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President Trump campaigned on “Make America Great Again,” promising more jobs and prosperity.

“Theoretically” a healthier economy will generate more tax revenue, solving our economic woes. If revenues grow at a higher rate than expenses, we can reduce the debt. Sounds like Reagan’s “supply side economics 2.0.”

Whitehouse.gov proclaims:

• Wall Street sentiment is surging as the stock market reaches new record highs. (Several major investment banks) elevated their S&P 500 Index year-end targets — now predicting record gains to continue.
• Consumer outlook is on the rise. With core inflation at its lowest level since March 2021, expectations for an inflation spike have “completely receded.”
• Price hikes never materialized. A new study found that prices for imported goods have actually declined faster than prices for overall goods — confirming that tariffs have had little effect on prices.
• By all metrics, President Trump is overseeing another economic boom. Jobs numbers have trounced expectations for four straight months, gas prices remain at their lowest level in four years, and blue-collar wage growth has seen the largest increase in nearly 60 years.”

Pundit Bill Bonner weighs in:

“Growth! Growth! Growth!

More jobs! More income! Abundance! Joy, from coast to coast!

…. The numbers are fishy, but it looks like this will add $26 trillion to the nation’s debt by 2035.

‘Don’t worry about it,’ say the Republicans. ‘Growth will make the debt irrelevant.’

…. Is ‘growth’ a false god? In preview, what we’ll see is that the feds can produce ‘more’ of just about everything — even more money itself. But what they can’t produce is real growth.

The statistics are misleading…or outright frauds.”

Is it possible to grow your way out of debt?

Absolutely!

For many years I lamented, “How come there is so much month left at the end of the money?” We had two mortgages, car payments and never seemed to be able to get ahead.

Constant money worries caused many sleepless nights. As the nest began to empty, things improved. We got out of debt and began saving for retirement.

My youngest son, a college finance major at the time, asked how the turnaround was done. I explained the major turning point was starting our own business; our income increased significantly. Because of legal issues with former partners, we banked a “war chest” – uncertain about the outcome.

Excellent results, litigation settled, and Jo and I made some major decisions. We were tired of the constant stress about money issues. Using our war chest, we paid off our debts, including the mortgage, and vowed to never-ever rent other people’s money again.

My son’s response – “Basically, you grew your way to prosperity?”

Not exactly, it wasn’t quite that simple. While the increased income was a big factor, we made several choices/decisions.

Increasing income dramatically. Jo and I took a risk starting a business. Working together, we were fortunate enough to quickly increase our income.

Commit to zero debt – forever. We wanted to eliminate the stress of monthly payments. We had to get off the debt treadmill.

Spend less than we earn. The book, “The Millionaire Next Door,” shares many examples of high-income earners spending all they earn. Country club memberships, luxury automobiles, lavish vacations, you name it. They appear very wealthy, but they are not. Net worth is not what you earn; it’s what you keep.

Set priorities. Setting priorities for the “extra money,” with savings #1. We set up a SEP-IRA retirement plan. “Pay yourself first, and learn to live on the rest” was our mantra. Jo and I first funded each year’s contribution; what money remained determined out lifestyle.

Modify our investment philosophy. We’re no longer investing to get rich; we focused on not losing money and becoming poor. Inflation is a concern. The goal is to diversify, stay ahead of inflation and protect our lifestyle for the duration.

Can the Government Do The Same?

A government deficit is a result of government spending exceeding revenues. The federal debt is the total borrowing to cover the deficits; representing the government’s outstanding financial obligations. Future generations are responsible for paying for sins of their elders!

Total federal debt is dwarfed by the unfunded government promises. It’s like a monthly payment book of obligations without borrowing the money.

Cato Institute explains:

“The Financial Report of the United States Government raises significant concerns about the country’s long‐term financial health. Unsustainable deficits contribute to rising debt levels as spending growth outpaces revenue growth at an accelerating pace. Over the next 75 years, US taxpayers face over $73 trillion in long‐term unfunded obligations.

What’s more, this unfunded obligation is entirely driven by only two federal government programs: Medicare and Social Security.”

Bill Bonner chimes in:

“The feds have just passed a huge new tax-borrow-print-spend program. Today’s debt — at $37 trillion — is now programmed to reach over $60 trillion in ten years. And the interest — already over $1 trillion annually — will soon reach $2 trillion annually.

“The only possible relief could come from faster GDP growth to offset the rising debt. If deficits were to hold steady in the 6-7% range, for example, we’d need growth of 6-7% to stay even with it.

Currently, Deloitte projects 1.4% growth for 2025…and 1.5% for 2026. In other words, growth would have to quadruple to reach the target.“

An improved economy will result in more tax revenue for the government. If we need 6% growth to just stay even, and only grow 1.5%, revenue will fall woefully short – leading to more borrow-print, federal debt and interest….

Forget the “Tax the rich, they don’t pay their fair share” solution. Socialists can debate tax inequity until hell freezes over; we can’t tax our way to prosperity either!

In 2019 Politifact reported:

“The 550 U.S. billionaires together are worth $2.5 trillion. If we confiscated 100% of their wealth, we’d raise enough to run the federal government for less than eight months.”

For growth to happen, the government needs to get out of the way – something they are incapable/unwilling to do. The uniparty is focused on taxing, spending and regulating, rather than allowing free markets to work.

Does the ruling class lie awake at night worrying about paying the bills? Apparently not, the uniparty chose to increase the deficit in their recent bill, just like always.

While you and I may worry about being up to our eyeballs in debt, the government is not spending their money; they are spending ours.

Their major worry is getting elected, re-elected and making sure their party stays in power. The planning cycle is normally the two-year election cycle. Borrow and spend now to get elected; let future generations worry about the consequences of their irresponsibility.

Dump The Debt???

Government debt generally gets diffused in three ways. Devaluation, inflation and default. Using any revenue surplus to reduce debt is not in politicians’ DNA.

In 1934, President Roosevelt confiscated all the gold and unilaterally raised the official price from $20.67 to $35 per ounce, effectively devaluing the dollar by 58%.

Inflation is a form of government default.

President Trump wrote on Truth Social:

“Our Fed Rate is AT LEAST 3 Points too high. ‘Too Late’ is costing the U.S. $360 Billion Dollars a Point, PER YEAR, in refinancing costs. No Inflation, COMPANIES POURING INTO AMERICA. ‘The hottest Country in the World!’ LOWER THE RATE!!!”

We tried that in 2019 – interest rates dropped from 3% to almost zero.

And what happened?

The treasury couldn’t sell all our debt at the “decreed” interest rate. The market, not the president or the Fed determines the interest rates. Therefore, the Federal Reserve created money out of thin air and….

BINGO!

Inflation clobbered us!

Jack Kemp, the Godfather of “supply side economics” showed me charts indicating government cuts in taxes and spending would fix the deficit and debt. He lamented it failed because “politics prevailed.” The democrat-controlled congress wouldn’t curtail domestic spending; they couldn’t allow the Reagan plan work.

Debt to Gross Domestic Product (GDP) was around 30% at the time; the plan might have worked. Today it has skyrocketed to 120%, which many pundits call the point of no return. We need 6-7% growth just to stay even.

Congress is now a uniparty; no matter who is president, they refuse to institute meaningful spending cuts.

Chuck Butler recently explained, “I feel we’ll not reach 10 years before the strain on the financial system leads to the collapse of our financial system.”

No recent president has directly caused, or can fix our economic woes; the deep state is too powerful. Whoever is in power when the final straw triggers the Minsky Moment will be blamed. This time will be different.

Congressional term limits, disband the fed and a return to the gold standard would address the cause. I don’t see that happening.

In the meantime, all we can do is diversify and try to invest in hard assets that will withstand the devaluation of the US dollar. We will adjust and survive….
 

On The Lighter Side…

I was pleased last week when my inbox lit up from readers welcoming me back and wishing Jo a speedy recover from her recent rotator cuff surgery. She and I really appreciate when readers take the time to send us a note and encouragement.

Jo is diligently doing her therapy and I am filling in with many household chores. I told her I am ready to be recertified to operate heavy equipment like the washer, dryer, dishwasher and vacuum. I’m just happy to pitch in – she is doing her best to rehab – and I appreciate that.

We have had some wacky weather this summer in Indiana. It’s been like monsoon season when we lived in AZ. We had a couple of flash flood warnings, lots of clouds, thunderstorms, heat and humidity.

While we have lost power a couple of times, it has not been long enough for our new Generac to kick on.

Once again, please feel free to forward our letters to anyone you feel might enjoy them – and encourage them to subscribe. In addition, we have a Miller On The Money Facebook page. If you like and follow the page it helps give us more visibility. I post once a day, normally a timely quote.
 

Quote Of The Week

“I sincerely believe…that the principle of spending money to be paid by posterity under the name of funding is but swindling futurity on a large scale.” — Thomas Jefferson to John Taylor, 1816.
 

And Finally…

Subscriber Charles C. shares 10 suggestions that can impact your life:

• Ignoring your gut instinct can get you into trouble.
• If you can’t be kind, be quiet.
• When you lie, the truth always eventually comes to the surface.
• Worrying is a waste of time. It steals your peace and most of the time it never happens.
• Don’t raise your voice. Improve your argument.
• Don’t rush. Trust the timing of your life.
• Be strong enough to let go of the things that make you unhappy.
• Worrying about what people think is like putting your soul in prison.
• Talk about your blessings more than your problems.

And my favorite:

• A negative mind will never give you a positive life.

Until next time…

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