo

— Elon Musk (@elonmusk) June 3, 2025

Responding to a chart of the U.S. national debt, Musk said: “Mammoth spending bills are bankrupting America!  ENOUGH”.

He also said:

We need a new bill that doesn’t grow the deficit

— Elon Musk (@elonmusk) June 4, 2025

“We need a new bill that doesn’t grow the deficit.”

Taking on Trump?

Musk is not directly attacking Trump by name, but he is attacking the bill that Trump has endorsed.

Trump has been ruthlessly attacking the best members of Congress for not supporting his big beautiful bill.  Trump really went after Thomas Massie and said that someone should primary him.  More recently, Trump went after Rand Paul just for saying that he can’t support the bill because it allows the debt to grow by too much.

Well, guess who Elon is very loosely aligning himself with now?

🇺🇸 https://t.co/w6E9pLrv45

— Elon Musk (@elonmusk) June 3, 2025

Simple math https://t.co/ZQn6mXTI86

— Elon Musk (@elonmusk) June 3, 2025

He isn’t saying a lot, but he did seem to respond positively to posts from Paul and Massie (and Ron Paul, too).  Musk is going after Trump’s position without directly going after Trump.

You had to wonder how long this bromance would last.  Trump is so unpredictable that we don’t know if he will finally come out swinging against Musk or if he’ll just mostly ignore him.  There is also the option that Trump could completely change his own position on this, but it would be difficult at this point for Trump to veto or stop the big beautiful bill that he has been praising so much.  I don’t think a man with his ego could do this.

Who is Trump Trying to Serve?

Will Trump be able to read the political tea leaves on this one?  I think that a large segment of Republicans will side with Musk over Trump on this issue.  Of course, I mean the average Republican voter.

The Republicans in Congress are mostly on board with this spending bill.  They are the establishment.  They like the money and the power.  There a many congressional Republicans who have publicly praised Musk and the work of DOGE because they knew it was popular.  Yet, they will vote for this massive spending bill.  They were either lying about supporting the work of DOGE or they are too cowardly to oppose Trump and his BBB.

Trump has been one to campaign on behalf of the little guy.  At least rhetorically, he has opposed the ruling establishment.  But here, he is completely on the side of the establishment and big government.  He is siding with creeps like Mike Johnson while sticking it to the average American.  Elon Musk seems to be genuinely trying to get government spending under control.

I know many people accuse Musk of trying to profit off his involvement in politics.  I find this incredibly hard to believe.  Musk has hurt his companies by being so involved in politics.  He was already the richest man in the world.  He could have just said something nice about Trump when he was elected and left it at that.  He didn’t need this grief.

Even if Musk is doing this for nefarious reasons, he is still correct in most of the things he is saying about runaway deficits and big spending.  And for whatever reasons Trump has for supporting this bill, he is completely wrong and is doing harm to the country for it.

I truly believe that a lot of Republicans are going to side with Musk here.  Trump better play his cards very carefully or he could lose the support of a lot of his base.

He should have lost that support already with the awful things he has been doing since around the end of March.  But this is too obvious even for most Republicans.  Trump is clearly on the side of the establishment and big spending with this spending bill.  His support for this BBB is undercutting everything that DOGE did.

Musk is right to lash out at this monstrosity.  We’ll see if Trump is smart enough to wake up to what is happening.