Four of my Harshest Economic Criticisms this Year Just Got Confirmed

The national debt hit its most dangerous imbalance since WWII. Inflation opened up the throttle. Trump Tariffs got trumped by European refusal to play along. Kevin "the hatchet" Hassett got chopped.

Feb 24, 2026

While we’re not yet facing the four horseman of the apocalypse, four ponies of the apocalypse have arrived.

It’s a bad day that manages to show the national debt suddenly redline as the economic engines start to smoke … and then shows that the old inflation battle is now fully back on, contrary to the president’s assurances otherwise … and then shoves his tariffs back down his throat … and then sees the president’s tariff hatchet man get chopped up in the press for trying to deny the inflation by blaming the Fed. It was not a good week in Trumpworld.

National Debt Deluge

A little less than two weeks ago, I reported on how high the national debt was soaring relative to gross domestic product when compared to past extremes …

Due to excessive borrowing, the $38 trillion national debt stands at 100% of Gross Domestic Product. The highest percentage the national debt has ever made up of GDP was 106%, and that was immediately following World War II….

Then, I pointed out that, while that appears to be still below the nation’s worst high, that could turn on a dime right now due to how bad the economy is actually falling, compared to what the president has been claiming:

That percentage of GDP can rise a lot in just one quarter if GDP drops, and market indicators show the likelihood that it is dropping, even though government reports are still mostly stalled from coming in.

I, then, moved to alternative indicators of economic performance to show how likely the fake GDP number was to take a sudden turn for the worst, which would result in the national debt suddenly looking far worse than what was just reported:

We do have one government report that is an indicator of what will happen in GDP for the fourth quarter of 2025 after inflation is subtracted to get “real GDP” whenever GDP is finally reported….

We already get to see just how quickly that turn in the ratio can change and did change to swing way past its historic worst level (outside of the huge, anomalous swing we got during the Covid lockdowns). The sudden change in how hard the national debt will become to handle arrived when a one-two punch did the trick of sending the historic ratio tumbling head over heels:

US Treasury Debt-to-GDP Ratio Rises to 122% in Q4….
The ugly debt monster grew faster than current-dollar GDP.

We just blew way past the old record for how far the debt exceeds the nation’s total production because overly optimistic GDP suddenly took the dive last week that I’ve been saying to expect (though the real truth still remains lower than the latest GDP report). We are now officially at our worst debt-to-GDP level ever because the debt is piling up so rapidly under Big Bodacious Bill just as fake GDP is scoring a face flop.

As the president gets set to report on the “best economy ever” in tomorrow's State-of-the-Dis-Union address, just keep that ratio solidly in mind. We are jacking up the economy as much as possible with government spending that was enormously increased by Trump and his pocket politicians in congress, especially for military spending,… far worse than it was at the end of WWII.

That is due to GDP plunging at the same time debt spending under Big Bountiful Bill has been soaring. You can see here where Big Bloated Bill took the national debt in just one year:

Over that same time, real GDP plunged from a grossly overstated claim of more than 4% growth to a mere 1.3%, which is still overstated due to how bogus government inflation reports are, which means part of what we are measuring as GDP (measured in dollars) is really just the declining value of the unit of measure.

Inflategate blows up

That last fact about bogus government reports, which is something I’ve been claiming in contradiction to all the government claims, is another point we got to see clearly confirmed again in the headlines I’m posting today. Another article by Wolf Richter on inflation points out that the Fed’s preferred inflation gauge (PCE) just went up more than the Consumer Price Index (CPI), which is NOT the normal relationship between the two. That is because of one of the big new flaws in inflation reporting that Richter has been pointing out (in confirmation of my own claims that the numbers are now hopelessly rigged, having already been rigged for years):

The PCE price index, the inflation measure that the Fed favors as its yardstick for its 2% inflation target, accelerated to +2.9% year-over-year in December, the most inflation in nearly two years, according to delayed data released by the BEA today (red in the chart). It started accelerating in April. On a monthly basis, it jumped by 0.36% (4.4% annualized). The six-month average accelerated to 3.0%, the worst since June 2024….
GDP inflation rose by 3.7% in Q4 – that was part of the huge trove of GDP data released today by the BEA, along with the PCE price index….
The Price Index for Gross Domestic Purchases, which reflects inflation adjustments in GDP except for imports, so domestic inflation, accelerated to 3.7% in Q4, the worst in three years….
On a year-over-year basis, core CPI started decelerating in September and overall CPI in October, just as the PCE price index components were taking off. So what gives?
The major factor that drove that deceleration was the outlier deceleration in the CPI housing components, particularly Owners’ Equivalent of Rent (OER), a massive component that weighs 26% in overall CPI: Over a three-month period – September, October, and November – the clearly doctored ultra-low OER figures pushed down services CPI, core CPI, and overall CPI due to its massive weight, and those three months will continue to push down year-over-year readings until they fall out of the 12-month timeframe in the fall (my discussion here):
There are many differences between the PCE price index and CPI. One of them is that housing indices have much smaller weights in the PCE Price index.
The PCE price index also uses the rent data and the OER data from the same surveys as the CPI, but combined, rent and OER weigh about 17% in PCE while they weigh about 35% in CPI.
So the doctored OER data also pushed down the PCE price index and the overall index for housing inflation. But because it has much lower weight in the PCE index, the effect of the doctored OER is not nearly as much.

In other words, both gauges are now seriously doctored by the Trump government to under-report inflation; however, the area where the doctoring happened affects CPI more than PCE. So, CPI is now more underreported than the underreported PCE. As a result, that inversion of the usual relationship now looks like this, where the two have flipped their relative positions:

The news about the gapping ration of debt to GDP would be so much worse if actual inflation were fully taken out of GDP.

This will continue to push down the year-over-year percentage changes until those three months fall out of the 12-month timeframe later this year….
Normally, the PCE price index shows lower inflation readings than CPI. That is one of the reasons the Fed prefers the PCE price index for its 2.0% inflation target.

The short of it is that even all the doctoring on inflation was not enough to keep the debt-to-GDP ratio from tripping and falling on its head to levels worse than WWII. That’s bad. Very bad. The only reason the Covid lockdowns were worse was because the government practically shut all GDP off for over a month back then by mandating that nearly all production and services cease (supposedly to keep us from catching a bad cold). Whereas, during WWII, production was going through the roof to keep up with how quickly the war was devouring production.

Of course, the Trump administration, Trump in particular, has been lying and saying that inflation, thanks to him, is cooling off! No, it’s being under-reported; and, even so, it is still rising.

The hot overall inflation data in the GDP release today (3.7%) and the accelerating consumer-facing inflation in the PCE price index today (2.9% and 3.0%) indicate that inflation is rumbling throughout the economy and is bubbling to the surface at the consumer end….
There is a lot of stimulus in the economy – government deficit spending, tax cuts for companies and individuals, massive corporate investments in anything related to AI, and too-low interest rates and spreads. Under these combined conditions, inflation isn’t going to sleep.

So, keep that in mind as the president lies through his State-of-The-Onion address on Tuesday where he makes up news on the fly. Yet, in spite of all that stimulus, Team Trump is constantly baiting the Fed to provide even more stimulus, and GDP is falling, even with all the stimulus. So, it looks like the US economy has finally come to the end of its rope (or its orange bed linens if this is government-caused economic suicide).

Trade tariffs in turmoil

One more area where my words were quickly vindicated was my claim in this past weekend’s Deeper Dive that …

All those countries [Trump] just imposed tariffs on know the last fight was over powers the president did not even have. So, they are going to wonder what they are dealing with and wonder whether whatever they finally agree to will be struck down again. So, why even engage in negotiations, especially since tariffs by this new route have to expire in as much time as the negotiations are likely to take?
Other nations are going to be so sick and tired of this guy, they will, if they are smart and and a tiny bit courageous (which Europe usually is not), just forego the bargaining table and focus all of their efforts entirely on developing trade among themselves, as China has been doing with enormous success.

We got to see that play out already in today’s news:

EU postpones vote on U.S. trade deal after Trump’s latest tariff threat
Europe has warned that trade deals struck with the U.S. could now be at risk after President Donald Trump unveiled a new global 15% tariff on all imports at the weekend….
Officials in Europe and London expressed alarm and consternation at the latest upheaval in global trade relations, saying Trump’s new tariff policy could upend trade deals signed with the U.S. last year.
They asked for more clarity from the White House as to what the new tariff policy framework means in practice for their respective trade deals, which saw most European Union exports to the States hit with a 15% duty, and those from the U.K. slapped with a 10% levy.
“Pure tariff chaos from the U.S. administration,” the chair of the European Parliament’s Committee on International Trade, Bernd Lange, reacted to the White House on Sunday.
“No one can make sense of it anymore — only open questions and growing uncertainty for the EU and other U.S. trading partners,” Lange wrote on social media platform X.
“Do new tariffs ... not constitute a breach of the deal? Regardless, no one knows whether the US will adhere to it – or even be able to,” Lange said, adding that “clarity and legal certainty are needed before any further steps are taken.”
The European Parliament’s trade committee held an emergency meeting on Monday to discuss Trump’s latest trade move, and Lange said in a statement that the legislative work was “on hold….”

Well, this is what happens when you set MAJOR foreign-relations policy by kingly decree in order to test and see whether or not you really have kingly powers. As I wrote over the weekend, US trade partners will not, if they are smart and have the least bit of courage, even come to the negotiating table.

“The ruling by the Supreme Court of the United States of 20 February 2026 on the use of the International Emergency Economic Powers Act (IEEPA) is clear and unequivocal. Its implications cannot be ignored, and business as usual is not an option,” Lange said.
“A key instrument used on the U.S. side to negotiate and implement the Turnberry Deal is no longer available,” he added. “The situation is now more uncertain than ever. This runs counter to the stability and predictability we sought to achieve with the Turnberry Deal.”

So, there you have it. The King of Chaos has had his negotiating wings clipped by the Supremes because he flew too close to the sun, using powers he never had in the first place. His was wings melted away. Eventually, smart people (if there are any) just stop doing business with you entirely because you never honor your own deals, or your own courts point out how illegal your deals were in the first place. So, instead, of engaging with any new deals, the EU said they’re holding on what they already have and expect …

the U.S. “to honour its commitments ... just as the EU stands by its commitments….
French Trade Minister Nicolas Forissier suggested that Brussels could hit back at Washington. Speaking to the Financial Times, Forissier urged EU members to not “be naive” and to adopt a united approach against the White House’s new trade position.”

Good luck with getting the US to honor its deals. The US used to be more honorable—not that it ever honored every treaty or commitment by a long shot—but now it makes deals it cannot keep, and Trump routinely shreds the deals he just recently made anyway just because someone does something unrelated to the deal that makes him mad. Kings are capricious like that. That was one reason we stopped wanting them.

Maybe a return to rule by law would be a nice change. The president needs to stay in his own lane, but that is not likely to happen from the man who increasingly looks like God’s wrecking ball for America (based on the repeated claim by Trump and his prophets that Trump was specially appointed by God to rule America). That’s certainly possible: maybe God wants to destroy America in judgement, and Trump is his tool! Could be. Trump being a tool is not hard to believe. The White House—now one-third demolished—probably serves as an apropos symbol of what Trump is doing to America.

Kevin Hatchet gets some chop

On February 18th, I gave bad-boy Kevin Hassett a bad report for giving his own bad report card a bad report:

One way a bad boy might deal with a bad report card is to claim the teacher is lying or doesn’t know what she is talking about. Most bad boys, however, would be smart enough to figure out they can’t sell that excuse to mom or dad. Yet, that is the flimsy excuse Trump’s economic chief Hassett gave today for the bad report card delivered by the Fed over the damage being done by the Trump Tariffs to American businesses and consumers….
“I mean, the paper is an embarrassment,” Hassett said during the “Squawk Box” interview. “It’s, I think, the worst paper I’ve ever seen in the history of the Federal Reserve system. The people associated with this paper should presumably be disciplined.

I went on to tear apart Hassett’s argument that the Fed unjustly blamed inflation on tariffs and unjustly reported that Americans are paying for the tariffs, not foreign entities. So, it was nice today to read someone else tearing Hassett apart:

National Economic Council Director Kevin Hassett is facing blowback for saying that Federal Reserve Bank of New York staff should be “disciplined” for a tariff report that was unfavorable to the White House…. Hassett made the remarks on Wednesday about New York Fed research that found the Trump administration’s tariff policies hurt U.S. companies, calling the report an “embarrassment….”
Douglas Holtz-Eakin, the president of the center-right American Action Forum, also condemned Hassett’s remarks in a memo on Thursday.
“The only one who should be embarrassed is Kevin Hassett, the smell of whom’s burning reputation flavors the air of DC, and who is a bipartisan embarrassment to all who have attempted to inject economic reality to the policy process,” wrote Holtz-Eakin, a Republican who previously served as director of the Congressional Budget Office….
“The louder the noise gets turned up, the more we hug the mast of what is our mission,” [Fed governor] Kashkari said.

(My thanks to all who keep my attempts at reporting the actual truth going through their paid support. It only gets harder as the smoke gets thicker and the mirrors more severely cracked.)