I was one of the millions of people listening to the live conversation last night between Elon Musk and Donald Trump.
And if you missed it, Trump was Trump. You pretty much know exactly what you’re getting with him, and there weren’t any major revelations.
Elon, on the other hand, came off as a genuinely concerned citizen who recognizes the problems facing the country and is exasperated why the people in charge aren’t implementing common sense solutions.
Honestly, I feel bad for the guy; Elon is blasted as a hard-core, right-wing nut job… and there are people who literally want to put him in prison because of his views.
But last night he said things like:
– “the legal system is supposed to be protecting the public from violent criminals”
– “we want safe and clean cities”
– “we want secure borders”
– “we want sensible government spending”
– “we want to restore both the perception and the reality of respect in the judicial system”
– “I’m pro-environment, but I don’t think we should vilify the oil and gas industry”
These are clearly not radical values, and my guess is that most people in the country would probably agree with his values.
About an hour into the call, Elon outlined what he thinks would bring prosperity back to the United States:
1) “Solve government overspending”. He correctly explained that extreme government deficits create inflation… so if you want to really get inflation under control, you have to stop the spending.
In theory, this shouldn’t be hard.
The Treasury Department expects to collect nearly $5 trillion in tax revenue this Fiscal Year (which ends on September 30th). And $5 trillion is an absurd amount of money.
As recently as five years ago (FY2019), $5 trillion would have been enough to pay for ALL federal spending and still have a surplus of more than $500 billion to start paying down the debt.
So, if they had simply frozen spending in place at FY2019 levels, even after adjusting for inflation and higher interest rates, $5 trillion in tax revenue this year should still be sufficient to keep the national debt from growing any further. And that’s without making any significant cuts to government spending.
But spending has increased by nearly 50% in five years. Is the government 50% better? Do taxpayers receive 50% more service? Clearly not. They’ve just let spending spiral out of control with no commensurate benefit to the taxpayer.
2) Deregulate.
Elon’s second point was that a lot of regulations are destructive and make no sense. Volumes and volumes of rules hold back businesses from innovating, hold back citizens from being productive. And that’s what the country truly needs to be prosperous– innovation and productivity.
And those were his two big points… and that if a government can do those two things, the future can be much brighter.
He’s right, and the math clearly supports this view.
Various Presidential administrations over time have increased, or decreased regulations. When there have been decreases in the number of regulations, US economic productivity tends to increase, and overall GDP growth rises. During periods of growing regulations (like right now), productivity wanes.
Higher productivity means that the economy grows faster. And a faster growing economy means more tax revenue for the government. Combined with spending constraints, this would leave plenty of money left over to pay down the debt… or simply set aside for a rainy day.
Imagine being able to obliterate a major threat to the nation, or shore up security to the power grid, or support an ally, without having to go into debt? It’s unimaginable given today’s national finances. But with real productivity growth and sensible spending, it’s absolutely a reality.
Failing to do BOTH of these things most likely results in a pretty bad outcome for the United States.
If the debt keeps spiraling out of control, and government regulators continue to constrain productivity, it’s extremely difficult to imagine the US dollar remaining the world’s primary reserve currency.
Continued deficit spending and a ballooning national debt will create even more inflation and cause foreign governments, central banks, and businesses to lose confidence in the dollar. It’s already happening… and one of the reasons why gold is hovering near its all-time high.
The US dollar’s global reserve status is one of America’s premier financial benefits. Losing it would be disastrous… and Elon’s approach is pretty much the only way to save it.
Will it happen?
With Kamala I think there’s zero chance. She does not strike me as someone who will cut spending and slash regulations. Quite the opposite. So honestly if she wins, I think it’s game over at that point. America does not have another four years to waste under the rule of Inspired Idiots.
With Trump I think there’s a chance. But a lot will have to go right, so the outcome is far from certain.
Honestly this is why it makes sense to have a Plan B. And I don’t mean that as a catchphrase or hollow aphorism.
As Elon said last night, “I think we’re at a fork in the road of destiny of civilization.” I don’t think is hyperbole; the differences in the potential outcomes are monumental. Any rational person ought to consider the probable consequences… and take sensible steps to reduce the impact.
Taxes might go through the roof. But there are completely legitimate ways to keep them low and reduce what you owe.
Inflation could easily spike. But you can hedge against inflation with real assets (many of which are absurdly cheap right now).
There are so many more examples; the point is that it’s really time to think clearly about how to navigate the road ahead.
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