We live in interesting times, and let’s face it: mostly, in a good way. It doesn’t have to stay that way, naturally, and it won’t stay that way naturally. This has always been the weak spot in any system that insists on centralized management of certain functions. Of course, that’s the fundamental flaw and conceit of socialism: it relies on the active intercession of omniscient beings to order activities better than the masses of private actors can.

I want to say something briefly about the “neutral rate of interest,” which has recently become grist for financial television because of new Trump-appointed Fed Governor Stephen Miran’s speech a couple of days ago in which he opined that the neutral rate of interest is much lower than the Fed believes it is, and that therefore the Fed funds target should be more like 2%-2.25% right now instead of 4.25%.

It is rare, in the investment world, for an investment to honestly and fully disclaim its basic nature in a way that finishes the story and requires no further analysis from us before making an investment decision. I have found such an investment. It is a cryptocurrency/meme coin called, appropriately, USELESS. If you were to buy all of the USELESS in existence, it would cost you (as of this writing) about $272 million dollars.

As we look forward to the CPI report next week, the monthly-repeating theme is ‘when will the tariff effect show up?’ The answer, so far, is ‘not yet,’ but economists who had forecasted the end of life as we know it when the Trump tariffs went into effect have been befuddled. I’ve already admitted in this column that I was educated in the tradition of ‘tariffs bad,’ but that over the years Trump’s insistence otherwise has made me carefully re-think of which ways tariffs are truly bad, and which ways they’re not so bad.

It is hard to believe that a third of the year is already past. Some people, of course, would say that it seems like a hundred years have passed in the first hundred days of Trump’s second term, but to me it seems like a blink. Here’s a quick mark-to-market summary of where I think we stand with respect to inflation and the economy generally…after which I actually have another point for this column:

As many of you know, one of my goals in life – for decades – has been to expand the inflation-linked investing ecosystem to other structures (e.g. options), other legs of the liquidity triad (e.g. cash, swaps, futures), other more-specific inflation (e.g. medical care), and in every other way I could. Barclays originally moved me into the US CPI Derivatives seat not because they thought I’d be a tremendous trader (there was nothing to trade) but because they thought I’d be a good evangelist for the product.

Before we get started on today’s CPI, let me add a few wise words from an old market observer: The stock market is not the economy. The stock market is the (private real economy) times (price per unit of the private real economy). When the stock market goes down, sometimes it’s because the real economy is contracting, and sometimes it’s because the price people are willing to pay to own a piece of that is declining.

Look, I know that traders sometimes think their job is to overreact. And media folks benefit from overreacting. And political strategists have been genetically bred to overreacting. But a bit of rational analysis here is probably worthwhile. The obvious backdrop to the CPI release this morning is the somewhat-greater-than-usual volatility in the equity market,[1] and some concerns that the economy might finally get that recession that I and others have been expecting for so long – although don’t get too chippy on that, since the Q1 contraction would be mostly due to a surge in imports from front-running tariffs.

Behold, my roughly-annual blog post on gold. I recognize that there is a good case for gold at a time when the price level is rising steadily and there are upside risks to inflation and downside risks to the dollar. Let me start there. I get a little confused trying to decide whether, if we find out that Fort Knox doesn’t have as much gold as we thought, that’s bullish or bearish.

A couple of weeks ago, I presented a blog post called “The Effect of Crazy Time on Portfolio Allocations,” in which I pointed out that the effect of increasing volatility generally is to decrease the optimal portfolio allocations towards safer allocations. It was one of those posts where you initially say ‘well, duh’ but hopefully liked the fact that I ‘proved’ the intuition with the illustrations.