Huge jump in Personal income…According to the Bureau of Economic Analysis, personal income was up 0.8% month-over-month in April while the consensus was 0.3%. This is following an upwardly revised 0.7% increase from 0.5% in March.

What does it mean – Tariffs, Trade deals, re-onshoring or onshoring, foreign investments, aircraft sales, manufacturing expansion, steel manufacturing, deregulation, DOGE, etc. All adding to rising wages.

CPI was up 0.2% month-over-month…The consensus was 0.3%. Following a 0.1% decline in March. This is the smallest 12-month increase since February 2021.

What does it mean – The economic pundits will pontificate the meaning of tariffs and inflation and still get it wrong if they don’t stop buying into their own fearmongering and biased ideology. Not sure how many times we have to say it, “inflation is about money supply.” It is about printing money. And yes, The U.S. printed a heck of a lot over the last 18 years. Per our previous letter we printed $68 out of every $100 in circulation today in just the last 18 years. Yet, when it comes to inflation, the economic pundits are once again getting it wrong. Here is a look at money supply. Meaning how much is actually in circulation.

Money Supply is flat…According to the FED M2 money Supply has been fairly flat for the last 24 months.

What does it mean – As seen in the chart below, M2 is flat, yet a bit worrisome as we see the short-term trend is still an issue but is flattening as of late. Don’t forget $9 trillion in debt is coming due and an increase in the debt ceiling is probably going to happen.

Currently the falling inflation flies in the face of nearly every pundit’s prediction. Inflation is slowing down, personal income is up, tariff revenue at record levels, we are managing through this “trade war”. We are debating the “Big Beautiful Bill.” Yet monetary policy continues to throw off the pundits.

While tariffs can result in higher costs for items being tariffed, it does not mean the overall economy is experiencing inflation. Tariffs do not change monetary policy or increase or decrease the supply of money.

For instance, if you earn and spend $1000 every week and the cost of gas in CA is almost twice as much as the rest of the country over the last 6 months, it does not mean you have inflation, just less money to buy other goods and services. This puts downward pressure on those other items as fewer things are purchased since you have less money because CA has a bad fiscal policy and is over regulated and has increased gas prices through taxes similar to tariffs. Net, net, there is the same supply of money(M2) in the economy resulting in low or no inflation.

Tariffs bring in record revenue for second month in a row…Since initiating Tariffs in April, the US has collected back-to-back record revenue and we have seen very little inflation.

What does it mean – Following up a record $16 billion in April with over $23 billion in May the treasury is adding record revenue. Assuming that everything stays as it is, this will bring in over $276 billion to the treasury. Unfortunately, this won’t even pay the interest on the $36 trillion in U.S. debt. At the same time the U.S. is seeing a surge in foreign investments. Yet, the very people who insist upon more social programs and more government spending are the very same folks who do not want fair trade and are willing to raise your taxes and subsidize foreign countries at the expense of the American citizens. HMMM.

The Gordian Knot – Who will rule Asia? The consumer or the supplier? Will U.S. politicians obfuscate their responsibilities to the courts, or will they be Courageous, bold, creative and act decisively?

What does it mean – Most of Washington DC, the media, nearly every pundit, elected, unelected bureaucrat, and the so-called experts continue to prove to the American people they are truly insane. Albert Einstein said it best, “doing the same thing over and over and expecting different results is the definition of insanity.”

Solving complex problems takes courage. Often requiring a solution that may not involve traditional methods. In Greek mythology, The Gordian Knot refers to the legend that anyone who can untie the knot would rule over Asia. HMMM!!! Interesting!!

In this story, King Gordius tied an intricate knot on his chariot’s yoke and dedicated it to Zeus. The myth goes on to say that an oracle foretold that whoever untied the knot would rule Asia.

When Alexander the Great visited Gordium, he took on the challenge of the Gordian knot. Instead of trying to untangle it, he cut it with his sword, fulfilling the prophecy and then conquering much of Asia.

The phrase “cutting the Gordian knot” has evolved to mean solving a complex problem in a bold, creative, or decisive manner.

Today we face a new Gordion Knot. And like the one created by a politician, King Gordius, this one was also created by politicians. And the results very well could be the same. Only this time, our Gordian Knot is the disaster of multi-lateral trade deals that have devasted the American worker, American manufacturing, agriculture, and the American farmer.

Upon further examination of these deals and living with the abhorrent results for nearly 50 years and continuing to double down on stupid and lazy, one could easily conclude that multi-lateral trade deals may have been designed to make life easy for politicians, too lazy to do their job and protect the American businessman, consumer, and most importantly the American Dream. And here we are, roughly 2,400 years later and Asia is in play once again as Freedom is challenged by the pundits and ruling class.

Our merry band of “big mouth courageous midgets” are a perfect example of talking oneself and our nation into a “Gordian Knot” over the fear of tariffs, the massive expansion of government, or trying to rid our government of waste, fraud, and abuse, or a self-made immigration problem that has overwhelmed social services, our schools, hospitals, law enforcement, water, electrical, and housing resources, jeopardizing and essentially delaying at best the American dream for your children and grandchildren.

Alexander the Great’s unconventional, bold, and decisive move achieved the desired result quickly and effectively and he went on to conquer most of Asia.

This timely illustration echoes past lessons we should all learn from and recognize the wisdom of action vs. endless babble and never-ending congressional testimonies that tie us up and take our eye off the prize. Will Congress act decisively and “rip the band-aid off?”

Let’s roll America!!

Doug De Groote, CFP®, MBA, CTC

Managing Director

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