Ferenc Toth is founder of Your Personal Bank TM. He is passionate about helping people gain control of their money, create tax-favored income, and having access to more funds over their lifetime! Ferenc is a voice for common sense. He cuts through the noise to help us understand how current events affect our money.
How will Trump administration policies affect our economy and money?
Drill, Baby, Drill
Energy prices affect nearly every product we purchase. Higher energy costs increase prices and inflation.
Increased production will lower energy prices. Lower energy prices will reduce inflation.
Deport illegal immigrants
Total cost to transport, house, feed, and support estimated about $500 billion annually.
This money came from taxpayers and government money printing. This is inflationary.
The government money was being used to compete for food, clothing, housing, and everything we purchase.
Deporting illegal immigrants will reduce housing demand.
The US has a housing shortage. Allowing millions of people in the country when you have a housing shortage will drive up the cost of housing. They have to live somewhere.
Fewer people will reduce housing demand. Housing costs will likely decrease. The effect will be regional.
Think about Springfield, Ohio. The government moved about 30,000 Haitians into a town of about 50,000. Housing costs skyrocketed. What will happen if the Haitians are returned to Haiti? There will be thousands of empty homes and apartments. Prices will drop.
Stop endless wars
The US government spends far more than any other country on defense spending.
I am in favor of a strong military. Most Americans are against war unless necessary to defend ourselves or interests that are vital for our national security.
Excessive spending is inflationary. Wars are expensive. Defense contractors make lots of money from war. Nearly everyone else loses either in blood or money. Less spending would reduce inflation.
Dept of Government Efficiency – Elon Musk
Elon has stated he can reduce $2 trillion in annual spending.
2024 spent $6.75 T, revenues $4.9 T = $1.85 T deficit spending
Reducing government spending will reduce inflation.
Even if the Trump administration does everything right, some problems will take a while to fix. Debt is a major challenge.
Record levels of debt requires record selling of bonds. This pushes bond interest rates higher.
Until the government starts paying down debt, bond interest rates will remain elevated.
At the same time, the Federal Reserve is lowering borrowing costs by reducing interest rates.
This creates an opportunity.
Your Personal Bank allows you to earn dividends (likely increasing) while accessing funds to pay off debt, purchase items, or invest in assets.
If dividends are higher than the borrowing costs, you keep the difference. This creates positive cash flow (positive arbitrage) on your money.
We are likely headed to a historical positive arbitrage scenario.
Historically, positive arbitrage has been available 24 of the past 28 years. The other 4 years the dividends and borrowing costs were similar. The average annual positive arbitrage was 2-3%. This is interest you earn on money you spent or allocated elsewhere!