A proposed “Mar-a-Lago Accord” to devalue the US dollar is gaining traction, but such a move risks severe economic fallout. A weaker dollar may provide short-term trade advantages, but history shows that currency interventions often yield unintended consequences. Rather than pursuing artificial currency manipulation, policymakers must consider the broader consequences of weaponizing the dollar and reassess the risks of forced devaluation.

A strong dollar aligns with President Trump’s America First strategy by enhancing US purchasing power, attracting global investment, and reinforcing the dollar’s primacy in international trade—strengthening both economic sovereignty and geopolitical influence. Some Trump administration policies, however, have raised concerns about economic nationalism and trade restrictions. If policymakers take an aggressive approach against foreign investors, treating them as adversaries, capital flight could occur just as the economy faces uncertainty from tariffs, spending cuts, and a rapid pullback in both consumer and business sentiment.

The US has long benefited from the “exorbitant privilege” of being the world’s reserve currency. America attracts vast foreign investment due to that status, which was gained in the 1944 Bretton Woods Agreement and persists more than 50 years after the agreement collapsed. With nearly $18 trillion in foreign investments in US equities today, a sudden reversal of those inflows could destabilize an already overvalued market.

In the past five years, foreign inflows into stocks have more than doubled, with international investors accumulating American equities at twice the rate of investments abroad. That dependency creates vulnerabilities, though. Should foreign investors assess the risks of exposure to the US dollar to be too great, capital outflows could push bond yields higher and stock prices lower.

Foreign central banks have already signaled concerns, with dollar-denominated reserve asset growth over the past seven years staying essentially flat. Private foreign investors have pushed some $10 trillion into US assets since the pandemic, most of which has gone into stocks. Continued flows depend upon stability and strong returns, both of which are likely to be compromised in a regime characterized by aggressive currency policies. Unlike central banks and governments, private investors are sensitive to competitive returns and relative valuations. If these investors retreat due to devaluation fears or punitive policies, the resulting selloff could destabilize markets at a time when valuations are already elevated.

The Plaza Accord of 1985 offers a cautionary tale. While it successfully depreciated the dollar, it led to unintended distortions. Japan, a key participant, saw its currency appreciate sharply, triggering an asset bubble and decades of stagnation. A similar strategy, today, would present even greater risks in light of the size and interconnectedness of global markets.

A weaker dollar also raises borrowing costs for the US government and private sector. Emerging market investors have already expressed concerns about capital seizure risks, reducing their appetite for US government and agency securities. If those fears are compounded by explicit currency manipulation, Treasury markets could face falling demand, driving up yields, spiking debt service costs, and undermining financial stability.

One proposed element of the Mar-a-Lago Accord includes “terming out” US debt by swapping existing obligations for 100-year bonds underwritten by Federal Reserve liquidity guarantees. But with $36 trillion in debt and ballooning deficits, private investors are not likely to swap short-term, liquid instruments for less liquid, high-duration assets. Even Stephen Miran, the author of the proposal, acknowledges that private investors cannot be forced to extend Treasury maturities. Capital flight from US financial markets means higher yields and credit constraints, which ultimately stifle growth–ironically, planting the seeds of the kind of crisis the accord seeks to prevent.

Addressing trade imbalances needn’t be destabilizing. Foreign capital plays an essential role in financing American innovation and growth via financial markets, and policies that threaten the inflow risk undermining asset prices, driving up borrowing costs, and eroding confidence in the US as an investment destination. As US financial markets incur mounting risks, investors will seek alternatives abroad.

A forced dollar devaluation is not a solution; it is a gamble. Rather than seeking the quick and uncertain route of currency manipulation and punitive foreign investment restrictions, structural economic changes fostering innovation, capital efficiency, and sound fiscal policy are necessary. Artificially shifting market dynamics rarely ends well. The lessons of the Plaza Accord are clear: interventionist currency policies create short-term winners and long-term losers but inevitably weaken the economic foundations they aim to strengthen.

Less than a week after breaking the $2,900 per ounce barrier, gold has surged past $3,000 per ounce, driven primarily by deepening economic uncertainty. The S&P 500 has entered correction territory, tumbling over 10 percent from its recent highs as fears of a slowdown grip markets, with persistent inflation and sluggish growth stoking concerns of stagflation. Trade tensions have escalated once again, with wildly vacillating tariff threats — including a 200 percent duty on European wines and spirits — fueling uncertainty and rattling global supply chains. 

Meanwhile, a growing schism in the political and military ties between the United States and Europe has added to market instability, as diplomatic fractures raise concerns over the future of transatlantic cooperation. Against a backdrop of turmoil, investors are once again flocking to gold as the ultimate safe-haven asset, pushing prices to historic highs.

For 5,000 years, gold has been a bedrock of economic commerce, a constant in the ever-shifting sands of monetary history. Era after era, it has been dismissed as an outdated relic — denigrated by policymakers, sidelined by financial engineers, and declared obsolete by the architects of fiat money — only to rise again with quiet, unshakable resilience when the grand designs of men collapse under their own weight. Time and time again, its eulogies have been written, its relevance pronounced dead, yet today, it once more stands at the center of the monetary and fiscal universe, not by decree, but by the sheer gravity of economic reality. 

Central banks, once dismissive of gold, are now buying it at an unprecedented pace, seeking shelter from the very systems they helped create. Since the Biden administration crossed the proverbial Rubicon, wielding the ubiquity of the US dollar as a geopolitical weapon, nations across the world have been jolted into recognizing the peril of dollar dependency, shifting their reserves toward the one asset that history has never betrayed. Gold, indifferent to ideology and immune to the hubris of policymakers, is reclaiming its throne — not with fanfare, but with the silence of a gravitational presence that has never truly left.

Gold’s rise over the decades has been closely tied to economic crises, inflationary pressures, and geopolitical instability. Gold surpassed $500 per ounce for the first time in December 1979 as investors scrambled for safe-haven assets. The 1970s had been marked by stagflation, an oil crisis, and a weakening US dollar, exacerbated by the collapse of the Bretton Woods system in 1971. Inflation in the US had surged past 13 percent, while geopolitical events such as the Iranian Revolution and the Soviet invasion of Afghanistan contributed to economic uncertainty. These factors fueled fears of currency devaluation, prompting gold prices to soar. By the end of 1979, the metal had become a preferred hedge against both inflation and instability.

Gold price per ounce USD (1920 – present)

Gold remained below $1,000 per ounce for nearly three decades until March 2008, when the global financial crisis drove investors into safe assets. The collapse of major financial institutions like Bear Stearns and the subprime mortgage crisis led to a severe credit crunch and widespread fear of a banking system collapse. As the Federal Reserve and other central banks responded with massive liquidity injections and interest rate cuts, investors turned to gold as protection against financial instability. The metal breached $1,000 per ounce on March 13, 2008, as concerns mounted over the sustainability of the global financial system. 

Just a few years later, in April 2011, gold prices surged past $1,500 per ounce as the aftermath of the financial crisis evolved into the European sovereign debt crisis. Countries like Greece, Portugal, and Ireland faced potential defaults, raising doubts about the stability of the eurozone. At the same time, the US dealt with its own fiscal struggles, including a credit rating downgrade by Standard & Poor’s in August 2011, further reinforcing gold’s role as a hedge against monetary and financial turmoil.

The next major milestone occurred in August 2020, when gold surged past $2,000 per ounce amid the COVID-19 pandemic. The global economy was upended as lockdowns, business closures, and widespread unemployment forced governments to roll out unprecedented stimulus measures, including trillion-dollar relief packages and near-zero interest rates. These efforts devalued currencies and sparked fears of inflation, leading gold to its then-record high of $2,075 per ounce. 

As inflationary pressures seemed resurgent in August 2024, the gold price crossed $2,500 per ounce, driven additionally by rising geopolitical tensions, persistent inflation, and concerns over the weakening US dollar. A combination of central bank purchases, trade conflicts, and shifting global monetary policies contributed to further price gains. And now, gold has hit an all-time high of $3,000 per ounce, reflecting continued uncertainty in global markets. Factors such as renewed gold-buying by central banks, a weaker dollar, tariffs, and global economic instability have cemented — or more aptly, reminded of — gold’s role as the ultimate hedge against financial turbulence.

From this point, gold could continue to rocket north, sag back to $2,000 an ounce, or hover around its new record high before establishing a clearer directional bias as political and economic trends unfold. What is certain, however, is that gold has consistently met the rare set of criteria that make it the soundest (according to the market as experienced in real life) form of money in human history. And just as certain, that truth will continue to be doubted, dismissed, and ultimately reconfirmed, as long as ambitious, power-seeking individuals attempt to manipulate the systems in which it operates. Reality will inevitably prove them wrong, again.

President Donald Trump has finally delivered on his campaign rhetoric by imposing sweeping tariffs, signaling a dramatic shift toward protectionism. He announced a 25 percent tariff on goods from Canada and Mexico and a 10 percent tariff on China, stating that the opportunity to reach a deal had passed. Not content to stop there, Trump imposed a 25 percent tariff on European and other countries’ steel and aluminum products and threatened other allied countries with more tariffs.

The fallout was swift.

Canada responded with 25% tariffs on U.S. products, pulled American liquor from store shelves, and even threatened to cut off electricity to U.S. states, prompting Trump to consider doubling tariffs on Canadian steel and aluminum. Meanwhile, China and the European Union have also retaliated, imposing tariffs on American goods like clothing and whiskey. In response, Trump has threatened to slap a staggering 200% tariff on European wine and champagne — a move that could escalate tensions further.

Economists and business leaders warn that these measures could raise prices, disrupt supply chains, and trigger retaliation — risking a global trade war and economic turmoil.

The Global Ripple Effect of Trump’s Trade War

Trump continues to claim that tariffs are taxes paid by foreign countries. The reality, however, tells a different story: they’re taxes on Americans. Research shows his proposed trade barriers could hike household expenses by $2,600 to $3,900 annually, while pushing consumer prices up by as much as 2.8 percent. Unsurprisingly, low- and middle-income families would suffer the most, making tariffs a regressive and harmful policy.

Perhaps one of Trump’s most bizarre assertions is that tariffs could reduce grocery prices. In reality, they would do the opposite. The US depends on imports for 55 percent of fresh fruits, 32 percent of fresh vegetables, and an astonishing 94 percent of seafood. These imports ensure affordable and diverse food options throughout the year. New tariffs would shrink this access, leading to higher prices and fewer choices. Existing duties on beef, seafood, and sugar already inflate costs — adding more would only worsen the situation. 

He also claims that tariffs protect American businesses and farmers. History shows otherwise. During Trump’s first term, tariffs on Chinese goods harmed American consumers and farmers alike. Retaliatory measures from trading partners slashed farm sales to China by over 50 percent and drove a 20 percent increase in farm bankruptcies. This collapse led to billions in government bailouts. 

Similarly, US tariffs would raise production costs for US manufacturers. Imposing a 25 percent tariff on imports from Mexico and Canada would significantly increase production costs for US manufacturers, potentially raising car prices by up to $3,000, slashing earnings per share by as much as 50 percent for General Motors and Stellantis and 25 percent for Ford. The move would likely disrupt supply chains, stifle innovation, and trigger job losses. 

A recent study underscores that tariffs on intermediate goods — essential components processed domestically — undermine US businesses’ competitiveness by driving up production costs. Even if final products were exempt to protect lower-income groups, higher input costs would still burden American companies, who often pass these expenses on to consumers.

The evidence is clear: tariffs do not protect American industries — they weaken them. They inflate prices, stifle competition, and erode international trade relationships. A 2021 report by the USDA estimated that removing tariffs on agricultural imports would improve US consumer well-being by $3.5 billion annually. Meanwhile, a recent Peterson Institute for International Economics (PIIE) study concluded that Trump’s proposed tariffs could raise prices by 2 percent and reduce US economic growth by over 1 percent by 2026.

The impact would not stop at American households. Trump’s protectionist agenda threatens to strain international alliances and stifle global growth. His derogatory characterization of the EU as a “mini-China” and the threat of imposing 10 percent tariffs on European goods could further aggravate Germany’s economic struggles, particularly in its automotive sector — a cornerstone of its economy. With 780,000 jobs at risk due to declining profits and competition from Chinese electric vehicles, the German industry faces an uphill battle.

A prolonged trade war would be a disaster for the global economy. Analysts warn it could slash global trade growth by 2.4 percentage points, threaten $510 billion in exports, and shrink global GDP growth by up to 2.3 percentage points. The consequences would be severe — and self-inflicted.

Openness, Not Isolation, Drives Prosperity

History shows that prosperity stems from openness, not isolation. Yet, as geopolitical tensions rise and voices calling for “de-globalization” grow louder, the United States risks repeating past mistakes. The reality is clear: retreating into protectionism would harm the US economy and disrupt global growth.

One of the rare points of consensus among economists is that free trade fosters innovation and benefits consumers. By expanding choices, increasing competition, and driving technological advancements, free trade has long catalyzed economic dynamism. In contrast, protectionist policies — such as tariffs and trade barriers — inevitably lead to higher prices, reduced efficiency, and fewer job opportunities. 

Despite promises of economic renewal, Trump’s tariff-driven agenda will do more harm than good, breeding stagnation rather than revitalization. A return to free trade — starting with the unilateral elimination of tariffs — would restore competitiveness, lower consumer costs, and repair strained international trade relationships.

To ensure long-term economic stability, the United States must resist the allure of protectionism. The path to sustainable growth and enduring prosperity lies in openness, not economic isolation. Free trade has delivered immense benefits in the past, and it remains the strongest foundation for a more dynamic and interconnected global economy.

It has become a tradition that when a Democrat occupies the White House, a bronze bust of Winston Churchill, historically displayed in the Oval Office, goes into storage, and when a Republican occupies the White House, it returns.  

For the second time, Donald Trump has restored the bust to its place of honor, and it is fitting that Trump should honor Churchill in this way. Churchill is the great statesman of the twentieth century not only for the great good he did during the Second World War, but for his wise opposition to the emerging trend of all-encompassing bureaucracy that has entangled so many Western nations.  

America is entangled in this sort of government — an infinitely complicated apparatus whose workings are unknown, whose works are so vast as to be unknowable, and which seems too often to answer to no one. All that a citizen can know for sure is that this machine moves in mysterious ways and according to its own devices. 

Churchill opposed this de-humanizing bureaucracy because it fills us with “a sense of vacancy and of fatuity, of incompleteness.” It offers people the apparent comfort of not having to make the hard choices that are the essence of self-government, but in the process, it denies people the dignity that comes from governing oneself well.   

Churchill saw this trend but could not unwind it. Trump might start the unwinding process. 

In his first month in office, Trump has fought more aggressively against bureaucratic control than his predecessors. His recent orders show not only zeal, but the technical knowledge needed to put it to good use.  

Trump seems to know that the bureaucracy’s nature is to grow. As it pulls more and more of daily life into its maw, it needs more rules and manpower to digest and reorder it. A few hundred bureaucrats become a few million, a few thousand rules become a few billion. The first step in reform must be to stop its growth.  

To that end, Trump has ordered the maw closed. Right after taking office, he ordered a regulatory freeze while his administration reviews the Biden-era rules still in the pipeline. A prudent move, because Joe Biden expanded the regulators’ reach more than any president before him. He set the national record for regulatory costs, imposing in four years three-and-a-half times the regulatory costs that Barack Obama imposed in eight. In his last year in office, Biden’s administration set the record for most pages published in the Federal Register in a year: 107,262. Laid end-to-end that’s 18.6 miles of paper. 

A temporary freeze is helpful, but not sufficient. Churchill warned that “if you make ten thousand regulations you destroy all respect for the law,” and we blew past that number long ago. A broader reconsideration of whether and when federal power should be used is needed. To that end, Trump has issued a “10-to-1” order requiring that “for each new regulation issued, at least 10 prior regulations be identified for elimination.” The point is to make sure that “the cost of planned regulation is responsibly managed.” Hopefully “cost” includes not only the price tag in dollars and cents, but also the unquantifiable cost of the “sense of incompleteness” that an all-encompassing bureaucracy imposes on people when it takes away their ability to govern themselves.   

The bureaucracy’s will to control requires hands to pull the levers of power, and so the bureaucracy expands over time. It is now the largest employer in the country, and one of the largest on earth. To stop this growth, Trump immediately imposed a hiring freeze on the government. For at least three months, no vacant civilian position may be filled, and no new ones may be created, except as required by law.   

A hiring freeze is no permanent solution. And a permanent freeze is not a prudent solution, for there is much that the federal government must still do. It is easy to misunderstand the goal of reform. The goal is not to demolish the federal government, but to reform it so that it does well what it can do well and does not do what it does poorly, nor what local governments can do just as well or better. That sort of reform will require shrinking parts of the bureaucratic apparatus, reorganizing others, and maybe even expanding a select few. 

The point is that a freeze can only be the start. Trump seems to know this too. His hiring freeze and his order creating a Workforce Optimization Initiative require the civilian agencies to craft plans to reorganize the federal government so that it more efficiently uses “existing personnel and funds to improve public services and the delivery of these services.” The point is not to destroy but to “make reallocations to meet the highest priority needs, maintain essential services, and protect national security, homeland security, and public safety.”  

The bureaucracy’s tendency toward unchecked growth is one thing, its will to be independent of the American people, another. Independence from the people is not compatible with our Constitution nor with the principles of good, stable, and trusted governance. So Trump has issued orders to make the bureaucracy more responsive to the people.  

He did this first with simple sunlight. Trump has ordered “radical transparency” about what the government does with the peoples’ money. His Department of Government Efficiency has uncovered billions of dollars of ideologically motivated spending, all of it contentious, none of it debated or approved by the people. Instead, a handful of bureaucrats, making decisions without the people’s considered judgment, handed out the taxpayers’ dollars to pet projects that a great many people would have opposed, had they known. Now, all agencies must make those grants known. Another order requires agencies to consider the national interest — rather than bureaucrats’ personal or ideological interests — when giving grants to non-governmental organizations.  

Trump’s most important order — and the one that best demonstrates his technical knowledge of bureaucracy — is called “Ensuring Accountability for All Agencies.” It makes even the most distant agencies responsive to the people through the Office of Information and Regulatory Affairs (OIRA). OIRA is a little agency that does a huge amount of good. OIRA reviews significant regulations to make sure that they align with the president’s goals. In that way, it makes the bureaucracy responsive to the people through their chosen president.  

In the past, not all agencies submitted their regulations to OIRA. The “independent” agencies did not. Those are agencies structured specifically to avoid presidential influence. The president may appoint some of their leaders, but after that, he has less control over what they do. But their independence is fiction. They are somewhat independent of the president (although he retains many tools to bend them to his will), but they are not independent of ideological factions. Nobody could say that the Securities and Exchange Commission under Gary Gensler behaved as a neutral, apolitical organization. Neither could anyone say that about the Federal Trade Commission under Lina Khan, nor the Consumer Financial Protection Bureau under Rohit Chopra. All were captured by ideology, and none heard or responded to the people’s considered judgment about its actions.  

That will change, for now. Trump’s order requires even those agencies to submit their significant regulations to OIRA and forbids them from taking any legal positions contrary to those of the President and Attorney General who are the only federal officers who may “provide authoritative interpretations of law for the executive branch.” They will now respond to the people’s judgment insofar as it is embodied in their choice of President. 

That is an improvement over faceless bureaucracy, but responsiveness through the president is still not ideal. Congress, much more so than the president who is represents the people’s considered judgment. Congress is deliberative, the president, decisive, and deliberation, not decisiveness, produces good laws. But Congress has given up its oversight of agencies, and responsiveness through the president is the best we can hope for until Congress picks up the reins it dropped. 

As mentioned above, prudent reform may require expanding some agencies. OIRA is one such agency. With a permanent staff of only about 45 people, it was stretched thin even before Trump’s latest order. Now, it will be stretched even more, and so a proper reform of the federal government would see it expand even as other agencies would shrink. 

But for all reforms, the animating principle ought to be this: that the federal government should do only what it alone can do well, leaving to local governments and civic organizations what they can do equally well or better. Otherwise, as Churchill said, the government will sap the people’s spirit, leaving them with only “subhuman goals and ideals.”  

I’m a philosophically liberal Christian, which means that my views on economics can sometimes feel anachronistic. I love capitalism, but I don’t like consumerism. I think everyone should have the legal freedom to neglect their families and work 100 hours per week to make enough money to buy a Learjet — but believe this is likely a destructive personal path. I think there’s nothing wrong with owning a fancy car, but there is something wrong with a society that tells us to buy the fancy car because the status we get from it will finally fill the hole in our hearts.

As such, I thought Sahil Bloom’s New York Times bestseller The 5 Types of Wealth was an absolute godsend.

At heart, Bloom offers a countercultural vision of what it means to live the good life. Instead of focusing purely on the accumulation of money, he argues, we should build a more holistic good life composed of five different types of wealth: time wealth, social wealth, mental wealth, physical wealth, and financial wealth.

This vision runs contrary to what most of us are taught in many ways, but let’s look at three that I consider to be foundational.

First: in our consumerist society, most of us strive to be always busy. If we are busy, the logic seems to go, then we are in demand; and if we are in demand, then we are important. All of our heroes are always busy; and therefore we should be too.

This logic can lead a lot of us to work hard climbing the corporate ladder while destroying the things that truly matter in our lives. We can end up working late on a Saturday night and letting our marriage suffer. We can spend 12 hours per day sitting in our cubicle until we find that our weight has ballooned and that even walking up the stairs leaves us exhausted. We can run around like a chicken with our head cut off, forever bouncing from task to task but never scratching the surface of what we were put on this earth to actually accomplish.

Bloom explains this with the metaphor of the red queen, a character in Lewis Carroll’s novel Through the Looking Glass. In one scene, the red queen and heroine Alice run as fast as they can, just to stay in the same place. Bloom suggests that that’s what a lot of us are doing. We’re sprinting day and night at the office, without ever feeling like we’re getting anywhere.

Instead of continuing this mad dash, Bloom recommends that we take a step back and reclaim control of our time. He quotes the Stoic philosopher Seneca: “We are not given a short life but we make it short, and we are not ill-supplied but wasteful of it.” Or as Bloom puts it: “You know how important your time is, yet you ignore its passage and engage in low-value activities that pull you away from the things that really matter.”

Bloom recommends that we be strategic with our time. Part of this means spending more time on our purpose at work, and less time putting out fires. For instance, he recommends that we follow the example of President Eisenhower and focus on the work that’s important, rather than letting ourselves get sucked into work that’s urgent but that won’t actually move the needle. But Bloom’s solution goes beyond accomplishing more in our careers. He also recommends that we step off the consumerist treadmill and devote more time to the things that truly matter. Make time for more dates with our spouse. Spend time with our kids. Make time to read, and meditate, and to think deeply about life. He himself quit a high-powered corporate career and moved across the country to spend more time with his aging parents, which he says was one of the best decisions he ever made.

Along with always being busy, our consumerist society is status-obsessed. We buy Rolexes and luxury vacations, not because we want them but because we think that they’ll impress others. Bloom tells the story of a wealthy man who rented a yacht for his friends and family for a week. He was really excited to see their faces when they stepped on the yacht and realized how successful he was. Then, one of his friends looked at the bigger yacht nearby and remarked that whoever owned that must be really successful, which killed the whole mood and left the man feeling “deflated.”

Instead of trying to earn status through material possessions, Bloom recommends that we earn status through character. He recommends that we invest in the things that money can’t buy, but which are more meaningful for this fact: being a kind and caring friend, being a supportive spouse, being a present and thoughtful parent. By doing these things, he suggests, we can earn the approval of people whose approval actually means something. By building character, we can fill the hole in our hearts that a luxury car or a rented yacht never can.

Finally, much of our society is selfish in the extreme. Bloom points out that we are obsessed with networking; that is, with trying to convince others to do things for us. We strive to convince other people that we are interesting. When someone else is talking, a lot of times we aren’t really listening; instead, we’re just waiting for our chance to speak (a regrettable habit he calls Level One listening).

Bloom’s message is to do the opposite. Don’t network to try to get things out of other people. Instead, focus on adding value to the lives of those around you. Don’t strive to be interesting; instead, strive to be interested. When other people are talking, listen to them sincerely and try to learn from them (what he calls Level Two listening).

I’ve always thought that markets need two prerequisites to function well. First, they need a legal framework in which the government (generally) steps back and lets free people come together to buy and sell and trade. But second, they need a people inculcated with sufficient moral virtue that we do good things with our economic freedom. If we all work 100 hours per week chasing money and status while letting our relationships and physical health go to hell, then we’re not building any kind of society worth living in — no matter how large our national GPD grows.

I think of Bloom’s work as an essential submission in developing (or perhaps reinforcing) the latter prerequisite. Instead of just using our freedom to chase money and cheap status, he says, we should invest it in the kinds of wealth that will make us truly happy. As Bloom explains, “Your wealthy life may be enabled by money, but in the end, it will be defined by everything else.”

Imagine that you wanted to do some grocery shopping. To do so, you drive your car from your house not to the grocery store, but to a parking lot miles and miles away from the grocery store.  There, you get on a bus (which you have to pay for) that will then take you to the grocery store. You do your shopping, get back on the bus (paying once again) with your groceries, which then takes you back to your car where you can unload the groceries from the bus and reload them into your car before ultimately driving home.  This would be absurd. It’s also remarkably similar to how people in the great states of Hawaii and Alaska must do almost all of their shopping, thanks to the Jones Act. 

Passed in 1920 (long before Alaska and Hawaii were states) the Jones Act requires that any cargo shipped between US ports, such as those in Hawaii and California, use American-built and American-owned ships and with a crew of majority US citizens.  This over-100-year-old law was meant to boost domestic shipbuilding and crewing by protecting them from foreign competition, who may be able to build ships that are bigger, faster, or cheaper to operate, with crews who work for lower wages than their American counterparts. Unfortunately, it has resulted in little more than increasing costs and complicating the lives of Americans, as a newly filed lawsuit alleges. 

For Hawaii and Alaska, which joined the US in 1959, the Jones Act is a daily burden.  Moving cargo from these states to the lower 48 requires hiring a vessel that is compliant with the Jones Act’s provisions, since the ports involved are all US ports. In practice, Alaska and Hawaii must have entire shipping routes specific to their states.  A large container ship coming from, for example, Australia, could not stop by Hawaii on its way to a port in California, pick up some cargo, and deliver both the Australian goods and Hawaiian goods to the US unless, that ship also happened to comply with the Jones Act.  Given the high cost of American-made ships and the more-expensive American crewmembers, most international shipping is not done by vessels that are Jones Act compliant.  A 2023 Hudson Institute report finds that “only 3 percent of the 55,000 ships in the global commercial fleet” are American-owned.  These 1,650 ships include “only 178 large US flag cargo ships, 85 of which are committed to international trade,” leaving only 93 of these large ships permitted to move cargo between US ports. 

As a direct result, shipping to and from Hawaii and Alaska is both less frequent and more expensive than it otherwise would be. A 2011 US Department of Transportation Maritime Administration report finds that operating a Jones-Act-compliant vessel costs $12,600 more per day than a “open registry” ship, with almost 90 percent of this increase attributable to higher labor costs.  By comparison, that’s a difference greater than the annual grocery budget for a family of four.  Every day.

These inflated costs get passed on to Hawaiians and Alaskans, who must import the vast majority of the goods they purchase. The Jones Act also raises prices for anyone elsewhere who consumes goods and services produced in those states. The Kōloa Rum Company, for example, faces significantly higher shipping costs than other domestic rum producers, in part because of geography, sure, but also due to the Jones Act unnecessarily and, as the lawsuit alleges, unfairly raising these shipping costs. 

Repealing the Jones Act would result in cheaper and more frequent shipping to and from the great states of Hawaii and Alaska.  This would only help these people better afford basic items such as food, building supplies, and other consumer goods. Further, it would greatly reduce the cost of shipping domestically for all Americans, which would significantly drive down the cost of goods and services.  So why has this law not been repealed? 

Unfortunately, protectionist measures such as this are easy to pass but incredibly difficult to rescind, at least politically, because of what Mancur Olsen refers to as the logic of “concentrated benefits and dispersed costs.”  Take, for example, US biofuel requirements.  Reportedly, these cost the typical American about $20 per year, which is hardly enough to cause a general uproar from citizens.  Farmers, however, benefit tremendously from this law and would face significant financial losses if it were repealed. They actively lobby Congress for its continuation, because these concentrated benefits are worth fighting to keep. The dispersed costs, though real and greater over all, are hardly worth fighting about for the many more people who bear them. 

Tariffs and other trade restrictions being floated about today should be approached with both skepticism and caution. It is entirely possible that a case can be made for them in the short-term. But the institutional stickiness and inflexibility of policy-making means that we will likely be stuck with these laws for much longer than we expect. All costs, both those felt by today’s generation and by those which will be felt by future generations, need to be accounted for.  Once they are, the economic case for protectionist measures falls precipitously. 

All that would be required to repeal the Jones Act is a simple stroke of a pen. With it, Congress and the President could significantly reduce prices for the two million US citizens living in Alaska and Hawaii, not to mention the millions of tourists visiting these states annually. A full repeal would improve the lives of all US citizens around the world by lowering prices and increasing access to goods and services. Finally, it would boost manufacturing jobs in the US. Repealing the Jones Act, also known as the Merchant Marine Act, would accomplish all of this. Reversing a century-old protectionist mistake is a legacy any political leader could be proud of.

Last month, President Donald Trump and Commerce Secretary Howard Lutnick announced that the United States government would be “selling a gold card,” with permanent residency status and a pathway toward US citizenship, in exchange for a five million dollar ($5M) fee paid to the federal government. Although it is still unclear at this point what would be included in the gold card, which replaces the EB-5 visa for immigrant investors, Trump alluded to “green card privileges plus,” allowing gold card holders to build companies, provide jobs, and pay taxes. 

But this gold card would be wildly overpriced, even to people having $5M to spare. Migrant investors can shop around globally among the many competing offers across a citizenship-by-investment (CBI) and residence-by-investment (RBI) landscape. What the Trump administration refers to as a “gold card” is merely what the citizenship and residence investment industry (yes, it’s a real industry) calls “golden visas,” essentially permanent residence visas available for purchase. 

Of course, the United States has been and still is a land of opportunity for millions and has the largest economy by far. But second citizenships (considered more desirable than mere residence visas) can be had for a €500K investment in Portugal, an €700K+ investment in Malta, a €400K real estate investment in Turkey, or for about €250K in various Caribbean Island countries and for even less in Vanuatu and Nauru. While, for many, these locations might not be as attractive locations to live as the United States, holding a passport from some of them open up the ability to live well beyond the passport issuer’s country. For example, a passport from Portugal and Malta allows you to live anywhere within Europe’s Schengen Area, and a passport from, say, Saint Kitts and Nevis, opens up the right to live in other Caribbean Community (“CARICOM”) member nations. 

Beyond the mere right to settle in a country, citizenship implies the right to a passport, which allows for mobility even beyond the passport’s issuing country. And as it turns out, the American passport is hardly the crème de la crème. In terms of visa-free access and other criteria used to measure a passport’s overall strength, its ranking ties with other nations in eighth place. Said another way, if you had a Romanian or Croatian passport, you would be allowed to enter more countries visa-free than with an American passport. If your only present passport was issued by Pakistan or China, an American passport is a step up. But if you are from a European country, the Emirates, Singapore, or a number of other developed nations, chances are, your passport is already more powerful than the privilege the president wants to sell.

Possibly the biggest obstacle to the success of a $5M permanent residence visa to the United States is that, for many, being an American citizen or permanent resident is an enormous net liability (not an asset). As American expatriates (citizens who live outside the United States) will be quick to tell you, the United States taxes its citizens and green card holders wherever they are in the world on their global income — even if they have no intention of ever returning. Even for years when an American does not owe taxes to the IRS, they are still required to file (a time-consuming annual chore with additional accounting costs) as well as file an “FBAR” with the US Treasury’s Financial Crimes Enforcement Network, disclosing foreign bank accounts. 

Americans abroad are also routinely turned away by foreign commercial banks that do not wish to incur the high costs of compliance with the US’s Foreign Account Tax Compliance Act (FACTA), which requires foreign banks to monitor and disclose the financial activities of American citizens to the American government. With all of this, Americans and American permanent residents (“green card holders”) are in many ways, while abroad, treated as second-class citizens thanks to present laws around taxation and reporting. 

To Trump and Lutnick’s credit, both have confirmed that the gold card would exempt investors from taxes on their income sourced from outside the United States, while still taxing income sourced from within. But what happens when a gold card holder nationalizes as an American citizen? With no guarantee that their global income would be secure from the US’s global tax net, the gold card is less attractive. 

While the Trump administration dangles a glorified green card with a $5M price tag in front of wealthy investors, it overlooks the rising number of wealthy Americans who renounce their citizenship each year. Mind you, they must pay a hefty expatriation tax upon renunciation. (In fairness, the United States still remains a net recipient of high net worth individuals — for now). 

(Note: We have Abraham Lincoln to thank for citizenship-based-taxation. Although Eritrea, Hungary and Myanmar have some version of it, in practice, the United States is the only country with enough enforcement power to pull it off). 

A Better Incentive for Investment

If the Trump administration really wants to raise investment dollars to pay towards the national debt or anything else, it could do a few things. First, it could increase the value of American citizenship and permanent resident status by doing away with citizenship-based-taxation altogether — for everyone. 

An investor interested in a gold card is likely to want more than just a glorified residence visa. Eventual citizenship is the real prize. But investors know that present tax laws make acquiring American citizenship a permanent tax trap — not only for the investors themselves but also for their children. Children born to American citizens acquire American citizenship themselves, as well as all the tax liabilities that come with it. 

As for taxation on global income, the Trump administration would be right to exclude it (as was announced). But would a gold card holder that later acquires American citizenship still be exempt from taxes on their foreign income? At the moment, it remains unclear. 

As for FBAR and FATCA reporting requirements, both add unnecessary burdens for both Americans and foreign banks. FATCA is a cause of routine discrimination against Americans around the world, which diminishes the value of American citizenship. Axing the requirements for both would boost the value of American citizenship as well as the gold card.

In conclusion, high net worth individuals are able to shop around in a global marketplace for citizenship-by-investment (CBI) and residence-by-investment (RBI). These individuals can – in many ways – obtain much better “bang for their buck” than $5M residency visas, especially for a country that is likely to tax their global income and cause them compliance trouble with foreign banks. 

To his credit, in October 2024, Trump made a campaign promise to Americans living abroad “to end double taxation on our overseas citizens.” But if the Trump administration wants to commoditize golden visas (and a pathway to citizenship) with a hefty price tag, it had better be ready for some long-overdue tax and financial reporting reform. The option to obtain an eventual American citizenship should stand out as an obvious net asset for wealthy investors, not a net liability.

After disappointing readings in November, December, and January, inflation appears to be slowing once again. Could this mark the return to sustainably low price pressures?

The Bureau of Labor Statistics reported that the Consumer Price Index (CPI) increased 0.2 percent in February, after rising 0.5 percent in January. The shelter index alone “rose 0.3 percent in February, accounting for nearly half of the monthly all items increase.” Prices are up 2.8 percent over the past year.

Core inflation, which excludes volatile food and energy prices, also rose 0.2 percent last month. They have risen 3.1 percent over the last year. After widening significantly in 2024:Q3, the gap between headline and core inflation is shrinking. 

Both headline and core inflation have hovered around 3.0 percent annualized for more than a year. Let’s hope the new inflation data indicates reversion to the pre-covid trend, rather than fluctuations around a post-covid trend. 

There’s a world of difference between 2.0 percent trend inflation and 3.0 percent trend inflation. It takes 35 years for prices to double at 2.0 percent, but only 23.3 years for prices to double at 3.0 percent. Investors with capital gains get pushed into higher tax brackets. And the Federal Reserve, which is supposed to keep price growth low and predictable, loses major credibility. To prevent this, central bankers should continue the push to 2.0 percent inflation.

Is monetary policy currently suitable to achieve the 2.0-percent goal? The Fed’s current target range for the federal funds rate is 4.25 to 4.50 percent. Adjusting for inflation using the latest headline CPI figures, the real rate range is 1.45 to 1.70 percent.

As always, we need to compare this to the natural rate of interest, which is the inflation-adjusted price of capital that balances short-term supply against short-term demand. The New York Fed’s estimates put this between 0.80 and 1.31 percent in Q4:2024. Since the lowest estimate for real interest rates in the market exceeds the New York Fed’s highest estimate for the real fed funds rate monetary policy appears to be tight.

Estimates of the natural rate vary, however. The Richmond Fed puts the natural rate of interest between 1.18 and 2.66 percent. That’s a wide range. That the median estimate of 1.89 exceeds the real federal funds rate target suggests monetary policy is loose. Hence, using interest rates to judge the current stance of policy depends crucially on one’s preferred estimate of the natural rate.

We should augment this analysis with money supply data. The M2 money supply is up 3.49 percent from a year ago. The Divisia aggregates, which are broader measures that weight money supply components by their liquidity, have risen between 3.26 and 3.53 percent over the same period. How does this money supply growth compare to money demand?

To proxy the demand to hold money, we can add the most recent real GDP growth and population growth figures. The Bureau of Economic Analysis says real GDP grew at an annual rate of 2.3 percent in Q4:2024. From the Census, we learn that annual population growth in July 2024, the latest data available, was about 1.0 percent. Hence money demand is growing roughly 3.3 percent per year.

So, the money supply is growing about as fast as money demand. Broadly, that suggests neutral policy. But neutral policy corresponds most closely to non-accelerating inflation. We still want price pressures to ease. 

There’s no good reason to settle for 3.0 percent inflation. The evidence suggests that the Fed must tighten further to hit its 2.0-percent target. Whether it will tighten sufficiently or let inflation settle in above target remains to be seen.

AIER’s proprietary Everyday Price Index (EPI) gained moderately in February 2025, continuing a climb that began in November 2024. The index rose by 0.51 percent to 292.4, its highest level on record.

AIER Everyday Price Index vs. US Consumer Price Index (NSA, 1987 = 100)

Amid the EPI’s twenty-four constituents, 17 rose, two were unchanged, and five declined on a month-over-month basis. Purchase and rental of video, residential telephone services, and cable satellite prices saw the largest gains in price. The largest declines came in postage and delivery services, intracity transportation, and housekeeping supply. 

Also on March 12, 2025, the US Bureau of Labor Statistics (BLS) released its February 2025 Consumer Price Index (CPI) data. The month-to-month headline CPI number rose by 0.2 percent, slightly less than the 0.3 increase surveyed. The core month-to-month CPI number saw the same change: up 0.2 percent, higher than the predicted 0.3 percent increase. 

In February, the shelter index increased by 0.3 percent, which represented nearly half of the overall rise in the all-items index but was offset by airline fares (down 4.0 percent) and gasoline prices (down 1.0 percent). Despite lower gasoline costs, the broader energy index edged up 0.2 percent owing to increases in electricity (1.0 percent) and natural gas (2.5 percent). Food prices rose 0.2 percent, driven up by an 0.4-percent increase in the cost of dining out, while grocery prices remained flat as declines across most categories were negated by gains in others.

Of particular note, egg prices surged 10.4 percent, pushing the meats, poultry, fish, and eggs index up 1.6 percent, while beef prices surged 2.4 percent. Cereal and bakery product prices rebounded after a January decline, rising 0.4 percent. Restaurant prices continued to trend higher with full-service and limited-service meal costs both up 0.4 percent and 0.3 percent, respectively.

Excluding food and energy, core inflation rose 0.2 percent in February, half of the 0.4 percent increase in January. Shelter costs continued their steady climb, with both rent and owners’ equivalent rent rising 0.3 percent; prices of lodging away from home increased by 0.2 percent. Medical care costs nudged up 0.3 percent, driven by a 0.4 percent increase in physician services, while hospital services saw only a marginal 0.1 percent uptick. Prescription drug prices remained unchanged. Prices for used cars and trucks rose 0.9 percent, while household furnishings and recreation posted gains of 0.4 percent and 0.3 percent, respectively. Other categories, including apparel, personal care, and motor vehicle insurance, also saw price increases. In contrast, airline fares fell sharply by 4.0 percent, erasing a January uptick, and new vehicle prices dipped 0.1 percent.

February 2025 US CPI headline & core month-over-month (2015 – present)

The headline CPI reading came in at 2.9 percent on a year-over-year basis, exceeding expectations of a 2.8 percent rise. Year-over-year core CPI also rose slightly more than forecast as well, with a 3.2 percent rise from February 2024 to February 2025.

February 2025 US CPI headline & core year-over-year (2015 – present)

Over the twelve months the cost of food at home increased by 1.9 percent, with notable variation across the categories. Meat, poultry, fish, and egg prices surged 7.7 percent, driven by a staggering 58.8-percent rise in egg prices owing to the largest avian flu outbreak in recorded history. Nonalcoholic beverages saw a 2.1 percent increase, while dairy and related products rose 0.8 percent. Cereal and bakery product prices climbed up 0.3 percent. Other food at home registered a slight 0.1 percent gain. By contrast, fruit and vegetable prices declined by 0.2 percent. 

Dining out became more expensive over the past twelve months, with the food away from home index climbing 3.7 percent year-over-year as full-service and limited-service meal costs rose a similar 3.7 percent and 3.5 percent simultaneously.

Energy prices declined slightly over the past 12 months, with the overall energy index falling 0.2 percent. Gasoline prices dropped 3.1 percent and fuel oil saw a steeper decline of 5.1 percent. Those decreases, anticipated owing to the recent decline in world oil prices, were offset by higher household energy costs: electricity prices rose 2.5 percent and natural gas prices were up 6.0 percent. Shelter costs climbed 4.2 percent, notching its slowest annual increase since December 2021. Other categories posted notable gains since February 2024, including motor vehicle insurance (11.1 percent), education (3.7 percent), medical care (2.9 percent), and recreation (1.8 percent).

February’s CPI report highlights weakening consumer demand for discretionary goods, and disinflation in tariff-sensitive categories (automobiles, home furnishings, and apparel) appears to have stalled – perhaps because of price pressures generated by above-average inventory stocking activity in advance of anticipated levies. 

Looking ahead, maintaining downward inflation momentum may prove difficult, particularly in the goods sector. Seasonal factors could push new-car prices higher, and tariffs scheduled for April 2nd — most particularly on auto parts from Canada and Mexico — pose an additional risk. Core services inflation is likely to decelerate further in the second quarter owing to slackening consumer demand, although the impact may be moderated by BLS changes to the weight given to housing in the overall index. At present, by the end of 2025 headline CPI is projected to hover around 2.7 percent, with core inflation slowing to 2.8 percent. 

Despite somewhat softer consumer price data, market expectations for Federal Reserve rate cuts have moderated with less than one cut now priced in for June and roughly 68 basis points of cuts anticipated for the full year. While tariffs on Canadian, Mexican, and Chinese imports are likely to result in a one-time upward price adjustment, the potential for reciprocal tariffs to escalate into a pattern of one-upmanship among a broader set of US trading partners could generate inflation-like pressures in various goods. Tariffs are unlikely to be benign, but their impact on the current disinflationary trend — whether as a further drag or a more challenging setback to progress already made — remains to be seen.

What, exactly, has DOGE found so far in its investigation of Social Security? For the most part we don’t know. But Elon Musk has posted several jaw-dropping items on X that were not what they seemed at first.  

Contrary to the programming assumption made by DOGE investigators, for example, the Social Security Administration does not send checks to everyone who qualifies for benefits, is over full retirement age, and is not coded as being dead. This led to the erroneous report that millions of people who are 100 or older – most who would presumably be dead – are receiving checks. The actual number is about 44,000.  

This number is plausible since it means that about 1 out of 10,000 Americans is both 100 or older and receives a Social Security benefit check. This comports with a related fact from the Social Security Administration’s data set, which is that those over the age of 100 comprise about .1 percent of those who receive Social Security benefits. 

In short, some of what looks like news isn’t.  

Now, some good news.  

Given early mistakes, it is good news that DOGE has no authority beyond having access to data, investigating, and then reporting what it finds to the president. It is the president, or Congress, that will change the Social Security program, not DOGE. Executive orders or acts of Congress  will be transparent policy changes. Both the president and Congress understand that unless there is a very good reason to make any change to Social Security, there will be a very high political price to pay. 

For those concerned that DOGE investigators will have access to private data, there’s more good news. Social Security data is not secret, it is confidential. It is common for even low-level employees in the federal government to have access to confidential data. Those in DOGE who have such access are special federal employees bound by all the rules binding others who currently work in the Social Security Administration. 

Here’s more good news. According to the May 2024 Social Security Trust Fund Report, the unfunded liability for the Social Security Program is 22.6 trillion over the next 75 years. To put this number in perspective, the US GDP for fiscal year ending 2023 was 27.4 trillion. Addressing fraud and waste will shrink the size of this underfunding problem.  

It is impossible for the federal government to eliminate the budget deficit by cutting non-entitlement spending, because these other budgets, even added up, are too small relative to entitlement budget shortfalls. For fiscal year ending 2023, for example, mandatory spending (mostly entitlements) was over twice as much as discretionary spending (3.8 trillion versus 1.7 trillion).   

This is why researchers like me harp on the need for entitlement reform. But if any significant percentage of the unfunded liability crisis is, itself, rooted in fraud and waste in the entitlement programs themselves, then maybe reforms need not be as drastic as we previously thought.  

Now some bad news.  

We are very far from being able to reliably estimate the savings to Social Security, so it is premature to think we are out of the woods. The budget hole is very deep: 22.6 trillion dollars over the next 75 years. No serious scholar I know of believes there could possibly be enough fraud and waste to cover the budget shortfalls by only eliminating that. It is therefore imperative that DOGE-related optimism not slow down needed reforms to entitlement. Such reforms are necessary if the federal government is to keep its promises to future generations. The most likely outcome is that it will shrink a very large problem, which is excellent, but the problem that remains will still be large.  

In the waning days of the Biden administration, this crisis was worsened by almost 200 billion dollars over the next ten years with the Social Security Fairness Act. In short, an unfair outcome had been detected in 1983, it had been addressed with an alteration to the computation of monthly benefits, and now that alteration has been removed to allow the highest-income people in the program to enjoy the most generous replacement rates which were meant for the lowest-income people in the program. It is very concerning that this incredibly low-hanging fruit has not been seized upon by DOGE. If President Trump leads an effort to repeal Section 3 of this act, it would not constitute his “touching Social Security.” It would not allow a last-minute change to the program that came after the president’s pledge, a change that undermines the program’s ability to keep its promises.  

Let’s finish with one last bit of good news. It turns out that two modest reforms that will not reduce what people are expecting to receive from Social Security can close well over 80 percent of the funding gap over the next 75 years. 

Even if DOGE is only modestly successful at removing waste and fraud, these two modest reforms could conceivably close the gap completely.  

In short, the reforms are to first, no longer use wage growth data to index prior earnings in the computation of average monthly earnings (this is the first step in computing the amount of monthly Social Security checks) and second, to use a chain-weighted CPI index for the adjustment of future benefits payments to more accurately account for inflation.  

This would be an incredible gift to the present and future citizens of America.