Huge jump in Personal income…According to the Bureau of Economic Analysis, personal income was up 0.8% month-over-month in April while the consensus was 0.3%. This is following an upwardly revised 0.7% increase from 0.5% in March. What does it mean – Tariffs, Trade deals, re-onshoring or onshoring, foreign investments, aircraft sales, manufacturing expansion, steel manufacturing, deregulation, DOGE, etc. All adding to rising wages. CPI was up 0.2% month-over-month…The consensus was 0.3%. Following a 0.1% decline in March. This is the smallest 12-month increase since February 2021. What does it mean – The economic pundits will pontificate the meaning of tariffs and inflation and still get it wrong if they don’t stop buying into their own fearmongering and biased ideology. Not sure how many times we have to say it, “inflation is about money supply.” It is about printing money. And yes, The U.S. printed a heck of a lot over the last 18 years. Per our previous letter we printed $68 out of every $100 in circulation today in just the last 18 years. Yet, when it comes to inflation, the economic pundits are once again getting it wrong. Here is a look at money supply. Meaning how much is actually in circulation. 
Money Supply is flat…According to the FED M2 money Supply has been fairly flat for the last 24 months. What does it mean – As seen in the chart below, M2 is flat, yet a bit worrisome as we see the short-term trend is still an issue but is flattening as of late. Don’t forget $9 trillion in debt is coming due and an increase in the debt ceiling is probably going to happen. 
Currently the falling inflation flies in the face of nearly every pundit’s prediction. Inflation is slowing down, personal income is up, tariff revenue at record levels, we are managing through this “trade war”. We are debating the “Big Beautiful Bill.” Yet monetary policy continues to throw off the pundits. While tariffs can result in higher costs for items being tariffed, it does not mean the overall economy is experiencing inflation. Tariffs do not change monetary policy or increase or decrease the supply of money. For instance, if you earn and spend $1000 every week and the cost of gas in CA is almost twice as much as the rest of the country over the last 6 months, it does not mean you have inflation, just less money to buy other goods and services. This puts downward pressure on those other items as fewer things are purchased since you have less money because CA has a bad fiscal policy and is over regulated and has increased gas prices through taxes similar to tariffs. Net, net, there is the same supply of money(M2) in the economy resulting in low or no inflation.
