WHEN YOU CAN’T OFFER SOLUTIONS, just blame corporate greed. Democrats wrote this playbook, and now the Trump administration has adopted it.

Donald Trump’s war with Iran has disrupted global supply chains. Oil, natural gas, fertilizer, aluminum, helium, plastics, and other commodities that usually transit the Strait of Hormuz were blockaded first by the Iranian navy and then by the U.S. navy too. Additionally, infrastructure around the Persian Gulf has been destroyed, suggesting that even when the blockade(s) end, production won’t resume as normal.

As a result, prices have surged. U.S. gasoline prices just rose at their highest monthly pace on record. Fertilizer prices have spiked too, which will eventually lead to much higher food prices. And voters are big mad.

The Trump administration and its allies have cycled through various deflections and excuses for this mess. Maybe the price increases are temporary, unconcerning, or not that bad. Or, wait—if they are bad, they’re probably Democrats’ fault. Or maybe they’re a small sacrifice to pay for [insert whatever our objective is in Iran].

And now, Republicans are getting around to greedflation. Over the weekend, Trump preemptively criticized fertilizer manufacturers for “price gouging,” an ill-defined, catch-all term meaning ‘prices that are higher than politicians think they should be’:

U.S. Department of Agriculture officials have already begun working with antitrust officials at the Federal Trade Commission and the Department of Justice to investigate whether anticompetitive behavior is driving high costs for fertilizer, machinery, and other inputs farmers buy, Bloomberg reports.

Similarly, Treasury Secretary Scott Bessent said on Wednesday that “We’ll be looking at Treasury to keep the retail gas stations honest. ‘You did this on the way up, you better be doing this on the way down,’” he said, gesturing up and down to indicate rising and falling prices. “And I’m sure the president will call out anybody who’s a bad actor.”

Trump, an icon of the Greed Is Good era who generally has a light touch when it comes to antitrust enforcement,1 appears to be blaming greedy corporations for high prices and prescribing antitrust-related remedies. So let’s consider whether there are merits to this logic.

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LET’S START WITH THE BASICS: Is more competition a good thing? Sure. I’m generally in favor of more aggressive antitrust enforcement (certainly more aggressive than the Trump administration has been to date). But as others have observed, promoting competition is like diet and exercise: good in the long run, but unlikely to solve acute crises.2

And right now we’re in an acute crisis, in the form of a massive supply shock. Whenever there are temporary supply disruptions you should expect short-run increases in prices—and often increases in profit margins as well, which can look “greedy.”

But let’s be clear: The cause of all this is the war; the cause is the closure of the Strait of Hormuz; the cause is Trump.3

What’s more, while the U.S. fertilizer industry is pretty concentrated, the retail gas industry is not. Most of the more than 100,000 gas stations around the country are owned by independent operators, competition is cut-throat, and most operators sell gasoline on razor-thin margins. (The slushies, beef jerkies, and other convenience-store wares are much higher margin.)

None of this is going to stop Trump from fruitlessly jawboning gasoline and fertilizer companies about how they should cut prices, even when doing so is against their economic interest—just as it didn’t stop him from jawboning companies not to raise prices in response to his tariffs.

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ALL OF THIS SHOULD BE A LAYUP for Democrats: Look at the silly things Trump is saying to deflect from his price increases! The challenge, of course, is that Democrats have themselves used nearly identical silly rhetoric too.

They did it when prices surged circa 2021 to 2023, for similar reasons: a COVID-era mismatch between constrained supply and strong demand. In that case, the supply issues were caused by the pandemic and not of Democrats’ making (unlike with today’s supply-chain problems related to Trump’s war). But . . . Biden and the Democrats did boost aggregate demand in ways that made the inflation problem a bit worse than it might otherwise have been, at least on the margin.4

Something similar happened with the great eggflation crisis of 2024. That was also caused by a sudden supply shock (bird flu forcing farmers to cull their flocks).5

But rather than offering boring, technical explanations about supply and demand (which might in some circumstances implicate specific policy decisions), politicians have decided that it’s more politically useful to blame greedy corporations. Both parties do this: Both the Biden and Trump administrations presided over antitrust investigations of Big Egg, and both railed against gas stations for raising prices.

And you can go back much further: There’s a storied history of presidents (and lawmakers) demanding FTC investigations when gas prices rise due to a supply shock, and then not finding anything.

None of which is to say that companies never collude to set prices beyond where market pressures would align them; there are real cases of illegal and anticompetitive behavior (like outright price-fixing); when there is legitimate reason to suspect that’s what’s going on, those firms should be investigated and held accountable.

But when it comes to inflation, if presidents feel the need to Do Something about high prices, launching a performative antitrust investigation is a cheap, easy option, one with seemingly little political cost. Same with yelling about greed, price-gouging, profiteering, and other vague sins that the public loves to hate. The risk in this approach is that none of these actions will actually fix the pricing problem—and so the president just ends up looking ineffectual in the process.

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Ramparts

— Given that those rising fertilizer prices are expected to feed into food prices soon, it’s maybe not the best idea for the Trump administration to propose cuts to nutritional assistance for low-income pregnant women, moms, babies, and toddlers.

— The U.S. fertility rate just hit a record low. This has major cultural, political, and economic implications worth exploring in a future newsletter. In the meantime, you can read JVL’s opus on the subject, from a little over a decade ago.

— Greedflation isn’t the only au courant example of horseshoe theory: Another is data centers. Red and blue states alike around the country are banning them (or considering doing so). The Democratic candidate for Texas agricultural commissioner also recently tweeted that AI data centers cause “chickens to lay 50% less eggs,” among other MAHA-esque claims. Incidentally I heard similar livestock-centric objections to wind farm developments when I reported on that subject in Kansas a few years ago.

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A LOT OF PEOPLE ARE GETTING RICH off the Trump presidency. Donald Trump himself tops the list, of course, but it also includes his kids and in-laws; other grifting nepo-babies; cabinet members (as well as their staff and children), senior aides; and other well-connected friends, investors, and firms.

You know who isn’t on that list?

You.

Yes, you, dear reader—at least assuming you’re not among the small community of courtiers sucking public funds dry. Instead, in virtually every way imaginable, Trump has made it easier for all those insiders to profit and, in turn, rip you off. If you bet on or invest in anything Trump might influence and you don’t have inside information, you’re a chump.

As the expression goes: If you’re not at the table, you’re on the menu.

The recent rash of curiously well-timed trades in prediction markets is one example of how those who have drawn up chairs to Trump’s banquet table appear to be feasting at public expense.

For example, there was the Polymarket account that banked over half a million dollars by betting on Iran strikes and the, ahem, departure of the ayatollah shortly before our military started dropping bombs. Other ‘lucky’ betting-market accounts, created right before the United States invaded Venezuela, engaged only in Venezuela-related bets, and somehow made perfect predictions every time, the Financial Times reported.

Similarly, just this week, a group of newly created Polymarket accounts “made highly specific, well-timed bets on whether the U.S. and Iran would reach a ceasefire on April 7,” Politico found.

These kinds of trades have raised concerns about not only insider-trading based on confidential or classified information, but also the incentives they create for as-yet-unmade decisions. How do we know officials are crafting policy based on what’s best for the national interest rather than what produces the biggest payday?

The risk of public fleecing based on private (or classified) data is not unique to prediction markets. There has been suspicious trading activity in more traditional financial markets, too.

Last month, minutes before Trump posted a market-moving post about his supposedly “productive” talks with Iran, someone (or someones, or some entity) placed bets worth half a billion dollars in oil markets.

“My gut from watching markets for the last 25 years is this is really abnormal,” a portfolio manager told the FT. “It’s Monday morning, there’s no important data today, there aren’t any Fed speakers you’d want to front run. It’s an unusually large trade for a day with no event risk. . . . Somebody just got a lot richer.”

This kind of insider trading is not some victimless crime. When traders front-run a market-moving Trump post, or a military announcement, or some other confidential or classified information, they’re taking money from all the other investors who didn’t have access to that inside information. Put another way: They’re taking money from your 401(k). Or your teachers’ pension funds. Or mom-and-pop investors. Again, all the chumps and suckers who don’t have a direct line to the president.

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Less white-collar enforcement, more eligible white-collar victims

OF COURSE, INSIDER TRADING antedates the Trump administration and has produced its fair share of political scandals in the past. But at least historically federal law enforcement usually tried to crack down on it, along with other white-collar crimes. That is . . . somewhat less true today.

Now, in fairness, Justice Department white-collar prosecutions have been trending downward more or less since the 1990s, with occasional spurts of enforcement (such as right after the 2008 financial crisis). But the Trump administration just hit an all-time low in white-collar prosecutions this past fiscal year, according to data from the Transactional Records Access Clearinghouse.

The Trump administration has dropped 145 major enforcement actions against corporations that it inherited from the Biden administration. And under Trump the head of the Department of Justice criminal division issued a directive last year to turn “a new page on white-collar and corporate enforcement” and divert more resources to bigger administration priorities, like immigration-law violations.

Trump has outlined the same approach through executive orders, including one that called for “fighting overcriminalization in federal regulations.” Another EO essentially adopted higher tolerance for the lucrative nexus between white-collar crime and international bribery—directing the DOJ to temporarily pause Foreign Corrupt Practices Act investigations and enforcement in order to develop a new strategy that safeguards “American economic competitiveness.” Trump has also been trying—with mixed success—to dismantle the entire Consumer Financial Protection Bureau.

Meanwhile, his administration has taken actions that would subject many more people to the riskier markets or predatory acts that these laws and agencies were meant to protect against. Last week the Labor Department proposed a new rule encouraging mom-and-pop investors to stash their 401(k) money in riskier “alternative” assets, such as crypto and private credit . . . right as the opaque and tenuous private credit market may be about to collapse.

Hey, when you run out of greater fools, it can be helpful to mint more of them. Someone needs to be left holding the bag.

Pardon Me

BUT TRUMP IS NOT MERELY content to block prosecutions of new fraudsters. He wants to clear the records of those already found guilty.

He has pardoned or commuted the sentences of dozens of people convicted of fraud and other financial crimes, such as Changpeng “CZ” Zhao, founder of the crypto exchange Binance1; Joseph Schwartz, a former nursing-home owner; Wanda Vázquez Garced, the former governor of Puerto Rico; former Rep. George Santos (R-N.Y.); EV startup founder Trevor Milton (represented by Pam Bondi’s brother); and billionaire former English football club owner Joe Lewis, who had previously pleaded guilty to insider trading charges.

“Over half of Trump’s 88 individual pardons are for white-collar offenses, with money laundering, bank fraud and wire fraud among the most frequent crimes the president has wiped clean,” according to an NBC News analysis from January.

NBC found that the 88 pardon recipients in 2025 had been ordered to pay more than $298 million in fines and restitution—and it’s unclear if the victims will ever receive it. Those being stiffed of their compensation include individual investors, as well as larger groups of victims such as the Oglala Sioux Tribe. (The Crime Victims Fund, created under Ronald Reagan in 1984, has been shortchanged, too.)

But the universe of victims is broader than the direct marks of the criminals whom Trump has pardoned. That’s because this kind of damage to the rule of law undermines faith in the broader market, by destroying trust that promised transactions or restitutions (including those put in place by our judicial system) will be honored.

As I wrote back in 2024, when some commentators argued that Trump’s felonious misrepresentations to banks and insurers were “victimless” crimes because those institutions still got their money in the end:

In a capitalist society, laws against fraud exist to protect not only the direct victims of fraud but also the overall integrity of the marketplace.

The reason we outlaw fraud, among other misbehavior, is to facilitate trust in business transactions. If I sign a contract to pay money in exchange for some service, I want to be confident that the promised service will be delivered. Or that if it isn’t, there will be legal consequences — regardless of the other party’s fame, wealth or political connections.

This level of trust, bolstered by the law, is why companies generally prefer to invest in the United States rather than a “Venezuela” or “Cuba.” The rule of law makes it easier to do business, not harder. The only people who benefit from the freedom to commit fraud are those who commit fraud.

Allowing well-connected sleazebags to lie and cheat hurts lenders, insurers, investors, customers, and others. But it also hurts the competitors of those sleazebags—and, in the long run, anyone else who happens to be engaging in commerce, too.

In this way, turning a blind eye to lawbreaking—whether via insider trading on classified information in newfangled prediction markets, or more traditional defrauding of investors or Uncle Sam—corrodes our markets because it encourages more lawbreaking.

It invites recidivism from those who’ve already been pardoned—as was the case with Adriana Camberos, who recently received her second grant of clemency from Trump (in January he pardoned her for a fraud unrelated to the fraud for which he released her from prison during his first term). But it also encourages more lawbreaking by everyone else. It compromises our democracy but also our collective morality. Because, after all, who wants to be the only chump left not cheating?

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Ramparts

— White House National Economic Council Director (and JVL’s favorite economist) Kevin Hassett predicts 4 to 5 percent GDP growth this year. Unfortunately that is roughly double what every major forecaster predicts, including the Blue Chip survey (1.9 percent); the Federal Reserve (2.4 percent); the Wall Street Journal survey of economic forecasters (2.1 percent); the Congressional Budget Office (2.2 percent, from February just before the war); the Financial Times/Clark Center survey (1.9 percent); and the OECD (2.1 percent). Maybe Hassett’s optimism will still win out, but he is not exactly known for his forecasting marksmanship. That said, he’s undershooting expectations from even more bullish Trump officials, like Commerce Secretary Howard Lutnick who was predicting 6 percent GDP growth just three months ago.

— Speaking of Trump economic advisers, Politico reports that the frontrunner to become chair of the White House Council of Economic Advisers is Chris Phelan, an adviser at the Federal Reserve Bank of Minneapolis. He looks to be a serious economist with an impressive C.V. I’m not totally sure why he’d want the job, but maybe he thinks his recent scholarship on strategic sovereign debt default will come in handy. (Let’s hope not?)

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— The Saudi government will soon be part owners of CNN and CBS, it seems. The Wall Street Journal, quoting “people familiar with the matter,” reports that the Saudi stake in the Paramount takeover of Warner Bros.-Discovery will likely not trigger a mandatory CFIUS or FCC review, which often accompanies a foreign entity gaining control of a significant U.S. business or media company.

— The White House budget proposes massive additional cuts to scientific agencies (including a 50 percent cut to both the National Science Foundation and the Environmental Protection Agency). Even the scientific areas that normally appear to be darlings of the Trump administration are unspared: AI research funding at the NSF, for example, would be cut by a third from its 2025 level.

— I wish we lived in a world where this kind of technological innovation was neither necessary nor profitable.

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I’M NOT SAYING DONALD TRUMP is trying to lose the midterms. But if he were, would he really be doing anything differently?

In recent days, the president has practically giftwrapped affordability-related oppo ads to Democrats via at least four channels:

• his war, and the resultant rising costs;

• his tone-deaf comments brushing off Americans’ concerns about rising prices;

• his proposal for (even more) safety-net cuts; and

• the gilded, marble-walled, money-making totems to Trump himself.

Any one of these things might be seen as political suicide in an election year. But all of them together, at once? It really starts to look like a deliberate plan to undermine his own party. Dems have a unique opportunity to (accurately) blame rising costs on Trump right now, and to shame him for his indifference to—at times, derision of—the pain he has caused. Will they take it?

Americans are big mad about the economy. So mad that they now miss the Biden economy, which trust me when I tell you they absolutely detested:

While some of this Debbie-Downerism may be “bad vibes,” real economic conditions do appear to be deteriorating. New data show that in February we had the lowest level of hiring since April 2020 (i.e., when the economy was shuttered due to COVID). Wholesale prices rose sharply in February as well. And those metrics were captured before Trump decided to start a war in the Middle East, which is making everything worse.

Crude prices spiked after Trump’s confusing and incoherent speech on the Iran war last night, in which he insisted that the Strait of Hormuz “will open up naturally.” Major measures of crude oil futures prices closed Thursday around 10 percent higher, at $110 per barrel; meanwhile “spot prices” for Brent crude reached a whopping $141, the highest level since the 2008 financial crisis.1

And of course the war hasn’t merely forced an oil crisis; we’re well on our way to an everything crisis, given the many supply chains disrupted by the strait’s closure.

Disruptions to fertilizer shipments and higher diesel prices are already raising food input costs. Fuel surcharges for shipments are lifting grocery prices, too. A global helium shortage is jeopardizing the AI boom, since helium is used to manufacture semiconductors (and has lots of other critical industrial applications, like MRI machines). Plastics prices are spiking too. And so on.

These disruptions won’t merely lead to higher prices; they are also boosting the risk of recession. That’s because higher energy costs (among other rising input costs) and lingering uncertainty effectively serve as a kind of tax on nearly all economic activity. Already Goldman Sachs estimates that the war is costing about 10,000 jobs a month.

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Trump’s other misguided economic policies (on trade, immigration, the Fed, etc.) are also compounding the warflation.

For example: aluminum smelters across the Middle East are closing down because of the war. Some have reportedly sustained damage from Iranian drones and missiles. But even if the war ended today, and if a shuttered facility had been completely unscathed by bombing, it can still take up to a year for an aluminum-smelting plant to restart operations. It’s not like flipping a switch.

But amid these developments, Trump has decided to increase the price of products made with aluminum.

Specifically, his administration is overhauling his existing steel and aluminum tariffs so that the tariffs will now apply to the entire value of a product that includes metal inputs, rather than just on the value of the steel or aluminum components alone.

Today is also the one-year anniversary of “Liberation Day,” when Trump announced global tariffs on adversaries, allies, and penguins alike. Even though the Supreme Court struck down those particular tariffs, the Trump administration is still refusing to issue refunds and working to reconstitute the stricken tariffs through other legal authorities.

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Trump Doesn’t Feel Your Pain

What is Trump’s response to concerns over the costs he’s imposed upon American consumers and businesses, via both his trade wars and actual wars?

He says it’s a sacrifice Americans must be willing to make, or, as he puts it, a “very small price to pay.” Maybe, he says, it’s even a good thing if oil prices rise, since America is home to big oil producers. And downstream companies shouldn’t care anyway about the costs: “You make enough money, it doesn’t matter to you, right?” he recently told farmers.

The words of a true political empath.

But it gets worse. Because while Trump is also giving us higher prices, he is also taking away programs to cushion the blow of those higher prices.

For instance, on Wednesday Trump said he directed his budget chief to stop sending states money for daycare because we need that money for wars instead:

Don’t send any money for daycare because the United States can’t take care of daycare, that has to be up to a state. We can’t take care of daycare. . . . We’re fighting wars, we can’t take care of daycare. You gotta let a state take care of daycare, and they should pay for it, too. . . . It’s not possible for us to take care of daycare, Medicaid, Medicare, all these individual things.

This is quite the midterm message: We can afford a billion-dollar-a-day war but not the popular safety-net programs that keep many American families afloat.

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Putting (Your) Money Where His Mouth Is

Lest you think this was merely an errant gaffe, Trump actually did try to freeze federal childcare funds sent to several blue states (though his efforts have been blocked by judges). And soon these spending priorities will soon be laid out nationwide, in black and white, in the White House budget.

Trump’s fiscal year 2027 budget, expected to be released Friday, “will frame his party’s midterm election message around a massive defense buildup, partially paid for by cuts to domestic agencies,” Bloomberg reports.

White House budgets rarely become law, and are usually seen as messaging documents. But on this particular set of fiscal choices, Trump may find a willing audience up on Capitol Hill.

Axios reports that House Republicans are currently weighing cuts to U.S. health programs to offset an additional $200 billion in spending on the Iran war and immigration. These cuts would be in addition to the $1 trillion+ cuts in Medicaid and SNAP that Republicans already passed in last year’s One Big Beautiful Bill, to pay for regressive tax reductions.

Those program cuts, coupled with the expiration of enhanced Obamacare premium subsidies that Republicans refused to re-up, have fed into Americans’ worries about health care affordability. In fact, new Gallup polling shows that health care leads Americans’ list of domestic concerns, with more respondents saying they worry “a great deal” about the “availability and affordability of healthcare” (61 percent) than said so about fifteen other domestic policy areas.

Trump’s timing here is pretty impeccable. The only way he could possibly appear more tone-deaf is if he were simultaneously spending hundreds of millions of dollars on a gilded White House ballroom and erecting a giant golden statue of himself in his presidential library/hotel.

Trump is worsening affordability while building himself a new Versailles—it’s a split screen that Democrats dream of.

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Ramparts

— In case you’re wondering if anyone is getting rich off of those Medicaid cuts, the answer is: Yes.

— It’s a strange state of the world when socialists are fantasizing about the rich getting (even) richer, but the New York City mayor’s office now finds itself doing just that after learning that the city’s finance professionals took in a bit less than expected last year. The city’s 2026 budget under Mayor Zohran Mamdani was counting on the average Wall Street bonus to soar an average of 15 percent above the prior year, but instead it rose “only” 6 percent (to $246,900). Tiny violins, I know; but this leaves an even bigger budget hole for the city to fill. That said, no one in government seems to have had a solid handle on how high the bonuses would climb: New York governor and self-described “staunch capitalist” Kathy Hochul’s office had projected that they would go up by 25.9 percent, resulting in an even larger budgetary hole at the state level.

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— A federal judge ruled that the Trump administration’s efforts to extract a list of Jews from the University of Pennsylvania were legally above-board. You may recall that Barnard got a similar demand last year, and complied. Penn says it is appealing the ruling. Meanwhile, a handful of states say the administration has defied a federal court order by continuing to share the private health information of millions of Americans with immigration officers. (I last wrote about all this, plus other examples of the administration’s abuse of confidential records and compilations of uncomfortable “lists,” back in January.)

— GLP-1s continue to rack up wins, with the latest being a demonstration of the drugs’ potential value for helping to treat psoriatic arthritis. One of my unpopular opinions is that people are probably overstating the medium-term economic impact of AI while underestimating the economic impact of GLP-1s.

— Happy Passover! RFK Jr. is bringing the plagues back.

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MOST PEOPLE THINK ABOUT the Federal Reserve as a dull, technocratic agency. If they think about it at all. Unlike other parts of government, the Fed isn’t trying to make headlines. They’re not trying to have viral moments.

Which is why it’s so weird that Fed Chair Jerome Powell has become something of a folk hero.

The John F. Kennedy Library Foundation announced last week that it would be honoring Powell with its Profile in Courage Award for “protecting the independence of the Federal Reserve . . . despite years of personal attacks and threats from the highest levels of government.”1

That’s a euphemism for: Trump launched a bogus criminal investigation into Powell to try to bully him into doing Trump’s bidding; and at great personal and professional risk, Powell stood his ground. This unlikely gallantry included some (yes) viral moments, such as a tense exchange with Trump on a hard-hatted tour of the Fed’s renovation project. And Powell’s dry-mouthed, direct-to-camera video, released late on a Sunday night, in which he revealed that the DOJ had threatened to criminally indict him.

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The Fed has not released a statement on the award, but confirmed to me that Powell will accept it, and will speak at the May ceremony where he’ll be honored.

For those of us who cover the Fed—as I have for almost two decades now—this has all been super weird. For a few reasons.

First, on the rare occasions that Fed news has gone viral before, it’s never been for anything good. At least I can’t think of anything comparable to this. If normies are sitting around discussing the Fed, and Fed officials are getting memed,2 something has usually gone very wrong for the economy, or monetary policy, or both.

Second, Powell does not want to be a leader of the Resistance. Central bankers are nerds who fiddle with interest rates. They sit around debating the value of r*.3 They’re not looking for political battles; in fact, they deliberately duck them, cognizant of the fact that the central bank needs to be politically independent in order to function.

By “politically independent,” I mean not just that Fed officials have to make decisions without regard to politicians’ preferences. They also must be perceived as operating entirely apart from politics. The public needs to believe the Fed is willing to do politically unpopular things, like hiking interest rates if necessary. That credibility—the mere belief that the Fed would willingly play bad cop—meant it rarely had to, and helped keep inflation low for decades.4

Powell doesn’t want to be viewed as a friend to Trump; and he also doesn’t want to be perceived as an enemy either. He wants to be seen, rightly, as a nothing to Trump.

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This situation is also super weird when you think about the kinds of people and temperaments the central bank tends to attract. The Fed is an institution that operates largely via consensus.5 Fed officials are generally not the kinds of personalities looking for public confrontation, or for opportunities to flaunt how brave they are. They’re not looking to win awards for “courage.”

Then again, maybe most people who truly deserve such awards aren’t those who seek them out. Winning an award for “courage” is like the moral equivalent of having a disease named after you. It’s nice to be recognized, I suppose, but maybe not worth going through what you had to go through to get it.

Just as Trump likes making apolitical things political, he also has a knack for forcing people to reveal either their courage or (too often) their cowardice. Powell’s choices have clearly resonated with the American public. If normie Americans are suddenly stans of a 73-year-old investment-banker-turned-technocrat, it’s because the country has been so starved of basic public virtue.

IF POWELL DESERVES OUR ADMIRATION, his presumed successor may soon warrant our pity: Trump has already put Kevin Warsh in a horrible position, and Warsh hasn’t even been confirmed yet.

Trump selected Warsh to succeed Powell as chair of the Fed when Powell’s term ends in May. A lifelong inflation hawk, Warsh nonetheless secured the nomination after declaring his intention to cut interest rates—something you don’t usually do when inflation is high. Trump had made clear this was a prerequisite for anyone wanting the job, after all.

But Trump is making it increasingly difficult for Warsh—assuming he’s ultimately confirmed6—to keep this pledge.

Even before the Iran war, inflation had been running stubbornly high, boosted in part by Trump’s trade wars. When inflation is elevated, that usually means the Fed wants tighter, not looser, monetary policy—i.e., higher interest rates.

And now, with the war disrupting oil markets (among many others), inflation is expected to rise even higher. The latest OECD Economic Outlook, released today, predicts U.S. inflation this year will be 4.2 percent. Meanwhile investors expect headline inflation to exceed 5 percent in the next twelve months.

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There is an ongoing debate as to how the Fed should think about this risk.

Normally, central bankers would be expected to “look through” a one-time energy shock and not worry too much about it feeding into ongoing inflation. In fact the Fed’s preferred inflation gauge excludes energy and food prices precisely because they’re so volatile.

But that’s not obviously the case now. This is not just an energy shock, it’s arguably an everything shock. And we’ve had five years of above-target inflation already. This raises the alarming question: What if businesses and workers start to expect broad-based price increases, and turn them into a self-fulfilling prophecy? If businesses expect higher prices for inputs, they could raise prices now—and voila, hypothetical future inflation becomes real, here-and-now inflation. The Fed would need to nip that in the bud.

Markets have already been pushing back their expectations for when the Fed will make its next rate cut, and some Fed officials, Powell included, have even suggested that the next move could well be a rate hike.

On the other hand, the U.S. economy has also shown serious signs of weakness lately. The Fed believes there’s been zero private-sector job growth over the past six months. The war is also raising the risk of recession. Maybe rate cuts, usually adopted during recessions, are a good idea after all?

This particular set of economic conditions would be challenging for any Fed leadership to make sense of. It’s genuinely hard to know what to do when you’re staring down the barrel of stagflation. But this will all be especially challenging for Warsh, who has promised to cut rates—and whom Trump has “joked” about suing if lower rates don’t materialize. Warsh and his Fed colleagues presumably also have to think about whether the public will view any rate cuts as an acquiescence to Trump (regardless of their actual rationale), and therefore a threat to that perceived independence of the Fed that I mentioned earlier.

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On the bright side, at least Warsh won’t have to make this decision alone. As I mentioned, interest rates are set not unilaterally by a chair, but by a twelve-person committee. And among those committee members may well be . . . Powell.

Last week Powell made an unusual announcement: Unlike nearly every Fed chair who preceded him, Powell said he had “no intention” of leaving the Fed Board, even after his term as chair ends in May—and will not depart at least until that bogus criminal investigation into him is over. Indeed, he says he may well stay even after the investigation is dropped, depending on what he judges to be best for the institution and the country.

Things may be super weird. But they’re also about to get super awkward.

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Ramparts

— Trump administration officials are reportedly modeling what a potential spike in oil prices to $200 a barrel could mean for the economy, Bloomberg reports. Maybe something they should have considered earlier?

— Relatedly: This past week has seen a brutal series of polls on the economy and Trump’s role in it. Just one example: Approval of Trump’s handling of the economy is at its lowest level across either of his terms as president—and lower than the measure was at any time during the Biden administration.

— Jed Kolko notes that “Miami is the new San Francisco,” in that it had the highest out-migration rate of all large metro areas last year.

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— Deutsche Bank has developed a “pressure index” for Trump,7 defined as a “proxy for upcoming rhetoric or strategic adjustments by the U.S. administration.” Its inputs are: one-month change in Trump’s approval ratings; one-year inflation expectations; and the performance of the S&P 500 and U.S Treasury yields. When the index gets higher, a TACO is supposed to be more likely to happen.

The problem is this measure kinda undermines itself. If it’s a good proxy, people will trade on it; its financial components (S&P, bonds) won’t gyrate as much because investors will anticipate the TACO and not freak out. But then the feedback loop that causes Trump to TACO gets short-circuited, and he doesn’t TACO because no market freakout forced him to.

What we want is probably something more like a positive feedback loop that causes Trump to TACO more. Normally shame might serve that function. But, you know.

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THE IRAN WAR HAS BROUGHT the dreaded r-word—recession—back into play amid a deeply fractured global energy market. To be clear, a massive downturn is not inevitable, nor can we even say it’s more likely than not. Recent surveys of economic forecasters place recession odds over the next year at about a third.

But those surveys were at least partly fielded before recent escalations in the war. And historically, oil shocks have preceded recessions in the United States (and elsewhere). So it’s worth walking through why this war and its resulting supply-chain disruptions have significantly raised the odds of recession—and what that outcome would actually look like. Buckle up. . .

The war isn’t just raising prices—it’s also slowing growth

Even before the war, the U.S. economy was showing serious signs of fragility.

Inflation has been above the Federal Reserve’s target of 2 percent for five years now, and Donald Trump’s trade wars have contributed to rapid price growth. For example, wholesale prices rose sharply in February (i.e., before the war began). Meanwhile, job growth has also sputtered; Fed Chair Jerome Powell said in a press conference Wednesday that if you adjust for what Fed staff thinks may be “overstatement” owing to methodological challenges, there has been effectively “zero net job creation in the private sector” over the past six months. And uncertainty (related to trade wars, regulatory changes, various rule-of-law-type risks) has also been a drag on economic growth.

That was the grim baseline prior to the war. Now layer on to those conditions a global oil shock.

Oil prices have been extremely volatile since the war started. Brent crude briefly surged above $119 per barrel on Thursday morning, then fell back and settled around $108. Fuels made from crude have become painfully expensive, with diesel prices nationwide now above $5 per gallon, and gasoline prices inching toward $4 per gallon. In much of the western United States, they’re already well above that milestone.

Jet fuel prices have likewise nearly doubled in the past month, leading to higher airline fares and canceled flights.

And needless to say, this is not only a U.S. story. Petroleum product prices have shot up even higher in Europe and Asia, leading to fuel hoarding and social unrest. The same holds true for liquefied natural gas prices, although the United States is relatively insulated from that hike because we produce so much LNG ourselves.

Obviously, high fuel prices are frustrating for consumers, who see billboard advertisements on their drive to work every day reminding them how expensive gas keeps getting. But fuel prices don’t just feed into inflation; they also have enormous consequences for global economic growth.

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TRUMP’S WAR OF CHOICE with Iran has many costs—in dollars, munitions, lives. But you could imagine at least one possible upside: climate.

This global oil crisis has again highlighted the riskiness of dependence on fossil fuels and the relative resilience of renewable energy. After all, naval blockades can stop oil tankers from traversing a narrow strait but they can’t keep the sun from shining or the wind from blowing.

We’d be more economically insulated if our country had built out more utility-scale solar projects, wind farms, batteries, and all the other clean-energy infrastructure that then-President Joe Biden subsidized and that Trump subsequently killed. Maybe this war will finally build more political will for green investment—not for bleeding-heart, tree-huggy reasons, but for our national and economic security.

You might assume all this. I initially did.

But, at least in the short term, it’s likely wrong. Instead, a sustained oil disruption could end up shattering the world’s attempts to curb climate change. That’s because it’s screwing up Europe’s ambitious climate plans, which are A) much more important than anything the United States is doing, and B) basically holding the global climate effort together.

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Europe is the key

When I started reporting out this newsletter, I thought it would be a good news/silver lining–type story. The headline I had in mind: “Trump’s Accidental Plan to Fight Climate Change.” After all, the war has already led to a shutdown of a fifth of the world’s oil supply, which is a keep-it-in-the-ground climate hawk’s dream.

The subsequent runup in energy costs has likely boosted some climate-friendly incentives elsewhere in the economy: The prospect of $4-a-gallon gasoline may get more Americans out buying EVs. Higher electricity prices might lead more people to persuade their HOAs to allow rooftop solar. And so on.

But those kinds of changes are small bore compared to what really matters—and what really matters right now is

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AHEAD OF THIS NOVEMBER’S MIDTERM ELECTIONS, the White House has reportedly grown worried about high consumer prices, particularly for fuel. Trump aides are now “looking under every rock for ideas on improving energy prices, especially gasoline prices,” per Politico.

Hmm. Have they perhaps tried not starting a war in the Middle East?

Until quite recently, oil and gasoline prices had been a bright spot in the affordability fight, registering modest price declines since Trump took office. But since we bombed Iran, energy costs have risen sharply. To put things in perspective: Oil prices are up about 20 percent so far just this week.

In other words: If Trump intended to start a war abroad to distract from problems at home, as some have proposed,1 he has instead made his domestic problems much worse. Trump’s “warflation” has just begun.

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The top crude oil expert at S&P Global Energy warned that the military conflict has the potential to become “the largest oil supply disruption in history.” That’s because about a fifth of the world’s oil passes through the Strait of Hormuz, on Iran’s southern coast—or at least, it used to. Iran warned tankers and other commercial vessels not to transit the strait, and at least nine of them have now come under attack in the Gulf region. Shipping traffic through the strait has virtually stopped.

Trump has offered U.S. Navy escorts (and insurance) to vessels transiting the strait, but as my colleague Ben Parker explained, that’s not a feasible solution. We’re now seeing the fallout: Iraq, for instance, slashed oil production by nearly 1.5 million barrels a day because it’s unable to load tankers and is running out of storage. Refineries in Saudi Arabia, Kuwait, and Bahrain have slowed output or shut down entirely; one in Bahrain was reportedly hit by a drone strike today. Meanwhile, China has begun hoarding fuel.

Gasoline might be the most noticeable price Trump is turbocharging right now, but it’s far from the only one.

Other energy markets are affected, too. Qatar, which supplies about 20 percent of the world’s liquefied natural gas, halted LNG production after a drone attack. Production there will take weeks to restart.

As a result, downstream firms that require LNG to operate are closing shop, too. For example, the Gulf region is responsible for nearly a tenth of the global aluminum supply. Already this week, multiple major aluminum smelters had to initiate shutdowns; one company says it may take up to a year to restart production.

Production of methanol and other chemicals has also been disrupted. Same with fertilizers used to grow the world’s food supply: Roughly 35 percent of global exports of urea (the most common nitrogen fertilizer) and 45 percent of global exports of sulfur (used to produce phosphate fertilizers) traversed the Strait of Hormuz. Fertilizer prices are already spiking, and American farmers are freaking out. Consumers may see “higher prices for bread within six to 10 weeks, eggs within a few months and pork and broiler chicken within six months,” according to an estimate from food-system expert Raj Patel.

And then there are the gazillions of consumer goods that people may not realize use petrochemicals as inputs. Those include clothes, iPhones, candy, dentures, dishwashing liquid, footballs, shampoo, toothpaste, lipstick, plastic toys, trash bags, umbrellas, tires—you name it. These products won’t immediately get more expensive, but we should anticipate that the chemicals that go into these products will start to get costlier if the war continues for a month or two, per Seth Goldstein, a senior equity analyst who covers chemicals for Morningstar.

Higher fuel prices also feed into higher prices for virtually all other goods—and many services, too—because most modes of transportation use fossil fuels.

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I DON’T THINK TRUMP is deliberately trying to raise prices. But if he were, it’s not clear how much he’d be doing differently right now.

This is why it’s so striking that Trump decided to start this war in an election year—and at a time when prices were already arguably the biggest issue dragging down his approval ratings, to boot. (I’ll leave geopolitical, military, and humanitarian considerations of the war to other experts, but my colleagues suggest those aspects don’t reflect particularly well on him, either.) The Biden administration went through a similar cost-of-living crucible in the 2022 midterms, when gasoline prices spiked because of a different war and featured prominently in GOP midterm attacks; and then again in the leadup to the 2024 presidential election.

At the time, naïve economic commentators such as yours truly had to explain that presidents can’t have much effect on prices, despite what voters assume. But between tariffs, mass deportations (and a resulting depletion in the agricultural workforce), politicizing the Federal Reserve, and bombing Iran, Trump seems intent on proving us wrong.

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Ramparts

— Voters may be mad, but there will also be winners from rising oil prices, of course—including producers outside the United States. Vladimir Putin, for instance, can use the windfall to help pay for his war in Ukraine.

— Trump and White House Press Secretary Karoline Leavitt appear to believe that the military conflict will ultimately reduce energy costs in the United States. It’s unclear how that would work. I imagine it involves “taking the oil” (à la Venezuela) and underpants gnomes.

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— The Pentagon estimates that the war costs around $1 billion per day, according to the Atlantic’s Nancy Youssef.

— New possible sign of frailty in the U.S. economy: The number of Americans withdrawing money early from their 401(k)’s just hit a record high.

— Meanwhile, Sens. Ted Cruz (R-Texas) and Tim Scott (R-S.C.) are asking the Treasury Department to approve a $200 billion tax cut without congressional approval. It would be an effective cut to capital gains taxes, which overwhelmingly would benefit the wealthiest Americans. Nice splitscreen there with the prior item.

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THERE’S AN OLD JOKE ABOUT two elderly ladies kvetching about a meal. “Oy, the food at this place is really terrible,” one complains. The other responds, “And such small portions!”

The same could be said of President Trump’s affordability comments at last night’s State of the Union, which were both brief and abysmal.

Affordability is the issue for the 2026 midterms. In virtually every poll, with virtually every demographic, some version of “inflation/prices/cost of living/economic problems” tops the list of the most important challenges facing the country. It also tops the list of reasons Trump’s own voters are ditching him, according to polling from Morris Predictive Insights.

And yet, according to the time-keepers from NBC News, in Trump’s record-long 108-minute SOTU speech, he spoke about affordability for a measly 2.9 minutes.

For context, that’s just a few seconds longer than the time he spent celebrating the country’s Olympic achievements (2.2 minutes), and about half the time he spent talking about Venezuela (4.8 minutes). Even if you add in time he spent on the broader economy and taxes, this total (7.1 minutes) is still less than the amount of time he spent talking about national security (8.5 minutes).1

If Republican lawmakers were hoping Trump would spend his ample time on the things their voters care about, they must have been disappointed.

When he did touch on affordability, Trump questioned the very notion that it was a legitimate issue at all. He claimed that “affordability” problems were either created or imagined by Democrats, and naturally, that they have all been solved since he took office:

Now, the same people in this chamber who voted for those disasters suddenly used the word “affordability.” . . . they just used it because somebody gave it to them, knowing full well that they caused and created the increased prices that all of our citizens had to endure. You caused that problem. You caused that problem.

They knew their statements were a lie. They knew it. They knew their statements were a dirty, rotten lie. Their policies created the high prices. Our policies are rapidly ending them. We are doing really well. Those prices are plummeting downward.

This message does not seem to be resonating with voters, most of whom say Trump is making prices and inflation sound like they’re in better shape than they really are.2 And they’re right: Notwithstanding Trump’s claims, prices are not “plummeting downward.”3 Prices are very much still rising—and rising faster than the Federal Reserve’s target of 2 percent. And there’s evidence that Trump’s tariff policies are contributing to that above-target inflation. For example, prices of appliances, furniture, and new cars, all products targeted by Trump tariffs, grew sharply from December to January.

Not to worry. Trump promised that his tariff revenue would be used to defray other American expenses—specifically, that it would “substantially replace” income taxes. This is a mathematical impossibility.

Tariff revenue certainly grew under Trump, totaling $264 billion in calendar year 2025 (more than triple the amount collected in 2024, by the prior administration). Meanwhile, the personal income tax brought in roughly $2.7 trillion in calendar year 2025. Trump can jack up tariff rates as much as he likes, but at some point he’s going to wind up on the wrong side of the Laffer Curve—that is, we’ll reach a tax rate that makes products so expensive that people stop spending, and tariff revenue declines. Given these limitations, one recent paper estimated that the most revenue that could possibly be wrung out of tariffs was in the ballpark of $400 billion to $500 billion, or less than a fifth of the revenue from income taxes.

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That wasn’t the only time in the speech that Trump characterized the economic pain he inflicted on the country as a victory. He said he “lifted 2.4 million Americans, a record, off of food stamps.” These people weren’t lifted up so much as kicked off: The figure of 2.4 million is the Congressional Budget Office’s estimate for how many people will lose food assistance in the average month because of Trump’s One Big Beautiful Bill.

Other figures appeared completely made up,4 such as his claims about gas prices. Gas prices have indeed fallen, but the president claimed they were “below $2.30 a gallon in most states.” It’s unclear where he got that figure; data from places like AAA and GasBuddy don’t show gasoline prices averaging below that level in any state.

Trump also offered his standard talking point about the booming stock market, but as I’ve noted before, markets have actually grown a lot more in the rest of the world than they have here. Not to mention that paper stock market gains are cold comfort to people struggling to put food on the table.

To the extent he acknowledged there was any further work to be done on affordability, he rehashed the same promises and ideas he’s repeated before—all of which either wouldn’t help Americans afford the things they need to buy, or would make it more difficult.

One example is his promise to block “institutional investors” from buying single-family homes. As I wrote last week, this idea has purchase (so to speak) among some Democrats as well, but it will not reduce housing costs. Institutional investors, usually defined as landlords with at least 1,000 homes in their portfolio, represent less than 1 percent of all single-family housing stock, and have been selling their holdings on net for most of the past two years. Tellingly, construction- and homebuilder-related stocks took a beating the day after the speech, in part because Trump didn’t even pretend to care about building more housing supply.

There was also a shoutout to Trump’s “Great Health Care Plan,” which he said would “stop all payments to big insurance companies and instead give that money directly to the people so they can buy their own health care, which will be better health care at a much lower cost.” As my colleague Jonathon Cohn has explained, that is bunk. Trump likewise claimed that he’s gotten Americans the lowest drug prices anywhere in the world; this, too, is bunk.

Trump also proposed a nonbinding “ratepayer protection pledge,” in which big tech companies agree to foot the bill for powering their own data centers. Seems like a sensible idea, if it ever gets any teeth, but at least as described, it wouldn’t bring prices down, despite Trump’s claims. At best, it would lessen further price increases.

Finally, while previews of the speech had promised “a new form of corporate and personal tax cuts,” the only “new” tax cut proposal was a retirement tax incentive. Specifically, Trump promised to give workers without 401(k) plans “access to the same type of retirement plan offered to every federal worker.” He said the government would “match your contribution with up to $1,000 each year, as we ensure that all Americans can profit from a rising stock market.”

This actually sounds promising! But it already exists.

The program is known as SECURE 2.0, and it was signed into law by then-President Joe Biden in 2022. Trump wants to “tweak” the program in as-yet-unspecified ways, per Bloomberg correspondent Josh Wingrove.

That’s a lot of hokum Trump managed to cram into a small sliver of his speech. But given the fare on offer, maybe Republicans in the audience should be grateful he didn’t provide more material. The portion size in this case was . . . just enough.

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Ramparts

— Also in the speech, Trump said Vice President J.D. Vance would be in charge of a new “war on fraud.” Psst: The call is coming from inside the White House.

— A couple months back I wrote about how the construction industry was curiously silent as Trump’s immigration-enforcement goons rounded up their workers (even those who are U.S. citizens) and busted into construction sites without a warrant. The tide may be turning on that; there have been a few stories of late about homebuilder complaints, although most seem to quote the same handful of voices. One of those voices, the executive director of the South Texas Builders Association, appeared recently on my MS NOW show. I asked him why the only lawsuit over these issues seems to be one filed by a U.S.-citizen construction worker, rather than the builders, particularly when the government argues that only the construction companies have standing to sue. Watch his answer here.

— This horrifying story reminds me of attics in Amsterdam.

— Some good news on energy: U.S. power plant developers and operators plan to add 86 GW of new utility-scale electric generating capacity to the U.S. grid in 2026. This would be a record. Solar power makes up 51 percent of the planned 2026 capacity additions, followed by battery storage at 28 percent and wind at 14 percent.

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FOR MAGA REPUBLICANS, the root cause of every problem is immigrants. Populist Democrats, by contrast, prefer to scapegoat billionaires and Big Business.

But lately, President Donald Trump has started to bogart Democrats’ favorite villains, too, by casting them as the baddies conspiring to increase housing costs. There’s now bipartisan (and yet wrong) agreement that Wall Street’s “institutional investors” are to blame for high home prices, and Congress appears on the verge of making the problem worse.

Here’s the background: Trump has struggled to address Americans’ affordability concerns. Calling the whole thing a “hoax” didn’t work. His administration frequently blames immigrants for high prices, especially when it comes to homes. (“Want affordable housing?” DHS tweeted. “Help report illegal aliens in your area.”) Yet somehow, even as the administration claims to have deported hundreds of thousands of immigrants, prices still aren’t going down. In fact there’s reason to believe that house prices could rise faster than they otherwise would, because Trump is effectively shrinking the homebuilding labor force.1

So the president has pivoted.

Last month, Trump announced that his new solution for the housing affordability crisis would be banning “institutional investors” from owning homes. He is now demanding that Republicans in Congress add an amendment to their housing bill to enforce the ban, reportedly with language that would allow the treasury secretary to define or exempt institutional investors as he sees fit. “Neighborhoods and communities once controlled by middle-class American families are now run by faraway corporate interests,” Trump wrote in his executive order. “People live in homes, not corporations.”

If this sounds like the kind of thing you might hear progressive Democrats say, that’s because it is.

For years, progressives have argued that the real reason that prices are high is that Wall Street firms are gobbling up all the homes. It’s a compelling narrative with terrific optics: Politicians naturally want to be seen as standing up for the little guy against big, bad, greedy corporations.

Unfortunately, the story happens to be wrong.

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First let’s define our terms. “Institutional investors” typically refers to landlords who own at least a thousand housing units. And it is true that in the aftermath of the 2008 housing bust, when foreclosures skyrocketed and there was a surplus of housing, some big Wall Street institutions (such as Blackstone) did swoop in to the market and buy lots of homes on the cheap. This was, and remains, controversial. They didn’t buy these homes to bulldoze them, of course; they bought them to rent them out. Which they did, and some continue to do.

But today, institutional investors hold a teeny share of single-family housing: roughly 3 percent of single-family rentals, and around 0.5 percent of all single-family housing stock (i.e., rentals and owner-occupied housing together). To be clear, there are a lot more homes that are owned by “investors” of some kind—people other than the primary occupant. Most of these investors, though, are mom-and-pop landlords who own fewer than ten properties, not the big “institutional” investors that politicians want to boot from the market.2

Even in markets with a higher concentration of institutional investor–owned homes, the share is still pretty slim. For example, the most concentrated markets are Atlanta and Jacksonville, and in each place big corporate investors hold about 3 percent of single-family housing stock, according to the real estate data platform BatchData.

What’s more, institutional investors have largely been reducing their holdings. For the past seven consecutive quarters, large institutional investors have been net sellers of single-family homes. For example, in the third quarter of 2025, they sold 5,798 homes while purchasing only 4,663.

They’re not getting out of the housing market entirely; rather, they’re shifting their capital to build new housing instead of buying up existing housing stock. “Institutional players continue their strategic pivot, deploying capital into build-to-rent projects, adding inventory rather than competing with traditional homebuyers for existing inventory,” according to BatchData.

The upshot is this: If Congress bans institutional investors from owning homes, at best it will probably have no effect on housing costs for normal people. At worst, it could raise costs, at least in rental markets where these mega-investors might have otherwise added more housing stock.3

Actual fixes to housing affordability are complicated. They involve zoning, construction costs, permitting and regulatory reform, and other eye-glazing issues.4 They also sometimes ruffle the feathers of important political constituencies.

For example, there are the NIMBY homeowners5 whose retirement savings are tied up in their home equity, and who therefore don’t want to see the housing supply grow and housing prices fall. Hence Trump’s recent, puzzling assertion that he’s going to make housing more affordable but also somehow more expensive. (“People that own their homes, we’re going to keep them wealthy. We’re going to keep those prices up. We’re not going to destroy the value of their homes so that somebody that didn’t work very hard can buy a home.”)

Blaming Big Bad Corporate Interests is easier than advocating policies that might alienate NIMBY boomers or trying to streamline permitting bureaucracies. So you get a lot of demagoguing, with little effort to understand, explain, or solve the very real problem of burdensome rents and would-be homebuyers being locked out of the market. Unfortunately, it’s hard to write the right prescription if you get the initial diagnosis wrong.

You know how you can tell these politicians may not have thought this through? They can’t even keep straight the names of the companies they want to ban. Vice President JD Vance gets this wrong all the time, leading an unrelated firm that doesn’t own any single-family homes to release pleading statements each time it gets mistakenly namechecked. Is the big bad villain supposed to be Blackstone? BlackRock? Blackwater? Something black, for sure.

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Ramparts

— Another slopulist housing policy that has gained support in the past year (and that economists almost uniformly hate) is rent control, which has been finding adherents in New York City, Los Angeles, and Boston, among other places. I’ll probably write a future newsletter on this topic.

— Trump is threatening to block the opening of a new bridge between the United States and Canada. This would be very bad for the U.S. auto industry, which sends goods back and forth across the existing, privately owned bridge daily. Note that the guy who owns the existing bridge has also personally been lobbying Trump to prevent competition: He met last week with Commerce Secretary Howard Lutnick the same day Trump started his bridge-posting campaign. Democratic lawmakers seem to have noticed. Watch this space.

— National Economic Council Director Kevin Hassett says that Fed economists should be punished for a paper finding that Americans bear most of the cost of Trump’s tariffs. “The people associated with this paper should presumably be disciplined,” Hassett said, “because what they’ve done is they’ve put out a conclusion which has created a lot of news that’s highly partisan based on analysis that wouldn’t be accepted in a first-semester econ class.” I wonder what he would say about an economist who predicted COVID deaths would fall to zero in May 2020 using an Excel function.

— JPMorgan Chase is reportedly in talks to become the banker for Trump’s “Board of Peace,” the institution meant to rebuild Gaza/rival the United Nations/provide a personal slush fund for the president. Just coincidentally, Trump sued JPMorgan last month for $5 billion for “debanking” him.

— Last year Trump pardoned the founder of Binance, Changpeng Zhao, who had been convicted of money laundering. Now Binance holds 87 percent of Trump’s stablecoin. Another crazy coinkydink.

— This story has everything: Grift. Immigration. Ron DeSantis. Toilets. A corporate phone number that (intentionally) spells out the word “POOP.” “$92 million for porta-potties? Big spending at ‘Alligator Alcatraz’.”

CHECK OUT THE NUMBERS: Hiring has slowed significantly. In fact, we had less job growth all of last year than we had in an average month during the Biden administration. Inflation is still too hot. Health insurance costs have spiked. And it turns out that, despite President Donald Trump’s promises that foreign companies would be paying for his tariffs, in fact it’s U.S. consumers who are paying 95 percent of the domestic cost, according to the Congressional Budget Office.

No surprise, then, that Americans are big mad about the economy. So mad, in fact, that they miss Joe Biden’s economy, which as you may recall they very much despised.

The Trump administration has a two-part strategy for allaying these concerns:

1. Deny there’s a problem

2. Promise stimulus checks that never come

Previous editions of Receipts have covered #1, including Trump’s habit of calling affordability concerns a “hoax.” So let’s home in on #2, particularly since the president reiterated in his NBC News interview last week that he would send out $2,000 checks. “I’m the only one can do it,” he said, “because I’m takin’ in hundreds of billions of dollars of money from tariffs.” But the real record of his promises over the past year suggests otherwise.

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MOVE OVER, Joe Camel. Get lost, Jared Fogle. The newest, grossest, most child-endangering industry mascot is ready for his closeup, courtesy of the Trump administration.

Meet “Coalie.” He’s a cartoon lump of coal with a yellow hard hat and large, anime-like googly eyes, and he’s been enlisted as the “spokesperson” for Donald Trump’s “American Energy Dominance Agenda,” per Interior Secretary Doug Burgum. Coalie is here to make coal look cute and cuddly, so young Americans can learn to love coal and older ones can rekindle the romance.

Make Black Lung Great Again!

Despite Coalie’s sweet kawaiian gaze, coal is obviously not the most wholesome energy source out there. Emissions from coal-fired plants are bad for the climate, bad for the local environment, and terrible for nearly every metric of children’s health. Coal extraction has sickened or killed generations of miners, and the Trump administration’s deregulatory agenda has made it easier to poison today’s workforce too. But even with a mawkish marketing campaign ignoring all these drawbacks, coal is unlikely to enjoy the economic renaissance under Trump.

And that’s part of a larger, underappreciated pattern with this administration. Trump has promised to revive a host of brawny, blue-collar industries that apparently remind him of when America was great. These tend to be predominantly male-dominated sectors that have been in long-term structural decline; their employees, mostly engaged in physical labor, have been displaced partly by trade but mostly by automation. But no matter how much money he throws at the old-timey he-conomy, these sectors continue to fall behind—in part because Trump’s own economic agenda is hampering them.

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As a source of energy in the United States, coal has been in decline for more than a decade.

That’s because coal is just no longer cost-competitive relative to other energy sources, particularly natural gas in the post-fracking era.1 Nonetheless, Trump has tried to prop up coal out through various means, including:

1) spending hundreds of millions of dollars directly subsidizing the coal industry;

2) rolling back mine safety regulations and oversight, ostensibly to encourage more investment;

3) mandating that some coal plants slated for retirement remain open—even if their equipment hasn’t been maintained, is experiencing mechanical failures, or is otherwise in disrepair; and

4) trying to sabotage other energy sources or else make them more expensive. For instance, the administration has tariffed solar parts, repealed renewable energy tax credits, and revoked federal approvals for wind and solar farms.

But even this isn’t enough.

There are now about 40,000 people working in the coal industry. For comparison, that’s less than the undergrad enrollment at Penn State. And employment in the coal industry has, on net, declined slightly in the past 12 months, losing about 1000 jobs.

Like coal, manufacturing was also supposed to enjoy a new golden era under Trump. Instead, it lost 68,000 jobs over the past year. Other metrics show it in contraction for most of Trump’s current term (and prior to his inauguration, to be clear).

This is part of a long-term structural decline. We are a services-based economy, and have been for many decades. Lower-value manufacturing has moved abroad, and higher-value production is increasingly done by a few people and many, many robots.

In addition to these longer-term challenges, manufacturing now also must contend with Trump’s disastrous trade wars. These trade wars have hampered or killed off many of our export markets, and also made it much more expensive for U.S. firms to operate. After all, American factories purchase materials and equipment from abroad. And even when they switch to domestic producers shielded by tariffs, their input costs still rise. That’s sort of the whole point of the tariffs: to help domestic producers capture more of the market and give them more pricing power.

Take the examples of steel and aluminum. Trump has placed draconian global duties on these metals. As a result, steel prices in the United States have skyrocketed relative to prices abroad.

Employment in domestic metal manufacturing firms is now doing okay—it’s up a touch year over year—because Trump pummeled the international competition with tariffs. Meanwhile, American firms that have to buy steel (machinery, furniture, electronics, cars) are screwed and shedding workers.

Then there’s the agricultural sector, which is also struggling.

Key inputs (fertilizer, machinery) have been tariffed to death, raising farmers’ costs. Much of the agriculture workforce is being rounded up, or is preemptively fleeing ICE. And again, export markets have closed off, with soybean sales to China completely suspended for an unprecedented six straight months. Farm bankruptcies in the first nine months of 2025 were 36 percent higher than the total for all of 2024. Trump’s measly $12 billion payoff “bridge payment” to farmers will not heal this damage, particularly if their export markets are lost for good.

Construction employment isn’t down yet, but hiring has significantly slowed. And deportations, tariffed inputs, and high interest rates (driven in part by tariff-related Trumpflation) are all weighing on the sector, too.

It’s proving tough to be a worker in the male-dominated sectors of the Trump economy. Assuming the tariffs aren’t going anywhere, they’re gonna need a lot more cutesy cartoon mascots.

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Looking for a Hero

One running theme of my newsletters is exploring what it will take for the corporate sector to finally stand up to Trump’s threats to democracy—if not out of a sense of duty or patriotic ideals, at least to protect its own self-interest. After all, destruction of the rule of law, corruption, erratic authoritarian decrees, expropriation, weaponization of government powers against perceived enemies, etc. are all terrible for the bottom line and economic growth writ large.

This week got my hopes up—at least a little.

Citadel CEO Ken Griffin, a GOP megadonor, made headlines with some terse comments at a Wall Street Journal event in West Palm Beach. Griffin has been critical of Trump’s policies before, including tariffs and assaults on Fed independence. But somehow this felt different, in part because Griffin criticized not just poorly thought-out policy, but also corruption.

Asked about reports that Trump secretly sold a 49 percent stake in his crypto firm to an Abu Dhabi royal days before his second inauguration, Griffin alluded to possible self-dealing.

“This administration has definitely made missteps in choosing decisions or courses that have been very, very enriching to the families of those in the administration,” Griffin said. “That calls into question, is the public interest being served?”

I don’t want to make too much of this. Griffin also praised Elon Musk for selflessly walking away from the private sector in pursuit of “public service” via DOGE—a laughable assertion considering how little DOGE achieved, and Musk’s overwhelming conflicts of interest in that role.2

Griffin also managed to both-sides his critiques of Trump’s corruption: “Most CEOs just don’t want to find themselves in the business of having to, in some sense, suck up to one administration after another to succeed in running their business.”

Nonetheless, even this gentle criticism is braver than what most titans of industry have been able to muster. So I’ll say: more of this, please.

My real hero for this week, though, is Julie Le, an ICE lawyer who had been working as a detail for the U.S. attorney’s office in Minnesota.

You may have seen her now-viral comments saying “This job sucks,” and suggesting she almost wished a judge would hold her in contempt so she “could get 24 hours of sleep.” But the rest of the transcript of her colloquy with Judge Jerry Blackwell is equally remarkable.

Le said that she had tried to resign, but ended up staying to help wrongfully detained people get out of detention. She also observed that her own family was at risk: “I am not white, as you can see,” she told the judge, “and my family’s at risk as any other people that might get picked up too.”

She was later fired from the U.S. attorney’s office; it’s unclear whether she was fired from her ICE post as well. Read an annotated version of the transcript here, courtesy of Chris Geidner.

“I LOVE THE POORLY EDUCATED,” Donald Trump once declared. That was back in 2016, during his first presidential campaign.

Now, a decade later, he and the rest of the MAGA movement have manifested that love into policy, with a series of changes that have hobbled America’s entire knowledge sector.

It’s been both disruptive and deeply damaging. For over a century, America’s knowledge economy has been our golden goose. Thanks to both private and public R&D, we have developed the strongest military, the most cutting-edge tech companies, and global dominance in the fields of science and medical research. These successes didn’t happen by accident. They were the result of deliberate policy choices going all the way back at least to the Morrill Act of 1862.

That’s the law that created land-grant colleges during the middle of the Civil War, just to give you a sense of how long America has prioritized higher education even in the direst of circumstances.

Over subsequent decades our policymakers made other choices to invest in and harness knowledge creation. They did so through our regulatory regime and federal investment in R&D. Perhaps most importantly, they opened up our immigration system in the mid-twentieth century to attract the best and brightest scientific talent from around the world. By one estimate, foreign STEM workers immigrating to the United States accounted for between 30 to 50 percent of all U.S. productivity growth between 1990 and 2010. These international STEM workers came to the United States to study, research, and collaborate with native-born scientists; they invested their skills in growing the U.S. economy. They also founded blockbuster businesses.1

Today, as other countries invest in developing the technologies of the future, our advantage is being rapidly unwound. This, too, is not something that has just happened on its own. It was not inevitable. It was a choice. It’s the Great American Brain Drain, courtesy of MAGA.

TRUMP SOMETIMES CLAIMS he wants more high-skilled immigration. But his record shows the opposite. In the past year, Trump has made it dramatically harder for high-skilled workers to come to or stay in the United States, where they would otherwise be able to contribute their talents to our economy. Some of these actions have gotten some press coverage, such as the $100,000 fee he’s tacked on to the so-called skilled-worker visa, known as an H-1B.2 This is, needless to say, prohibitively expensive for virtually any employer, who already must certify that the workers they’re sponsoring are being paid the prevailing wage and are not taking the job of an equally qualified U.S. citizen.

But the six-figure visa fee is hardly the only brick in Trump’s wall keeping out high-skilled immigrants. In December, the administration finalized a new rule that will make it harder for recent graduates to get high-skilled worker visas, including those who graduate from U.S. universities. This is not to be confused with yet another rule expected in the next few months that would make it harder for graduates of STEM degree programs at U.S. universities to stay and work after graduation through their student visas.3

These are among a slew of recent under-the-radar regulatory changes that will make it hard or impossible for high-skilled immigrants to come or stay here.

Some changes haven’t even been formally announced: For example, immigration attorneys have reported that U.S. consulates in India abruptly canceled visa interviews at the beginning of this year4—and won’t allow applicants to reschedule their appointments until 2027.

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Red states are getting in on the fun, too. The governors of Florida and Texas both recently announced plans to block public educational institutions from hiring workers on H-1Bs. This will be disastrous for some of these states’ strongest and most prestigious institutions, whose success depends on being able to hire the best researchers and clinicians regardless of nationality.

Take the University of Texas MD Anderson Cancer Center, the largest cancer center in the world.

Government data shows that MD Anderson has hired around 100 new H-1B workers annually in recent years. Based on both how long these visas last and expected turnover, “a conservative estimate would be that MD Anderson has 400 to 500 people working in H-1B status,” according to Stuart Anderson, executive director of National Foundation for American Policy, a pro-immigration think tank. (MD Anderson did not reply to a request for comment.)

Other federal measures target international students specifically. Last fall, matriculation by new international students plummeted 17 percent, in part due to visa issues, and the administration has taken measures to drive numbers even lower. For example, Columbia’s settlement with the Trump administration—supposedly designed to combat antisemitism—included a commitment to decrease international student enrollment.

At a broader level, the administration is also working on a rule to change student visas from lasting for the duration of academic program to a fixed four-year term, and then making them much harder to renew. This would destroy U.S. universities’ ability to attract international students pursuing advanced degrees in STEM fields. After all, the median time to complete a Ph.D. is 5.7 years, according to the National Science Foundation.

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All of this amounts to almost masochistic levels of economic self-sabotage.

Higher education is one of our most successful “exports,” and consistently has a huge trade surplus. Consider that, in dollar terms, the rest of the world paid as much to travel to the United States for education-related purposes as they did to buy our natural gas and our coal in 2024. We’re also depriving our country of access to the next generation of critical thinkers. In the recent past, roughly half of STEM doctorates went to international students each year; those doctoral recipients historically have tended to stay in the United States after graduation, work in labs or private companies, and start their own businesses that employ American workers. At least, that has been the case.

Supporters of the Trump administration’s approach insist it will redound to the benefit of native-born Americans, who will now find a bevy of opportunities that didn’t otherwise exist in STEM programs. But despite what the xenophobes in the administration claim, international students aren’t stealing American students’ slots. To the contrary: their tuition dollars enable more American students to attend college. That’s because international students are more likely to pay full freight, and so they end up cross-subsidizing the tuition charged to U.S.-citizen undergrads.

The administration’s professed concern for reserving educational and employment slots for American scientists rings a little hollow for other reasons, as well. Chief among them: They’ve been snatching funding away from researchers regardless of their country of origin.

Meanwhile, the federal government has engaged in a mass purge from its own ranks. In the past year, the federal workforce lost more than 10,000 STEM Ph.D.s, according to an analysis in Science. Yes, you read that number correctly. The losses were disproportionately large in some agencies; the National Science Foundation lost about 40 percent of its doctorate-holding experts, for instance.

Trump officials seem unperturbed by this historic brain drain. Treasury Secretary Scott Bessent even gushed last year that all those expert civil servants laid off by DOGE would soon be freed up to work in the factories newly created by Trump’s trade wars.

Alas, that plan hasn’t panned out either: The manufacturing industry is hemorrhaging jobs. Turns out the sectors driven by brains and brawn are both struggling in the Trump economy.

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— At long last Trump may be announcing his choice for the next Federal Reserve chair; on Thursday evening he said he’d name his pick “tomorrow.” Stay tuned. The next big question will be whether the outgoing Fed chair, Jerome Powell, intends to stay on the Fed Board, since his term as a board governor is separate from his chairmanship and doesn’t end until 2028. Usually Fed chairs leave the institution entirely when their term as chair ends; only twice in history has the chair opted to stick around, with the last time in 1978 for only a couple of months. But for a host of reasons, including the DOJ’s political investigation of Powell, he may decide to stay.

— One reason why the public may care less about the decimation of our research institutions is that Americans from all political persuasions have increasingly soured on college. Even a slight majority of Democrats now say college is not worth the (substantial) cost, according to recent polling from NBC News. Of course, whether these respondents still send their own kids to college is a different question entirely. At some point I’ll write a newsletter on how college became a political football, and what universities can and should do to recover their image.

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— Maybe Trump’s love of the poorly educated explains why he and his underlings struggle to do basic math.

— Last week, I wrote about Trump’s collection and weaponization of confidential government records. There have since been developments on that front. In one viral video, an ICE agent told a protester she was going in his “nice little database” and would be labeled a “domestic terrorist.” The White House claimed no such database exists. However, CNN reports that ICE agents received a memo instructing them to collect “intel” on protesters:

A DHS official in Minneapolis sent a memo to Immigration and Customs Enforcement Homeland Security Investigations officers assigned to the state on temporary duty asking them to use a form to input information on protesters and agitators.

The form — titled “intel collection non-arrests” — allows agents to fill in personal information of agitators and protesters who they encounter. It’s not clear whether other agencies in Minnesota are also using the form.

Previously, agents had informally shared information about protesters and agitators with each other, the memo said.

Additionally, in a sworn statement, at least one ICE observer said she had her TSA PreCheck revoked after an encounter with immigration officials. And of course, Attorney General Pam Bondi’s demand for voter rolls as ransom for taking ICE out of Minnesota is another troubling example of how the administration seems to be hoovering up and weaponizing data for political purposes. Please drop me a line if you know of other developments I should track.

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— The Congressional Budget Office estimates that federal troop deployments to U.S. cities cost a total of $496 million last year. Continuing current deployments will cost $93 million per month. This is, to be sure, not the most important reason why the military should be ejected from U.S. cities, but it is a useful data point nonetheless.

— The “sell America” trade continues: According to BlackRock, investors can no longer hedge their bets using bonds.

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THE TRUMP ADMINISTRATION has been compiling lists. There are lists of immigrants, lists of people with developmental disabilities, lists of dissidents—and lately, even lists of Jews.

All ostensibly in the name of public safety.

Over the past year, I’ve been tracking the Trump administration’s use and abuse of federal data. For the most part, this has involved deletions of records that the regime finds inconvenient, or other forms of censorship. For example, the administration has stopped publishing certain statistics on climate change, hunger, trade and sexual orientation. It has also deleted photos of nonwhite people serving in the military. When Trump found the official jobs reports insufficiently flattering, he fired the head of the statistical agency that produces those figures, after having already slashed the agency’s staffing by 20 percent.

But now it’s becoming clearer that some of the most disturbing developments don’t involve data the administration is suppressing, but rather data it’s collecting—in some cases illegally—and the ways those data can be weaponized against perceived enemies.

For example, the Trump administration recently sued the University of Pennsylvania to force it to hand over a list of Jewish faculty, staff, and students. The government is demanding the school release these records without first obtaining consent from Jewish community members themselves; authorities say they need the university to produce this Jewish registry to help the government “combat antisemitism” on college campuses.1

The University of Pennsylvania has refused to cooperate, to its credit. But not every school has done the same. Last year, Barnard College complied with a similar demand. Barnard faculty and staff were shocked to receive unsolicited text messages asking them to fill out a questionnaire bearing the logo of the U.S. Equal Employment Opportunity Commission (EEOC), confirming whether they were indeed Jewish.

This should go without saying, but these days it apparently needs to be said: There’s good historical reason to worry that an authoritarian government leader collecting a registry of Jews, under the pretext of protecting Jews, while that leader has referred to Jews as “disloyal,” and that leader’s coalition has many outspoken Jew haters and Holocaust deniers, may not end up so well for Jews.

“Against a backdrop of rising antisemitism, white supremacy, and other forms of hate, the danger that lists of Jews or other groups could fall into the wrong hands looms especially large,” reads a filing this week from five groups affiliated with UPenn.

What might these groups mean by “the wrong hands”?

Well, even if you give the EEOC the benefit of the doubt and assume that it intends to use this information in a purely benevolent way, someone else in government might try to access Jewish data registry for more nefarious purposes. Such as, say, whoever over at the Department of Homeland Security has been using openly white-nationalist slogans and imagery in its recruiting.

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THE POSSIBILITY THAT THESE DATA could be misused is not just a baseless, hypothetical concern: Again and again the Trump administration has been caught sharing data and breaching confidential records for purposes other than the stated reason for why those confidential records were collected in the first place.

For instance, last year a whistleblower alleged that DOGE had unlawfully accessed private Social Security data and copied it into a less-secure cloud environment, where it could be more easily manipulated and exposed. In court filings, the administration insisted that DOGE employees had done only what was necessary to fulfill Trump’s commands to “modernize technology and to ‘maximize efficiency and productivity’” within the Social Security Administration.

But the whistleblower, Charles Borges, was worried about data security all the same, and was troubled that SSA employees were directed not to talk to him when he started asking questions.

“I’m not alleging any particular nefarious intent or that any data was actually compromised,” Borges, who was SSA’s chief data officer, told me in an interview last week. “But the way that the environment was structured, even if data had been compromised, it’s entirely possible we would never know. That’s a huge risk.”

Borges was right to worry.

Shortly after we spoke, the government finally acknowledged that the DOGE workers at SSA had communicated with an unidentified political advocacy group about using Social Security data to help overturn election results in certain states. In fact, “one of the DOGE team members signed a ‘Voter Data Agreement,’ in his capacity as an SSA employee, with the advocacy group,” the government said in a court filing.

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These kinds of abuses of confidential government records are happening across government.

Last year the Internal Revenue Service agreed to share confidential tax records with ICE to assist immigration-enforcement efforts—despite having assured immigrants for decades that their compliance with tax law would never be weaponized against them.2 A judge blocked the IRS-ICE agreement in the fall, but similar (possibly illegal) data-sharing agreements are being allowed elsewhere. Last month a federal judge ruled that ICE can use Medicaid data in immigration enforcement, for example, while a legal challenge works its way through the courts.

“They’ve been sucking up data from all across government for immigration enforcement purposes, like basically anything that might have names, familial relationship, address, any geographic information,” said Bethanne Barnes, who until October had served for six years as the chief data officer for the Administration for Children and Families at Health and Human Services. “Just assume it’s all getting sucked in.”

Barnes quit, she told me last week, in part due to some “funny business” related to the government’s matching up of information on immigrant children with a national database of employment records. She said she worries not only about how data like these are being misused today, but the amount of distrust these revelations are fostering—which might make the public less willing to report information honestly (or pay their taxes, or cooperate with law enforcement) in the future.

“If you start violating all those protections, especially at scale, eventually it harms the quality of the data, right?” she said. In the past, data-sharing among government agencies has often been uncontroversial—beneficial, even. Matching up records can help officials spot patterns, solve problems, identify failed policies, and improve people’s lives. But when you have an administration that doesn’t respect privacy safeguards and that clearly doesn’t care about improving outcomes for people, then sloppy, secretive, and nonconsensual new efforts at data-sharing should be met with healthy skepticism.

Or sometimes, for that matter, fear.

When the National Institutes of Health director announces his agency will create a “disease registry” of people with autism—to be compiled without consent, via confidential private and government health records—some members of the autism community understandably heard it as a threat. After all, the announcement came a mere week after his boss, HHS Secretary Robert F. Kennedy Jr., stated that children with autism will never lead productive lives. And elsewhere, the president and various political appointees have mocked people with disabilities. NIH subsequently walked back the comments after public outcry from the autism community, but the recent “MAHA” report and other government documentation suggested similar efforts may still be in the works.

Meanwhile, Tom Homan, Trump’s border czar, has threatened to create his own “database” of people who protest ICE, which sounds an awful lot like twentieth-century government databases of Commies, wrongthinkers, and other political enemies. Or perhaps worse historical analogues, from Europe, also implemented in the name of keeping the public safe from the enemies within.

So I ask you, my fellow Americans: Do you feel safer yet?

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— On the point about data suppression: The Trump administration is also intimidating anyone in the private sector who might deign to produce credible alternative numbers. That’s what happened this week when an analyst at Deutsche Bank wrote a client note about how many bonds are held by Europeans (who are obviously pretty mad at us right now). Treasury Secretary Scott Bessent said that the bank’s CEO apparently called to apologize and to say the bank did not stand by the note. If you had assumed that the private sector would step in to fill statistical voids left by government deletions, this should give you pause.

— Last week I wrote about how Trump was driving our allies into the arms of China. This week, French President Macron said: “What we need is more Chinese foreign direct investment in Europe in some key sectors to contribute to our growth.”

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— OpenAI board chair Bret Taylor says that AI is “probably” a bubble, and that he expects a correction in the coming years. Points for candor, I guess.

— A senior CDC official says the loss of measles elimination status in the United States would just be a “cost of doing business.” Lord Farquaad would like a word.

— New research concludes the Trump administration’s policies could cut legal immigration in half over the next four years.

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SOMEONE ALERT the Norwegian Nobel Committee: Against the odds, Donald Trump has succeeded in peacefully uniting the world.

Unfortunately, the world has been united against us.

This Pax (Ex) Americana era was illustrated Friday, as Canadian Prime Minister Mark Carney wrapped up a trip to China. This wasn’t just any old visit, either: It marked the first time a Canadian PM had been to the world’s second-largest economy since 2017—and based on the glamorous video Carney’s team released, it was a smashing success for Beijing.

Carney and Chinese President Xi Jinping unveiled a “new strategic partnership” between the two countries. Among the key planks of this agreement, China will reduce tariffs on Canadian canola seed, peas, and lobsters. It will also allow visa-free travel for Canadians, who are apparently eager for new tourism destinations.1 Canada, in turn, will allow 49,000 Chinese electric vehicles into its market at lower tariff rates.

Why is this a big deal? Because the U.S. government had been trying to contain China’s global economic influence. It had been trying to expand U.S. exports. And it had been working to prevent inexpensive Chinese EVs from blowing up the U.S. auto industry. But after a year of bullying, insulting, and threatening to invade our polite northern neighbor, we undermined all those objectives and drove a close friend into the arms of an adversary. After all, Trump declared just this week that Americans “don’t need” any products from Canada, even though the country is our second-largest trading partner.

“We’re forging new partnerships around the world to transform our economy from one that has been reliant on a single trade partner,” Carney2 said before his Beijing visit, “to one that is stronger and more resilient to global shocks.”

In short, Trump’s big bet that countries would ultimately determine that they simply can’t live without America’s markets, and thus would cave to his every whim, was dangerously wrong. Instead, Carney’s Beijing visit shows just how much Trump has done to make China great again. In recent weeks and months, China has advanced or rekindled relationships with many of our allies, hosting a parade of foreign leaders.

In early January, for instance, South Korean President Lee Jae Myung visited Beijing. It was the first official visit by a South Korean president since 2019. A few months earlier, Xi had had his first visit to South Korea since 2014. The two countries have now signed more than a dozen agreements across the tech, consumer goods, and supply chain sectors. Lee said he hoped the January summit represented an “opportunity to make 2026 the first year of full-scale restoration of Korea-China relations.”

Additionally, last spring, China, South Korea, and Japan had their first economic dialogue in five years. If you know anything about Chinese–Korean–Japanese national relations—and the mutual mistrust that dates back generations—you’ll realize what an enormous deal all this is.

You’ll also realize how much we must have pissed off our friends to force this outcome.

Later this month, British Prime Minister Keir Starmer is slated to visit China, too, in what will be the first trip to the country by a British PM since 2018. German Chancellor Friedrich Merz is also slated to visit China in February.

Chinese companies are already reaping the rewards; the country has just boasted its biggest trade surplus on record. Sure, exports to the United States fell 20 percent last year, but businesses in China found plenty of willing buyers elsewhere. Chinese exports to the European Union grew 8.4 percent, and those to southeast Asia shot up 13.4 percent.

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Other economic alliances are forming without us, too, as Trump saber-rattles toward Greenland, and other long-term friends openly question whether America remains an ally.

Last week, the European Union greenlit an enormous trade accord with four South American countries, creating a new free trade zone encompassing 700 million people. The pact has long been controversial; negotiations for it began more than a quarter century ago, and European farmers are now blocking highways in protest.

But in spite of this opposition, the need to unite against economic threats from Trump convinced negotiators to nudge the agreement through.

Once upon a time, it was the United States urging likeminded liberal democracies to band together to prevent an authoritarian superpower from writing the “rules of the road” on trade and other economic relations. That was the exact pitch then-President Barack Obama made a decade ago for the Trans-Pacific Partnership, a trade pact designed to box in China.

But first congressional Democrats blocked it, and then Trump withdrew us from it entirely on one of his first days in office in 2017. The remaining signatories moved ahead without us, and if recent events are any indication, more pacts designed to knit together the rest of the world will be signed in the years ahead. And it will be the United States—not China—that finds itself boxed out.

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TRADE WARS AREN’T THE ONLY REASON why the United States looks more and more like an unreliable economic partner for both foreign governments and companies. There are other ways in which our institutions and the rule of law are fraying, which makes America a less attractive place to do business.

Trump’s attempts to politicize the central bank—including, most recently, by criminally investigating Federal Reserve Chair Jerome Powell—should send shivers down the spines of anyone thinking of investing in the United States. That’s because putting the money supply in the hands of an authoritarian politician is precisely how you can get hyperinflationary outcomes à la Venezuela, Argentina, Turkey, Zimbabwe, pre-euro Italy, and many other troubled states.

Indeed, in the wake of the Powell investigation, some European bond traders finally began digging into Project 2025, the Heritage Foundation playbook for Trump’s second term. When they did, they were apparently aghast to discover its proposal to “effectively abolish” the Fed.

Trump has also seized equity stakes in healthy companies—including in an alumina refinery just this week. “Prior to Trump, the US government hadn’t taken a permanent, non-crisis investment in a healthy private company since at least the 1950s,” notes Cato Institute scholar Scott Lincicome. “Now we have 11.”

Not all of these companies are American, either: Trump demanded a “golden share” of U.S. Steel as a condition of approving its acquisition by a Japanese company. The share allows Trump—and only Trump, but no subsequent U.S. presidents—to veto key business decisions the company might make.

Meanwhile, the president is changing the rules under which businesses may operate, by social-media fiat.

Last week, he announced that credit cards may not charge more than 10 percent interest, a change that would require new legislation from Congress. But don’t worry, his top economic adviser Kevin Hassett declared Friday: Legislation won’t be needed because the White House expects banks to comply via “really great new Trump cards” that banks will offer their customers “voluntarily.”

Or else, wink-wink.

Elsewhere Trump appears to be imposing capital controls on immigrants. And manipulating mortgage markets. And unilaterally restricting purchases of single-family homes. And opening offshore bank accounts to hold the proceeds from stolen assets.

In this context, it should be unsurprising that countries and companies are looking for alliances elsewhere—including with China, where at least this kind of economic thuggery is out in the open.

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— Fed governor Stephen Miran was asked this week about threats to U.S. institutions, and whether they might affect the dollar’s standing in the world. Miran replied that “institutions in the United States are very, very strong,” and anyone who says otherwise is doing so “for clicks.” For context: In an unprecedented move last fall, Miran refused to resign his senior White House job while serving on the Fed board, which is supposed to be politically independent. Miran also scolded central bankers around the world who stood up for Powell.

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— Two scary charts about the U.S. stock market, both courtesy of Apollo’s Torsten Slok. The first shows that equity valuations are near their highest levels since 1880. Translated, this means that stocks are priced very high relative to what the underlying companies are actually earning.

The second shows that this boom is largely about just a few (AI-related) stocks: There is record-high concentration in the S&P 500’s market cap, returns, earnings and capex.

— The Trump administration’s order to change the name of the Defense Department to the “Department of War” could cost taxpayers anywhere from a few million dollars to $125 million, the Congressional Budget Office estimates. Where’s DOGE when you need it?

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IF YOU WERE HOPING the hands-on U.S. involvement in Venezuela’s politics and economy might end quickly, think again: The United States will sell Venezuelan oil “indefinitely,” President Trump’s energy secretary declared Wednesday, and the funds from these sales will be “deposited into accounts controlled by the U.S. government.” Maybe even “offshore accounts.” Meanwhile, following this “Oil Deal,” Venezuela will supposedly “be purchasing ONLY American Made Products,” Trump wrote this afternoon. Exactly what all this means, whether it is constitutional, and whether the interim Venezuelan government or U.S. oil companies are on board all remain to be determined.

But one thing is already clear: It’s unlikely to be a good deal for U.S. taxpayers or U.S. companies.

Trump, keep in mind, invaded Venezuela because he only believes in war for profit, and for years has been saying U.S. military strategy should be guided by the opportunity to make money by seizing other countries’ natural resources.

But Trump is also notoriously a moron who does zero homework.1

There are four main reasons why Trump’s decision to invade Venezuela for its oil is unlikely to result in the big payday he expects. Let’s go through them one by one.

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MANY OF US HAVE BEEN raising hue and cry about the irreversible damage Donald Trump has wreaked on the economy. Tariffs! Corporate shakedowns! Destruction of research institutions! Deletion of data! Politicization of the Federal Reserve! Alienation of our allies! Socialization of private companies!

And of course, the collapse of the rule of law.

All of these things should be terrible for the U.S. economy, especially in the long term. And yet to date, the stock market has seemingly shrugged it all off.

In fact, markets look somewhat ebullient. In 2025, the S&P 500 grew a solid 16 percent—far better than the average year, and better than many forecasts, particularly in the wake of Trump’s Liberation Day tariffs.

So what’s going on? Why aren’t investors pricing in all these risks?

Some of it may be that they believe there’s a huge, sustainable Trump boom just around the corner. It didn’t come by the end of 2025, but perhaps it’ll arrive this quarter . . . or next quarter . . . or the end of 2026, per the latest goalpost-moving forecasts from Commerce Secretary Howard Lutnick.

But there are other ways to interpret what’s going on. None of them are particularly assuring:

1. U.S. markets actually aren’t doing that great, when compared to our global competitors.

2. The lion’s share of growth here in the United States—in both financial markets and hard economic data—is driven by a single sector: AI . . .

3. . . . which looks an awful lot like a bubble right now.

I find these explanations to be more persuasive than the hope that a new economic golden age is about to dawn. And to understand why, it’s worth recapping why you should worry about the long-term damage from Trump’s policies in the first place.

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LET’S START WITH something that should go without saying: Democracy and the rule of law are good for their own sake. But they also matter quite a bit to the U.S. economy.

A country that protects property rights; that has free capital markets; that has a stable and predictable regulatory regime; where all citizens are equal before the law; where individuals don’t fear being expropriated by the state without cause; and where private contracts can be enforced regardless of political connections is generally a better place to do business. All these features are among the reasons the United States has long been the richest country on earth. It’s also why we have attracted so much foreign capital.

When property rights aren’t protected and the justice system operates to reward friends and punish enemies, doing business is harder. People don’t have the certainty they need to invest here, or study here, or start businesses here.

“If businesses can’t predict what the law will be next year or even next month they will pause,” Nick Bloom, an economics professor at Stanford, told me. “No firm wants to invest to suddenly discover the government is now taxing you twice as much or has banned your product.”

In fact, there was a Nobel Memorial Economics Prize awarded in 2024 on “how institutions are formed and affect prosperity.” Here’s how the Nobel committee, in press materials released with the award, summarized the laureates’ findings: “Institutions that were created to exploit the masses are bad for long-run growth, while ones that establish fundamental economic freedoms and the rule of law are good for it.”

Much of that prize-winning research looks at developing countries. But lately we have plenty of cautionary tales here in the United States.

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Today, companies must fritter away precious resources finding ways to bribe appease a mercurial president, via gilded trophies, fake accolades and unpopular movie sequels. Or they waste their energy scheduling and canceling and then uncanceling shipments of imported goods, depending on Trump’s latest tariff tweets. Or maybe they’re holding off on investment entirely, because there’s too much uncertainty.

This affects even the sectors Trump is ostensibly trying to help, such as energy.

“With all the changing regulations a bunch of wind-farm investments are massively lossmaking and all investment has stopped,” Bloom said. “This will not only damage wind farms, but other energy investments as related industries fear being next. If you are thinking of building a big coal station, sure the Trump administration is in your corner today. But maybe next month Trump decides he prefers oil or gas, or the next administration thinks you should be taxed twice as much. So not surprisingly even coal plants are not rushing to invest.”

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THE HARD ECONOMIC DATA are somewhat dated and backward-looking, especially right now due to the recent government shutdown. What data we do have are not super encouraging, given that three of the past six months saw job losses. But we do have real-time data from stock markets, which are supposed to be forward-looking.

The White House has been quite eager to tout that data because U.S. markets appear to be up—a fair bit. Aides often crow about new market highs. And Trump often claims that the United States is “the hottest country anywhere in the world,” and that all foreign leaders admit it.

But the numbers appear less impressive when you look a little closer. In reality, U.S. markets have been relatively laggard since Trump took office, when compared to the rest of the world.

As you can see, non-U.S. markets grew by nearly twice as much as U.S. markets did last year, in data from the financial services company MSCI.

By other metrics, too, the United States has been losing its premium against other countries. The dollar is slumping against other currencies, and in 2025 had its biggest decline since 2017 (the first year of Trump’s prior term). As Bloomberg’s Robert Burgess pointed out, every major currency appreciated against the U.S. dollar in 2025.

The American economy may have entered 2025 as the “envy of the world,” according to The Economist, but it exited somewhat worse for wear.

Then there’s the question of what drove growth here in the United States. The answer is, overwhelmingly, artificial intelligence.

When it comes to the “real” economy, we have data through only the first nine months of 2025. During that time, investment in AI-related categories (such as data center structure investment or software) accounted for about a third of overall real GDP growth.1

When it comes to stock markets—which take us through the end of 2025—the numbers are even more lopsided. A handful of mega-cap, AI-intensive tech stocks known as the “Magnificent Seven” (Apple, Microsoft, Alphabet, Amazon, Nvidia, Meta, and Tesla) currently dominate the market. This is visible in multiple metrics, including capitalization and R&D.

Mag 7 stocks also rose about 26 percent in 2025, with chipmaker Nvidia alone rising nearly 40 percent. Collectively these seven stocks alone accounted for nearly half of all market returns last year.

In other words, the AI boom seems to be propping up much of the rest of the economy.

“The general consensus among economists and folks I speak to is that the AI boom has offset the uncertainty and tariff damage,” Bloom says. “It’s like unexpectedly inheriting $100,000 in the same week as you get hit by a surprise $100,000 tax bill—they are both big shocks but end up canceling out.”

Ironically, one reason the AI sector has experienced this growth is that it has been relatively insulated from some of Trump’s destructive behavior, since he has carved out huge tariff exemptions for AI-related imports. To much controversy, he has also allowed Nvidia to sell its powerful H200 chips to China.

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Finally there’s the question of how sustainable all this AI investment is.

It is true that AI is expected to restructure much of the economy, including the white-collar labor market. So it makes sense that companies are spending a lot of money investing in AI. But there seems to be a lot of bad money chasing after good. Many investors are betting that AI will be a winner-take-all market; if that’s the case, you might see one champion emerge and suddenly everyone else pulls their funding simultaneously, leading to a collapse of those other companies and the popping of the industry bubble.

When and if that happens, we may have some pain to reckon with.

In historical terms, stocks look pretty frothy right now. One measure that suggests this is the “cyclically-adjusted price-earnings” ratio, maintained by Yale economist and Nobel laureate Robert Shiller. The “CAPE” compares the past decade of corporate earnings to current stock market prices. When the ratio is high, it’s often a sign that stocks are overvalued. Right now it’s over 39, the highest level it’s been since the dotcom bubble.2

As for all the longer-term damage Trump has wreaked across the rest of the economy, it may also be the case that investors know there are problems but are waiting for someone else to end the party first. This is generally how bubbles work: people continue blowing them bigger while there’s still money to be made, even if everyone knows the pop may be coming someday. Former Treasury Secretary Bob Rubin has likened the current situation to October 1987: For years before the “Black Monday” crash, market conditions were considered to be “highly in excess and nothing happened in the markets.”

As a result, Rubin said, “people stopped listening.” Until one day, with no obvious, specific triggering event, markets just imploded.

I also asked Simon Johnson, one of the recipients of that 2024 Nobel for research on democratic institutions and prosperity, why the business community still seems relatively unperturbed by the degradation of rule of law here. He offered a more ominous analogue.

“Our findings are for long-term growth; plenty of authoritarians oversee growth spurts (e.g., from commodities) and then it collapses,” he replied. “When the tide is rising, even leaky boats rise. When the tide goes out . . . see Suharto’s Indonesia 1997–98.”

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Ramparts

— The New Year began with a delicious serving of TACOs: In 2026, Trump has already chickened out of his tariffs on pasta and furniture.

— It’s probably not a good sign that Trump’s assistant attorney general for civil rights used a slur for people with disabilities. Alas, this is not the only indicator that this administration scorns those with special needs.

— Trump’s cabinet is hiding from Congress, which says as much about the administration as it does Congress. For example, would Republican lawmakers not like to hear what OMB Director Russ Vought has to say, given that he has stolen their constitutionally granted power of the purse? I know I would.

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Stockbridge, Massachusetts
NOT EVERYONE WHO VENTURES OUT to the Norman Rockwell Museum in Western Massachusetts gets the luxury of a tour from the artist’s own family.

But on a fall day in this—yes—picture-perfect New England town, Daisy Rockwell graciously took me through some of her famous grandfather’s most iconic works.

You’d recognize these masterpieces anywhere, even if you don’t know them by name. The “Four Freedoms” paintings depict the fundamental freedoms that President Franklin Roosevelt once declared all people entitled to: Freedom of Speech (a lone man who resembles young Abe Lincoln rises in dissent at a town hall meeting), Freedom From Want (a happy family awaiting a roast turkey), Freedom of Worship (multiethnic group praying), and Freedom From Fear (parents tucking in their peacefully sleeping children).

The works have been endlessly parodied since their introduction in 1943. In the internet age, they’ve become ubiquitously memed. (Freedom of Speech, for example, is nowadays widely known as the “unpopular opinion” meme.) But originally, they served as wartime propaganda, meant to help rally support for America and its cause during the years of war against the Nazis.

As Daisy puts it, “Norman Rockwell was antifa”—literally.

So you’ll understand her indignation when President Trump began hijacking her grandfather’s legacy to promote what she considers modern-day fascism.

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Over the past several months, the U.S. Department of Homeland Security has been lawlessly appropriating Rockwell’s Leave It to Beaver-esque paintings to promote its Gestapo tactics. In August, the DHS Instagram account posted his 1971 painting of Americans saluting a billowing American flag, alongside the department’s own caption: “Protect our American way of life.”

A month later, the government reproduced his famous 1946 painting of workers cleaning the Statue of Liberty, taking a symbol of welcome for the tired, poor and tempest-tost and superimposing upon it directives to “PROTECT YOUR HOMELAND” and “DEFEND YOUR CULTURE” by joining Trump’s anti-immigrant goons.

Even Rockwell’s Santa was recently enlisted by DHS.

“They used [the paintings] . . . as though his work aligned with their values, i.e., promoting this segregationist vision of America,” said Daisy. “And so of course we were upset by this, because Norman Rockwell was really very clearly anti-segregationist.”

This fall, Daisy decided to take action, organizing a family letter denouncing DHS’s unauthorized use of their patriarch’s oeuvre. (You can watch my conversation with Daisy in the video embedded atop this newsletter, recorded by my Bulwark colleague Hannah Yoest and edited by our video team.)

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NORMAN ROCKWELL IS HARDLY the only American cultural treasure unwillingly drafted into the MAGA cause.

It’s not surprising that Trump has slapped his name onto several institutions with some connection to politics or government, such as the U.S. Institute of Peace, now the “Donald J. Trump Institute of Peace,” and the syntactically awkward “The Donald J. Trump and The John F. Kennedy Memorial Center for the Performing Arts.” (The legality of these acts of eponymizing is in dispute.) But some of his most frequent targets are bits of Americana traditionally disconnected from politics.

These include the many pop hits scoring Trump rallies and social media posts against musicians’ wishes. Artists as varied as Sabrina Carpenter, Bruce Springsteen, Olivia Rodrigo, Semisonic, SZA, Village People, and Creedence Clearwater Revival1 have condemned Trump’s unauthorized use of their music.

Some of this is about glomming on to hits to borrow their popularity. Our president would rebrand apple pie if he could. It’s not only about that, though. As with the Rockwell case, many of these artistic abductions are meant to weaponize nostalgia for a simpler, more innocent time—back when America was still “great,” of course.

Classic children’s books feature heavily. For instance, the immigration crackdown in Charlotte, North Carolina, was branded “Operation Charlotte’s Web,” appropriating the title of the 1952 novel by E.B. White. White’s descendants were outraged.

E.B. White “believed in the rule of law and due process,” the author’s granddaughter Martha White said in a statement. “He certainly didn’t believe in masked men, in unmarked cars, raiding people’s homes and workplaces without IDs or summons.”

Both Defense Secretary Pete Hegseth and the Department of Justice likewise arrogated another children’s literary classic, the character Franklin the Turtle, to promote the administration’s extralegal boat strikes and deportation efforts. Once again, the publisher—which happens to be Canadian—condemned the Trump administration’s posts. “Franklin the Turtle is a beloved Canadian icon who has inspired generations of children and stands for kindness, empathy, and inclusivity,” the publisher said in a tweet. “We strongly condemn any denigrating, violent, or unauthorized use of Franklin’s name or image, which directly contradicts these values.”

Even the Rat Pack has been conscripted into the misplaced MAGA nostalgia for a bygone, more nativist era.

“Watched the Dean Martin and Frank Sinatra Family Christmas with my kids,” Stephen Miller tweeted Friday. “Imagine watching that and thinking America needed infinity migrants from the third world.”

As my colleagues have pointed out, this is a strange takeaway about two singers whose parents immigrated from Italy, which would have been considered “third world” at the time.2

It’s not exactly unheard of for an authoritarian regime to try to co-opt cherished cultural darlings from eras past. The Soviets famously exploited Tchaikovsky. The Nazis used Wagner. And both, like Trump, simultaneously cracked down on contemporaneous artists whom they deemed disloyal or degenerate.

But exploiting Rockwell in this way is additionally offensive if you know anything about his artistic trajectory.

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ON THE BASEMENT LEVEL of the Norman Rockwell Museum in Stockbridge is a room of Rockwell’s early works, his covers for the Saturday Evening Post.3 It’s cover after cover of sweet, whimsical, slice-of-life scenes of middle-class Americana. There are Boy Scouts and baseball games. Town gossips, soda shops, and returning G.I.’s. And of course all those adorable childhood shenanigans.

It’s no wonder this artist appeals to an administration that pledges to turn back the clock to some prior golden age. Rockwell’s scenes look like a happy, wholesome past that many Americans wish they could return to. But this bucolic past was imagined; Daisy notes that her grandfather created and staged it, using models he cast from his local communities in Vermont and Massachusetts. The artist himself grew up in a boarding house, in a cramped urban environment.

“He loved this idea of this, like, sort of small town idealistic thing,” said Daisy, who is an artist and writer too. “But he made it up himself.”

There’s something else that feels a little off in Rockwell’s depictions of this imagined past: They are overwhelmingly white. In fact, there are scarcely any people of color at all.

For Trumpers, this is presumably a feature, not a bug. You’ll find similarly pale complexions populating the Trump Department of Labor’s current anti-immigrant campaign, which seemed to borrow from that early Rockwell aesthetic when it used AI to generate images of blonde, buff, cleft-chinned male youths powering Trump’s “Blue Collar Boom.”

In Rockwell’s case, the demographics were less an artistic choice than a condition of employment. The Saturday Evening Post barred him from painting people of color in anything other than subservient roles, his granddaughter says, citing interviews he gave later in life.

At the museum, Daisy pointed out places where he sneaked in nonwhite characters anyway, always in ways to emphasize their common humanity. For instance, in that Statue of Liberty painting that DHS stole, the team of workmen cleaning Lady Liberty’s torch is racially integrated.

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Then in the 1960s, Rockwell underwent a more radical transformation. He became more concerned by both the social turmoil around him as well as his own legacy. “I was born a White Protestant with some prejudices that I am continuously trying to eradicate,” Rockwell said in 1962. “I am angry at unjust prejudices, in other people and in myself.”

In other words, Norman Rockwell got woke.

Seeking more artistic control, he left the Post for Look magazine. There, he went on to paint some of the most iconic images of the civil rights movement. These have pride of place in the main gallery of the Norman Rockwell Museum.

There you’ll find his famous painting of a black family moving into a white neighborhood, “New Kids in the Neighborhood (Negro in the Suburbs).” Another usually on display—though not on my most recent visit—chillingly depicts slain civil rights workers (“Murder in Mississippi”). And then there is perhaps his best-known work, the 1964 painting that features 6-year-old Ruby Bridges desegregating a white school in New Orleans. She is escorted by U.S. marshals, whose heads are just out of the frame. Also unseen is the angry mob that necessitated the presence of those marshals, and that presumably scrawled the racial slur behind her. The only face we see—and the only one we identify with—is that of a heroic little girl.

The painting was radical for its time. It is called “The Problem We All Live With,” a title that Daisy notes was deliberately present-tense then, and remains present-tense today.

If Rockwell’s early illustrations of pink-cheeked lovebirds and rough-housing kids were meant to comfort audiences, those latter works were meant to challenge them. His tool for achieving both ends, though, was the same: compassion. His works ooze it, whatever the subject and whichever the characters, and regardless of how subsequent opportunists might try to exploit those works.

Compassion of that sort is a virtue obviously absent from Trump’s mass deportation campaign—and arguably from MAGA overall. Which makes the use of Rockwell’s art an especially egregious misappropriation.

I wish I knew what Rockwell might have said about Trump’s theft of his life’s work in service of state-sponsored terror. But even more than that, I wonder what he would have painted.

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Ramparts

— Metaphor alert.

— Check out The Bulwark’s “12 Days of Griftmas” video if you haven’t already done so. The lyrics all refer to real gifts bestowed upon our leader. (Citations included.) Thanks to the many colleagues I peer-pressured into singing, and to our video team—especially Chris Herbert, Dante DiCicco, and Jamie Abraham—for recording and working overtime to edit this.

— Sometimes I wonder how Commerce Secretary Howard Lutnick managed to run an investment bank.

— Bigots once said this about my ancestors. Miller’s, too.

— The FDA just approved a pill version of Novo Nordisk’s GLP-1 drug Wegovy. This seems like a pretty big deal. I maintain that in the medium term, the economic effects of AI are probably overstated while those of GLP-1’s are massively understated.

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— The Department of the Interior suspended leases for five large offshore wind projects under construction off the East Coast. It cited national security concerns though, of course, Trump has long hated these projects. Either way, it’s owning the libs at the expense of “energy independence.”

— Sen. Mike Lee (R-Utah) wants to license Americans to become literal pirates to help Trump’s Caribbean campaign. In ye olden days, a letter of marque allowed privateers to seize, like, a Spanish galleon and sell the gold doubloons. But what do you do with a big oil tanker? Or for that matter a boat full of cocaine? Are privateers supposed to pull up and sell their seized blow in Miami?

— Trump has made Mexico great again.

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WHEN LEO FELER GOT HOME, there was blood everywhere. On his front door, the window sills, the foyer. This wasn’t some tragic accident or a murder scene; rather, while he was out of town to run a marathon, immigration agents had decided to attack the workers replacing windows on his house.

Footage from Ring surveillance cameras around the house, as well as cell-phone videos from protesters outside, tells the story: Masked agents sent to Chicago as part of “Operation Midway Blitz” saw workers taking items to a dumpster in front of Feler’s home. The agents then hopped his locked gate. They trampled his property, aggressively manhandled at least one worker, and entered Feler’s garage. They even tried to pull a bleeding worker out of a second-story window.

They did it all without ever presenting badges, identification, or a warrant.

“It was violent. There’s blood all over the house. It’s insane,” Feler, who is a U.S. citizen, told me the day after this happened in October. “It’s complete lawlessness. How does the government have impunity to jump into my home without a warrant?”

As far as Feler has been able to discern, his house and the crew working on it were targeted at random. The Department of Homeland Security did not reply to detailed questions about agents’ actions or why they were there, but did send me a statement complaining about “agitators” (i.e., protesters) in the street who “obstructed federal law enforcement and ignored multiple warnings to disperse.”

This wasn’t an isolated incident. Rather, it was just one of a rash of warrantless raids on private, residential construction sites recently—raids that are sweeping up basically anyone who looks Latino, including U.S. citizens, and subjecting them to dangerous and sometimes life-threatening conditions.

In a Minneapolis suburb this week, masked men wearing ICE vests—who refused to present a warrant or identify themselves—roped off a construction site, trapping two workers on a partially built roof for hours in subzero temperatures. It was so dangerously cold that “at least 30” masked federal agents present took shifts rotating in and out of their cars to stay warm, a state representative on the scene told local media.

Protesters gathered; some said they were prevented from bringing the trapped, shivering workers warm blankets and extra coats. In one dramatic video, a bystander climbed the spindly rafters herself to hand a worker a cup of hot coffee.

Eventually the masked men left, and one worker on the roof was taken away by ambulance.

A week earlier, in a New Orleans suburb, agents pointed guns at workers balanced on a roof before hauling at least one away.

And in Alabama, a U.S.-born construction worker has been detained not once but twice, at different job sites twenty miles apart from one another. The first time, agents kept him handcuffed for over an hour even after seeing his REAL ID (which Alabama issues to lawful residents only). The second time, agents barged inside the house where he was working, detained him, and again refused to accept his REAL ID as identification. All without a warrant.

“The administration isn’t doing any front-end investigation, targeting specific people,” Jared McClain, an attorney with the Institute for Justice, a nonprofit representing the Alabama worker, told me. “They’re just showing up on construction sites and arresting Latinos.”

There is no question that this wave of deportation operations has hurt workers who are just trying to do their jobs. But it’s also terrible for the contractors and construction companies that employ them. So why hasn’t the construction industry, ya know, done anything?

Here’s what I found when I attempted to get an answer to this question.

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THERE ARE MANY ITEMS on President Trump’s agenda that are hurting the U.S. economy: the pointless trade wars, the socialization of the private sector, the mass deportations, and much more.

But in the long run, the most damaging policy of all might be one that’s gotten scant attention, at least from non-finance-nerds: Trump’s quest to crush the Federal Reserve. If Trump succeeds, he may doom the United States to high inflation for years, if not decades, to come.

Bullying the Fed has long been one of Trump’s favorite pastimes. Way back in 2019, he called Jerome Powell, the Fed chair whom he had appointed the year before, an “enemy.” He’s continued the broadsides during his second term, repeatedly musing about firing Powell—including earlier this year. It got press coverage at the time, due to the resulting market wobbles—and a truly awkward visit Trump made to the Fed headquarters as some sort of intimidation tactic. But the firing never came. And when the threats stopped, most of the media moved on.

They shouldn’t have.

The threats to Fed independence have continued, and got darker this week. We may now be at an inflection point, as the Trump administration tacitly threatens to purge not Powell but other officials who set interest-rate policy. If he’s successful, Trump could seize direct control of the money supply and turn America into Venezuela.

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LET’S START WITH THE BASICS. Why does the central bank need to be politically independent in the first place?

The answer has to do with political incentives. If politicians control interest rates—and therefore the supply of money sloshing around the economy—they will always have an incentive to reduce them. That’s because doing so would stimulate the economy. If borrowing is cheap, that helps consumers and businesses feel richer, which encourages them to spend more. This creates a sugar rush, which in the near term can feel good. Especially if you’re the sitting president.

In the long run, though, overstimulating the economy can be dangerous. It fuels inflation. And the medicine necessary to cure that high inflation (higher interest rates) is painful. Voters hate it. So politicians are reluctant to administer it, which can lead to more and more price growth.

That’s why you want the people in charge of setting interest rates to be insulated from near-term political pressures. If they’re focused on the long-term health of the economy, rather than the next election, they’ll be more willing to play bad cop and “take the punch bowl away” before the collective party gets out of hand.

There’s a lot of empirical evidence bearing this out. Countries with more independent central banks tend to have much better (i.e., lower) inflation outcomes. Likewise, there are plenty of examples of countries where politicians seized control of the money supply and decided to keep that delicious punch flowing. Venezuela, Argentina, Turkey, and pre-Euro Italy come to mind.

But you don’t need to venture very far geographically for a cautionary tale. This same thing happened right here in the United States, when, in turn, Lyndon Johnson and Richard Nixon each leaned on the Fed to keep interest rates low. You may recall the painful stagflation that resulted in the 1970s. But if you’re too young, ask your parents about it.1

Powell certainly remembers it.

At a public event in Texas last year, a week after the 2024 election, I interviewed Powell and asked some awkward questions about Fed independence. One of my questions was whether we learned anything from prior episodes in which the Fed was seen as less independent. Here was his response:

If you go back to the period of the high inflation—which I’m old enough to remember, it was during my college years—and basically, the public kind of lost faith that the Fed would restore price stability. And, you know, the cost was a decade of very high and very volatile inflation, quite difficult business conditions, extremely difficult for people on a fixed income. . . . We’ve seen it here in the United States in the 1970s actually, and it’s not a pretty picture.

To his point, a recent working paper by a University of Maryland economist quantified how much political pressure various presidents placed on their Fed chairs based on daily records of their interactions and how long they lasted. The paper found that if a current president increased political pressure on the Fed by half as much as Nixon did, even for just six months, it would raise the U.S. price level by 7 percent over the next decade.

In other words: If Trump (or some other future president) took a page out of Nixon’s playbook,2 we should all expect to be paying a lot more on everyday purchases.

But at last year’s event, Powell assured the audience that lawmakers today knew all about this risk, and would have the Fed’s back:

So you know, I think this is very widely . . . understood and supported. You know, I’ve spent a lot of time on Capitol Hill. And I think where it really matters, on both sides of Capitol Hill, the Senate and the House, in both political parties, there’s a broad understanding that an independent central bank is very important in just serving the public as best we can. We’re not perfect, everyone makes mistakes, but you’ll get the best results if you have people who are just focused on that task and separate from politics.

He should not have been so confident.

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IN HIS FIRST TERM, Trump threatened to put a few nutjobs on the Fed, but ultimately lawmakers in his own party stopped him. So maybe that’s what Powell was thinking of when making those comments last year.

Even so, Trump has continued to harass Powell since returning to office. The president has given the Fed chair cutesy nicknames and accused him without evidence of mismanaging the Fed headquarters construction project. Trump has mostly stopped threatening to fire him, at least. Which makes sense: Powell’s term as Fed chair ends in May 2026 anyway, so why bother? Firing him without cause would also be unlikely to survive a court challenge. (More on this in a minute.)

Meanwhile, Trump has been hunting for a successor for Powell who would be more pliable, and more interested in cutting interest rates. In fact, when asked this week if cutting rates was his “litmus test” for the next Fed chair, without hesitation Trump declared, “Yes.”3

The widely reported favorite to be Trump’s nominee to replace Powell is Kevin Hassett. You may know Hassett as the affable, sycophantic director of Trump’s National Economic Council, whom JVL once described as “Conservatism’s Invincible Ignoramus.” Econ-watchers generally know him for his egregious chart crimes, the most infamous being his “cubic model.” That chart predicted, in May 2020, that COVID-19 deaths would drop to zero within two weeks. (He had misused a basic Excel function.)

That embarrassing incident sums up Hassett pretty well: He’s a guy who relies on the trappings of academia to reverse-engineer whatever result Trump wants, but the entire exercise is usually garbage. That reputation, in turn, explains why bond investors recently warned Treasury Secretary Scott Bessent that they didn’t want Hassett helming the Fed. According to the Financial Times, investors worry he won’t be independent.

That’s likely to be an issue with whomever Trump chooses for the top job, though. And not just for the top job, either.

The Fed chair is just one position on a rotating committee that sets interest rates; Trump would need a majority of that committee under his thumb to get the easy-money policies he wants. So he has simultaneously pursued other avenues for reshaping the central bank.

For example, Trump appointed the chair of the Council of Economic Advisers, Steve Miran, to an open Fed Board slot this fall. To be clear, lots of former CEA members have gone on to serve on the Fed. What’s unusual here, though, is that Miran assumed the Fed job without resigning from his political White House job. Instead, he went on “unpaid leave” from the White House while still being employed there.

So there’s not even a pretense of independence, and yet Senate Republicans still pushed Miran’s confirmation through.

Trump has also weaponized the state against other Fed officials. He attempted to fire Fed governor Lisa Cook in August, for instance, after claiming that she had committed mortgage fraud.4 She has denied the allegations, and she continues to serve as her case works its way through the courts.

Separately, the Trump administration claims it doesn’t need to cite a “cause” (whether mortgage fraud, or any other misbehavior) when removing independent agency leaders. This would overturn a 90-year-old precedent regarding independent agencies. This week the Supreme Court heard oral argument for a case challenging Trump’s decision to fire a member of the Federal Trade Commission, which certainly seemed like a test case for firing Fed officials, too. In fact, Justice Brett Kavanaugh expressed concern about how the Court could rule in Trump’s favor on the FTC firing without also compromising Fed independence (which he seemed loath to do).

Finally, there’s the sneakiest thing, which has gone almost entirely under the radar: the plot to undermine the regional Fed bank presidents.

The Fed has an unusual governance structure. The rotating committee that votes on interest rates draws from twelve regional Fed bank presidents from around the country. These regional Fed presidents are chosen by local business leaders and other stakeholders, but must be approved by the Fed board in Washington, D.C. Usually this approval is pro forma. I have been unable to find a single case where the Fed Board vetoed a regional pick. (Tell me if I’ve missed one.)

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But all twelve regional bank presidents are coming up for renewal in February, and Hassett and Bessent have both coyly hinted that a purge may be coming.

The pretext would be a new, bogus, long-term residency requirement that Bessent proposed, which would require Fed presidents to have lived in their bank’s region for at least three years before taking the job. If this rule were already in place today, nearly all of the Fed presidents would have been disqualified from their appointments. (These are big jobs, and usually involve a national talent search.) Hassett echoed this idea during an exchange on Fox Business last Friday:

Kevin Hassett: It wouldn’t require anybody to go in and fire anybody who’s there now, but going forward, being respectful of the original design of the Fed, which helps provide the independence you need because you’ve got regional variance across who’s actually making the decisions. I think it’s a good idea.

Maria Bartiromo: Would it derail the expected February approval of the twelve Regional Reserve Bank presidents to five-year terms?

Hassett: That’s something I’ve not discussed with everybody yet.

This would be the way Trump co-opts the Fed. And we all would pay the price for it—quite literally.

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Ramparts

— According to a new court filing, the Trump administration has a six-page list of banned words and phrases that Head Start locations are forbidden from using when describing their programs. Among the censored terms: “disability,” “race,” “women,” “trauma,” and “Gulf of Mexico.” You can find the full list here.

Note that these bans have real consequences: For example, a Head Start program operated by a tribe on a Native American reservation was told not to prioritize tribal kids, in likely violation of the Head Start Act. The program director also can’t do training on trauma-informed instruction, or to support kids with autism, according to the court filing.

— Days after Trump was awarded the totally-real-and-not-made-up FIFA peace prize, his DOJ moved to drop charges in a FIFA corruption case.

— John Deere has warned that Trump’s tariffs are backfiring on American farmers, per the Financial Times. The tractor manufacturer has had to cut production (“building half as many tractors this year as we did two years ago”) and workers, and says it is likely to cut more jobs in 2026.

— Paramount’s commitment to Rush Hour 4 may be paying off! Well, that and Jared Kushner’s involvement. Trump appears to be openly helping Paramount’s hostile takeover bid for Warner Bros. Discovery.

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LIKE CLIMATE CHANGE AND THE EPSTEIN FILES, the affordability issue is a “hoax.” So saith our president.

“The word ‘affordability’ is a con job by the Democrats,” Trump declared during this week’s cabinet meeting, in between snoozes. “The word ‘affordability’ is a Democrat scam,” he insisted, adding that the word “doesn’t mean anything to anybody.”

Sure, just last week he was proclaiming himself “THE AFFORDABILITY PRESIDENT,” but maybe he has a point. “Affordability” doesn’t have a universally agreed-upon definition. Is it just a vibe? A number? How can you tell if it’s getting better or worse?

So let’s talk about how you might go about measuring affordability, if you were trying to do so in an intellectually honest way, and what Trump could do to improve the issue. He’s probably not going to like the answer.

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FIRST THINGS FIRST: Yes, the vibes are definitely bad. Americans hate the economy these days, and have for a while.

Consider Gallup’s Economic Confidence Index, which was released today. This index looks at two measures: how many people rate the economy as “excellent/good” minus those who say “poor”; and the share who say the economy is getting better minus those saying it’s getting worse. This monthly measure has been consistently below water since 2021, and in November, it fell to a seventeen-month low.

Gallup also found that Americans’ views of the job market are at their most negative since the end of Trump’s first term, when the pandemic was still raging. Consumers have likewise sharply revised down their expectations for how much they’ll spend this holiday season. In fact, their mid-season spending plans fell by the largest amount on record.

Other measures of consumer sentiment are similarly dour. For ten months, the Conference Board’s Expectations Index has tracked below the threshold that usually signals a coming recession.

But these are feelings, and as we know, facts don’t care about your feelings. So let’s look at some harder data.

One obvious metric for assessing affordability might be overall inflation, which measures how quickly prices are rising. Inflation is now significantly lower than it was during its post-COVID spike, but it has been ticking up roughly since Trump’s “Liberation Day.”1

Or maybe you’d look at one specific, more salient expense, such as electricity, which played a big role in the recent off-cycle elections in New Jersey, Virginia, and Georgia. Electricity prices have indeed surged nationwide—both since the end of the pandemic and in the past year:

You might also look at health insurance, the key issue in the recent government shutdown. Chiefly because Republicans refused to extend Obamacare subsidies expiring this month, the average premium for people who get subsidized health insurance in the individual marketplace is expected to more than double (from $888 in 2025 to $1,904 in 2026).

Finally, you might also look at housing, the key to the American Dream.

House prices shot up during the pandemic, but more recently price growth has tapered off. That sounds like progress, except consumers are still of course having to confront all that previously accumulated price growth.

And that’s a common problem with assessing “affordability” based on traditional inflation metrics. Inflation is a measure of changes in prices, not levels of prices. So if the price of a basket of goods is not growing today but it grew a lot last year, inflation will look pretty low, even if the products in question still feel super expensive, or outright unaffordable.

Another way to look at all this is to examine what’s happened to wages after inflation2: How much more stuff can you buy than you could before? There’s an ongoing debate about the best way to measure inflation-adjusted wage growth, which we can discuss in greater depth another time. Suffice it to say that on net, real wage growth has been somewhere between slightly negative and weakly positive in the years since the pandemic.3

That means people’s living standards have been stagnating—a problem that antedates Trump, but which he hasn’t helped.

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SO WHAT CAN TRUMP ACTUALLY DO about any of this? The answer is not much, but ideally none of the things he’s currently doing.

It’s unhelpful, for instance, that Trump has jacked up tariffs to the tune of approximately $1,700 for the average household and $900 for households at the bottom of the income distribution, based on estimates from the Yale Budget Lab. Also unhelpful is the cancellation of various energy projects around the country that might have helped push down electricity prices.

The president could also stop mass deportations of the agricultural workforce, which even his own administration says is a threat to “the stability of domestic food production and prices for U.S. consumers.” Same with the construction workforce, which is needed to build more houses. Trump’s DHS blames “tens of millions of criminal illegals” for increasing every fathomable expense—housing, groceries, healthcare, etc.—but his deportation and de-documentation policies are likely contributing to high costs, given the sectors that immigrants are more likely to work in.

And he could definitely stop degrading the political independence of the Federal Reserve, as he’s been doing by trying to purge Fed officials he dislikes so he can install loyalists. In the long run, this is toxic for inflation.

There’s no knob under the Resolute desk that presidents can use to dial down prices, but there are a few isolated things Trump could do to help. Extending the ACA subsidies, for instance, would shield people from a doubling of their premiums. But that might require acknowledging Democrats were right on the issue—which, of course, they can’t be because it’s all a fake news con job hoax.

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Ramparts

I’m trying out a new section of my newsletter, with miscellaneous things I’m reading or thinking about. It’s called “Ramparts.” (Get it? Get it???)

— Trump said this week that he won’t announce his pick for the next Fed chair until January. This was odd given that days earlier he said he’d already decided, with National Economic Council Director Kevin Hassett the presumed favorite. Well, according to the Financial Times, bond investors recently told Treasury Secretary Scott Bessent they don’t want Hassett because they think he’ll be politically controlled by Trump. But this will be a problem with virtually anyone Trump chooses, since personal loyalty to Trump seems to be the sole criterion for the job. Not sure how you square this circle.

— Treasury Secretary Scott Bessent spoke at the New York Times DealBook conference this week. Among other things, he suggested that Trump may attempt to “veto” the regional Fed bank presidents. This is a huge sleeper issue. My reporting suggests officials at the Fed have been concerned about this possibility for months, since all twelve Fed bank presidents come up for reappointment in February. Watch this space.

— Costco has sued the Trump administration over tariffs. Much as I love Costco (and boy do I love Costco) this is not really about the company growing a spine and taking a political stand, or whatever else people are projecting onto the story. An impending deadline has forced their hand. In fact, due to a countdown clock that started with the imposition of some of the tariffs, there may be a flurry of additional suits coming up if the Supreme Court doesn’t rule on tariffs by December 15.

— Matt Gaetz has apparently taken to wearing a jacket embroidered with his name. That’s a dealbreaker, ladies.

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