Overall Inflation was gauged at 3.0% for the past twelve months in September. The problem is that this doesn’t even begin to tell half of the story that Entrepreneurs need in order to properly manage their businesses.
The US Dollar Index is reported by the Wall Street Journal as a broad measure of how our dollar is doing against other major foreign currencies. If the dollar weakens, it reduces our buying power, making imported goods coming into our country and our businesses that much more expensive.
At the beginning of 2025 this index was hovering around 103. At this time of this writing, it’s sitting at 97.66.
This means that the real buying power of the dollars sitting in your checking accounts has decreased by over 5% in less than a year. The Inflation Gauges at 3% don’t begin to tell the whole story.
The Mar-A-Lago Accord
Earlier this year Stephan Miran, Chair of the Council of Economic Advisors, Scott Bessent, Director of The Treasury, and President Trump sat down at Mar-A-Lago to put together an economic and trade blueprint for the current administration. The main point of the proposal is to lower trade deficits and boost American Manufacturing, putting Americans back to work.
Key components of The Accord include…
1 – Reducing US budget deficits through imposing a broad system of tariffs
2 – Using tariffs as leverage by linking access to US Markets to foreign countries cooperation in our national security interests
3 – And encouraging countries to swap short-term US Treasury securities for longer-term, 100-year bonds, which reduces our costs of borrowing, further helping to balance the budget.
But there’s another part of The Accord that has far reaching and potentially devastating implications if Entrepreneurs don’t know about it and don’t do anything about it. It’s the fact that they want to devalue the US Dollar.
At first blush many are probably asking why. Why would any administration intentionally want to devalue our dollar? There are many reasons, but here are the two that are central.
A devalued dollar reduces our trade deficits and boosts American Manufacturing by making our exports to other countries less expensive. This in turn, puts Americans back to work.
Just in case you think I’m making this up, please go to the following Wikipedia Page for further information and verification.
https://en.wikipedia.org/wiki/Mar-a-Lago_Accord
Let me leave you with this…
Before any of my friends on the far right or far left start sending me hate emails, I’m not presenting this as any sort of a political statement endorsing or condemning any of the new administration’s actions or policies. My column isn’t about politics.
It’s about helping entrepreneurs manage their businesses better.
This isn’t something that people are writing about. Unless you’re at the highest levels of finance, it’s not the sort of thing that you would know about. But I think you’d agree that now that do you know about it, you should probably do something about it.
This isn’t the first time we’ve had an administration that wanted to devalue the dollar. The Reagan Administration did the same thing back in the 80’s.
President Reagan inherited a nightmare inflationary economy from Carter where the US Dollar Index shot up to 163 within a few months of him taking office. By the end of his term it was back down in the nineties putting Americans back to work.
The implications of this from an Entrepreneurial Standpoint are staggering.
If you have a large chunk of money sitting in a non-interest bearing checking account you should probably put it into the market. You just lost over 5% of your buying power without even knowing it.
Basing any potential pricing increases on the rate of inflation is probably the wrong way to go. The problem is that this current trend doesn’t look like it’s going away any time soon.
It will probably continue into the future. If you did a 5% price hike today, it just means that you’d probably be behind a month or two from now when the dollar may devalue further.
This is the sort of thing that you need to get ahead of and stay ahead of. Your monthly financial statements are more important than ever.
These problems usually aren’t uniform. Depending on the company and the individual goods and services purchased either domestically or internationally, you could easily see variances that either double or triple that 5% figure.
Again, digest your monthly financials. The information you glean from them should guide your decision making.
I’ve had many Entrepreneurs ask me why it feels like they’re doing worse this year than normal. They’ve been aggressive in their price hikes, are taking home less than usual, and what they are taking home is buying less at the grocery store.
Inflation and the overall value of the US Dollar is probably why. Please realize that the fruits, vegetables, and even some of the meat you buy at the grocery store was probably imported from another country.
Again, this isn’t a political statement. I’m not agreeing, disagreeing, promoting or condemning any of our new administration’s actions or policies. This isn’t about politics. Please know that if you’re foolish enough to send me any hate emails, I will only delete you from my email list.
I’m writing this because no one else is.
Entrepreneurs can’t do anything to change the economy we operate our businesses in. We can only respond.
Get ahead of this. The business you save might be your own.
When you have questions, don’t hesitate to contact me.
We’re all going to get through this. Let’s get through it together.
Accounting Solutions Ltd. stands ready to complete our mission and purpose of protecting you, your family, and your business. Whether you need Payroll Services, or Accounting and Tax Work, you have but to ask. I’m here and I remain,
Sincerely yours,
Chris Amundson
President
Accounting Solutions Ltd.
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