Donald Trump’s victory in the November presidential election was a surprise to some, but not to me. I was certain that Trump would win, and that we would know the outcome by Wednesday morning. The reason for this confidence was the Median Voter Theorem, one of the more famous (and underappreciated) theories in political science and public choice economics.

A family member recently sent me a post from the Reddit Subreddit, r/wallstreetbets. The post was written by a McDonald’s worker who received a shipment of special coins at his restaurant. These coins allow the bearer to exchange a coin for one Big Mac. The post asks, “Since the U.S. dollar is no longer backed by gold, does this mean that the Big Mac coin is more stable than the dollar, since that coin is backed by Big Macs?”

When the price of something rises, allegations of price gouging inevitably surface. Vice President Harris claims that she will “make groceries more affordable by cracking down on price gouging on food.” What exactly is price gouging and what should be done about it? Simply put, price gouging is a meaningless concept and fighting it makes the situation worse.

A few weeks ago, the Harris campaign proposed using price controls to address the high cost of groceries. The cost of groceries is indeed 25% higher than at the start of the pandemic. Addressing this through price controls would be counterproductive and damaging.

In the world of baseball cards, the most valuable is Honus Wagner’s rookie card that sold at auction for $6.6 million in August 2021. Known as the “Flying Dutchman,” Wagner played for the Louisville Cardinals and Pittsburgh Pirates from 1897-1917. His 3,420 career hits put him 1,000 hits behind Pete Rose.

The 40-year high inflation the United States has experienced post-COVID has resulted in substantial hardship for Americans. Rising prices have reduced Americans’ purchasing power and standard of living.

In last month’s column, I discussed how trust in government is at an all-time low. The Gallup Organization finds that trust in private institutions is similarly low. The only institution that enjoys widespread trust is small business, where 68% of Americans’ trust it a “great deal” or “quite a lot.” Trust substantially decreases for other institutions. Only the medical system and organized religion are trusted by more than 30% of Americans. Twenty-to-thirty percent of Americans trust unions, banks, tech companies and newspapers, while big business and television news are only trusted by 10%-20% of Americans.

An underappreciated risk in the U.S. economy is that Americans have lost confidence in the federal government. The Gallup Organization has tracked Americans’ trust in government since the 1970s. It is striking how much Americans used to trust the government compared to now. When Richard Nixon was president in 1972, 75% of Americans had a “great deal” or “fair amount” of trust that the government could solve international problems compared to 44% now. Seventy percent had this amount of trust that the government could solve domestic problems compared to 37% now.

My March column discussed the challenges involved in balancing a federal budget that is currently $1.5 trillion or so in deficit. The necessary tax increases and spending cuts would far exceed what Americans have ever experienced. A natural question might be why the budget deficit and the national debt, which is the accumulation of all the past deficits, is even a problem. The government has consistently run a budget deficit since the 1980s without an issue. Why should we worry about it now?

At the end of 2023, inflation appeared to be falling to the Federal Reserve’s 2% target. Inflation was 3.3% in December 2023 and was expected to be below 3% in January. However, inflation was higher than expected at 3.1% in both January and February. There is a strong possibility that inflation will continue to run above 3% rather than falling to the Federal Reserve’s 2% target.

The federal government is set to add another $1.5 trillion to the national debt this year. To put this in perspective, note that one trillion is a thousand billion. A billion seconds is roughly 32 years – thus, a trillion seconds is 32,000 years. The national debt currently stands at $34 trillion. Counting to $34 trillion, assuming each number took one second to count, would take roughly one million years. The Great Lakes were not even formed yet one million years ago! The debt-to-GDP ratio is now at 120% – what it was during World War II. This is an unfathomable amount of debt.

Higher interest rates usually result in falling house prices, as the higher mortgage interest rate increases the monthly payment. Consider a $250,000 house purchased with a 20% downpayment. When the 30-year fixed mortgage rate is 3%, as it was in 2021, the monthly payment is about $850. When this interest rate rises to 7.5% as it did in 2023, the monthly payment doubles to $1,400. Housing thus becomes less affordable and the demand for houses falls, reducing their price; the fact that this did not happen in 2023 was surprising. A likely explanation for this is that housing supply remains constrained, which is keeping prices elevated.