Affordability, Meet Reflation

President Trump was in Detroit yesterday, touting the accomplishments of his second term.

Among the “affordability” measures he mentioned: Fannie Mae buying $200 billion in mortgage bonds to thaw out the housing market, a proposed 10% interest cap on individual credit cards for one year and the criminal probe against Jerome Powell, ostensibly because the Fed will not drop rates fast enough to meet Trump’s economic vision.

Similar market interventions were deployed during the Nixon, Ford and Carter administrations of the 1970s. The result: a stubborn battle to contain inflation.

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Inflation (gold line) continues to closely track the inflation of the 1970s (blue line). (Source: FX)

Today’s chart of inflation reflects an eerily similar path to the 1970s. The last CPI reading (gold line) ticked back up 2.7%. If prices today continue to track those of the 1970s, the next wave of inflation could see prices rise higher and faster than during the 2021/2022 bout.

Yesterday, gold notched another new record high of $4647. Its slimmer, svelte cousin, silver, set a new historic high of $92. Both monetary metals are reflecting the market fear that once inflation gets started, it’s very difficult to contain.

~ Addison

P.S. Tomorrow in Grey Swan Live! we’ll be joined by Shad Marquitz and take a close look at the precious metals market in 2026.

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In a brief discussion last week, Shad let slip his interest in one particular company that has labeled itself a gold and silver miner because of regulations that have restricted their sale of existing copper and antimony (used in drones and other defense tech).

Those restrictions are being lifted this month, along with other regulations that the Trump administration is trimming.

The details of this one company alone are telling for investors interested in capitalizing on the new retail interest in both precious metals and critical minerals. Shad’s an encyclopedia on the entire resource market. Every conversation yields a wealth of new market insights. Tomorrow’s Grey Swan Live! promises the same. Don’t miss it!

President Trump was in Detroit yesterday, touting the accomplishments of his second term.

Similar market interventions were deployed during the Nixon, Ford and Carter administrations of the 1970s. The result: a stubborn battle to contain inflation.

Turn Your Images On

Inflation (gold line) continues to closely track the inflation of the 1970s (blue line). (Source: FX)

~ Addison

P.S. Tomorrow in Grey Swan Live! we’ll be joined by Shad Marquitz and take a close look at the precious metals market in 2026.

Turn Your Images On

Those restrictions are being lifted this month, along with other regulations that the Trump administration is trimming.

Sunday night, Powell addressed the probe head-on in a video post — a rarity. He accused the White House of using cost overruns in the Fed’s HQ renovation as a pretext for political interference.

The White House denied involvement. But few in Washington believed it.

What followed was bipartisan condemnation of the investigation. Greenspan, Bernanke, and Yellen co-signed a blistering rebuke, warning the U.S. was starting to resemble “emerging markets with weak institutions.”

Estimates now indicate that the average consumer will default on a minimum payment at about a 15% rate – the highest level since a spike during the pandemic lockdown of the economy.

President Trump’s proposal over the weekend to cap credit card interest at 10% for a year won’t arrive in time to help consumers who are already missing minimum payments.

Not to fret, the other 85% of borrowers continue to spend on borrowed time. Total U.S. household debt, including mortgages, auto loans, student loans, and credit cards, reached record highs in late 2025, exceeding $18.5 trillion. This surge was driven partly by rising credit card balances, which neared their own all-time peaks due to inflation and higher interest rates.

There’s an old Wall Street maxim: “Don’t fight the Fed.”

This year, you could add a Trump corollary.

A wise capital allocator doesn’t fight that storm. He doesn’t argue with it. He respects it the way sailors respect the sea: with preparation, with humility, and with a sharp eye for what breaks first.

In 2026, the things that break first are the stories. The narratives. The comfortable assumptions.

Total municipal, state and federal debt service costs soared to nearly $1.5 trillion in the third quarter of 2025. Debt’s easy to accumulate when rates are low. Trouble is, you are obligated to refinance them even after rates go up.

It’s also a key reason why the Trump administration is demanding lower interest rates – even if it means reigniting inflation.

Sunday night, Powell addressed the probe head-on in a video post — a rarity. He accused the White House of using cost overruns in the Fed’s HQ renovation as a pretext for political interference.

The White House denied involvement. But few in Washington believed it.

Estimates now indicate that the average consumer will default on a minimum payment at about a 15% rate – the highest level since a spike during the pandemic lockdown of the economy.

President Trump’s proposal over the weekend to cap credit card interest at 10% for a year won’t arrive in time to help consumers who are already missing minimum payments.

There’s an old Wall Street maxim: “Don’t fight the Fed.”

This year, you could add a Trump corollary.

In 2026, the things that break first are the stories. The narratives. The comfortable assumptions.

It’s also a key reason why the Trump administration is demanding lower interest rates – even if it means reigniting inflation.