Tariff Revenues = Rounding Error

August 13, 2025 • 2 minute, 28 second read

government revenues Government Spending Tariff

The July numbers are in. Unlike the BLS data — which can get “seasonally adjusted” into something unrecognizable months later — the Congressional Budget Office’s tallies are final. What they report es lo que es. It is what it is.

In near real-time, we can see exactly how much Uncle Sam is hauling in from taxes and tariffs… and how much is pouring back out for the military, social programs, and, of course, the ever-growing interest on the national debt.

Even as President Trump touts record tariff revenues, the red ink flows on.

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Government continues to spend far in excess of what it brings in, even as tariffs rise. (Source: CBO)

July alone saw a $291 billion deficit — in one month. At this pace, annual deficits could easily run closer to $3 trillion. That money will either be printed or borrowed at rates north of 4%.

The Department of Government Efficiency (DOGE) hasn’t made much of a dent in spending, nor have sky-high tariff rates. Which leaves us with a stubborn reality: the deficit remains the single biggest long-term threat to the American success story.

~ Addison

P.S. Some companies are thriving under the shifting tariff regime — and from other Trump policies that are decidedly pro-growth. But “pro-growth” also means you need lower interest rates. At least in the Trump Great Reset playbook.

The tricky part? Government printing debt out of thin air usually means more inflation. Under normal circumstances, the Federal Reserve would be leaving rates unchanged in September… or even raising them.

Therein lies the pickle we’re in.

You can’t let interest payments on the existing debt swallow the government budget. This means that, in addition to “pro-growth” economic strategies, you need lower interest rates.

But lower interest rates also mean higher consumer prices for necessities like energy, food, housing, health care and tuition.

The bond market doesn’t like deficits or debt, either. Investors demand higher interest rates to lend the government money.

Like we said, it’s a pickle.

We’ll be digging into both sides of that equation — plus our latest research — in this week’s Grey Swan Live! on Friday, August 15, 2025… exactly 54 years since Nixon “closed the gold window.” Members will get the sneak peek before anyone else.

A special note to Grey Swan subscribers: This week’s Grey Swan Live! will be held on Friday at 11 a.m., not tomorrow. We’re in the middle of some new groundbreaking research – and will have even more details that afternoon. But our paid-up Fraternity members will get an early sneak peek at what we see developing.

Sneak Peek Grey Swan Live!
Friday, August 15, 2025
11am ET

We set up a “VIP access” hot list for non-paying members of the Grey Swan Investment Fraternity. To be reminded before Friday’s event, click on this link and add your name and e-mail to the list.

As always, your reader feedback is welcome: feedback@greyswanfraternity.com (We read all emails. Thanks in advance for your contribution.)

Dave Hebert: How Long Could That $1.8 Billion Powerball Jackpot Fund the Government?

September 16, 2025 • Addison Wiggin

Our fiscal reality is clearly unsustainable. With the passage of the “Big Beautiful” budget reconciliation bill, Congress has already given itself permission to grow the national debt to $41 trillion. Interest payments on the national debt are already the second-most-expensive item on the federal budget, behind only Social Security (and ahead of defense spending). As the national debt continues to grow, debt service will become our number one spending obligation. History suggests it’s only a matter of time until we hit that limit and, unless things change, once again raise the debt ceiling. This cannot continue indefinitely.

Dave Hebert: How Long Could That $1.8 Billion Powerball Jackpot Fund the Government?

When Trust Runs Thin, Markets… Rally?

September 16, 2025 • Addison Wiggin

Bloomberg’s September survey of economists found that the majority are “somewhat or extremely worried” that the Fed’s decisions will be influenced by political loyalties.

If that happens, borrowing costs for the U.S. government rise as risk premia creep into Treasury markets.

Public confidence is already threadbare.

In 2001, 74% of Americans trusted Alan Greenspan to do the right thing. In 2025, only 37% say the same of Jerome Powell. For the first time, trust in Trump to manage the economy is higher than trust in the Fed chair.

The Tech Meltup, Exhibit A

September 16, 2025 • Addison Wiggin

Overall, the S&P 500’s RSI hit 70, the low side of overbought territory — for the entire index.

“Fed rate cuts tomorrow are likely priced in,” writes portfolio director, Andrew Packer, “it may not trigger a selloff, but at these levels, investors may be disappointed with a .25 cut.”

Tech investors will remain bullish on the prospect of multiple rate cuts over the next few meetings.

But be wary of any indication the Fed tries to rebuff Trump’s overtures and, God forbid, remain independent tomorrow.

Plowshares into Swords

September 15, 2025 • Bill Bonner

The empire is in decline. Demographics, regulatory tightening, fake money and the mis-allocation of trillions of dollars (much of it on pointless wars) have sapped the vitality of the economy. The Federal government gets bigger and bigger, but there is no longer enough output to pay for it.

The interest on the debt alone takes more more than a trillion dollars a year. The US faces a financial crisis. And for the first time in history, our children face a poorer future.

The welfare state model no longer works; the center — consensual democracy — wobbles towards the extremes. What to do? Beat our plowshares into swords?