December 22 2025
- Budget Deficit - goal was 3%
- Came down from 1.8T to 1.78T (estimated was 2.0T which would have been much worse)
- 40% of government spending occurred in the 4th quarter of 2024 during Biden administration trying to convince voters to their side
- Projecting $200-$300B contraction
- Year nominal growth of 6%
- Hoping to get it down to mid 5s
- Tariffs
- Alan Greenspan did a great job in the 90s and during Clinton years economy was roaring
- Folks were even worried there wouldn’t be enough government debt to service some financial actors
- SF Fed with 150 years of data shows that tariffs are disinflationary and do not cause inflation (see study)
- Tariff policy is part of national security
- Fentanyl imports dropping by putting pressure on China
- Trump retaliated to Chinese rare earth tariffs with his own tariffs
- Chinese won’t stop producing because of tariffs - their economy is based on volume
- Current tariffs is to cause a rebalancing of the economy - over time it should actually drop and get higher tax receipts from more jobs, etc
- Also its about getting more GDP and more reshoring of jobs
- Supreme Court hearings are compelling hearing
- Interesting that President will be allowed to put a 100% embargo but not a 1% tariff according to plaintiffs?
- Alan Greenspan did a great job in the 90s and during Clinton years economy was roaring
- Inflation
- Won’t pretend that people aren’t hurting like the Biden administration did
- Focusing on gas prices dropping - rents dropping with illegal aliens being asked to leave - it will take time
- Fed’s new “Gain of Function” monetary policy article by Bessent
- Fed established in 1913 after KnickerBocker crisis of 1907 which one could say makes 1929 crisis look pedestrian
- Post WW2 Treasury didn’t have any more influence over the Fed
- Post great financial crisis of 2006-2008 lending was bad for post crash housing prices so rich buyers bought up a bunch of properties
- Fed kept QE going for too long - led to 2 tier system of asset holders and not
- Fed exacerbated the economic inequality
- Read the book by Karen Petrou - Engine of Inequality - The Fed and the Future Wealth of America
- Now Fed for some reason has 3 agendas - Rate setting policy, Balance sheet policy, Regulatory
- Fed is losing money every year now - they bought high - this was a mistake
- 42% of inflation was caused by budget deficit - MIT study
- We can’t change the inflation targets until we meet the target of 2% and maintain credibility
- Markets are biology, not math or physics
- Maybe it should be a range - but first meet the 2% benchmark
- 2026
- CapEx boom of 2025 should become employment boom in 2026
- Tax cuts should help
- Trump accounts will help fix the problem of 38% of Americans not being equity owners
- Susan and Michael Dell are putting $6B+
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