Latest / Financial Survival Network / Inflation, Debt & Gov’t Spending: The GDP Squeeze - Ted Thatcher #6245

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Inflation, Debt & Gov’t Spending: The GDP Squeeze - Ted Thatcher #6245 · Financial Survival Network

• 0:00
  Speaker 1: And ultimately when you actually look at what is being done,
• 0:04
  Speaker 1: the cutting of unnecessary government spending. Sure, when you're uncovering
• 0:08
  Speaker 1: the level of government spending that's going awry, you know,
• 0:11
  Speaker 1: people like to highlight who is going to lose their
• 0:14
  Speaker 1: benefits because you know, we're no longer going to be
• 0:16
  Speaker 1: spending you know, tens of billions of dollars here or there.
• 0:20
  Speaker 2: You are listening to Carrie Lutz's Financial Survival Network, where
• 0:23
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• 0:27
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• 0:47
  Speaker 3: And welcome you are listening to and watching the Financial
• 0:50
  Speaker 3: Survival Network. I'm your host, Carrie Lutz. Hey, we're at
• 0:54
  Speaker 3: the end of February here, DOGE has firmly taken hold.
• 0:59
  Speaker 3: Are we heading for a recession? Is the economy salvageable?
• 1:03
  Speaker 3: Will DOGE succeed?
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  Speaker 4: Well? These are important questions.
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  Speaker 3: We've got Ted Thatcher on with us now and Ted,
• 1:11
  Speaker 3: it's always great to have you on. So Bright Lake
• 1:14
  Speaker 3: Financial that's where you go to and we'll give you
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  Speaker 3: the website later. If you've got any questions for Ted
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  Speaker 3: or myself, shoot me an email kl at kerrie lets
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  Speaker 3: dot com. So first, Ted, the thing that's been dominating
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  Speaker 3: the headlines now for weeks is doge Elon Musk's.
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  Speaker 4: Single handed effort.
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  Speaker 3: Obviously there's a lot of people involved in it, but
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  Speaker 3: is his focus for right now? I guess the'se in
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  Speaker 3: between rockets to Mars is somehow making this federal behemoth
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  Speaker 3: efficient or more efficient, less weight, wasteful, to less prone
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  Speaker 3: to fraud and theft and corruption. You know, a what
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  Speaker 3: effect is this having on the economy of throwing a
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  Speaker 3: quote of a million government workers, which is a little
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  Speaker 3: bit of an oxymoron onto the market at once.
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  Speaker 4: I mean, we're.
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  Speaker 3: Already seeing bad things happening in the Washington.
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  Speaker 4: D c. Real estate market. What's your take on it?
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  Speaker 4: You know?
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  Speaker 1: I think that when it comes to those the overall
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  Speaker 1: standard and the idea behind it sometimes gets lost in
• 2:22
  Speaker 1: all the i'll say political rhetoric around it, and ultimately
• 2:26
  Speaker 1: when you actually look at what is being done, the
• 2:29
  Speaker 1: cutting of unnecessary government spending. Sure, when you're uncovering the
• 2:33
  Speaker 1: level of government spending that's going awry. You know, people
• 2:36
  Speaker 1: like to highlight who is going to lose their benefits
• 2:39
  Speaker 1: because you know, we're no longer going to be spending
• 2:42
  Speaker 1: you know, tens of billions of dollars here or there.
• 2:44
  Speaker 4: But it is.
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  Speaker 1: Ultimately really important for the underlying economy because, as we've
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  Speaker 1: also seen throughout the last several years, so many Americans
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  Speaker 1: don't feel that the American dream is accessible. And there's
• 2:56
  Speaker 1: a couple of reasons for that. Certainly inflation driven at
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  Speaker 1: many in many ways, largely by government spending, and secondarily
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  Speaker 1: housing accessibility, and right now most Americans don't feel homes
• 3:09
  Speaker 1: are accessible. The thirty year mortgage is still between six
• 3:12
  Speaker 1: and seven percent, really so.
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  Speaker 4: But rates have been coming down a little bit, haven't they.
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  Speaker 1: Sure so, the federal funds rate absolutely has. But that
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  Speaker 1: speaks specifically to short term interest rates. So yes, our cash,
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  Speaker 1: our money market accounts, you know, if we are lucky
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  Speaker 1: enough to have a bank that's going to pay us
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  Speaker 1: anything on our savings accounts, those rates have been you know,
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  Speaker 1: more or less pretty good the last several years, but
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  Speaker 1: they're starting to come down. However, the long term rates
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  Speaker 1: still are high, and ultimately that is because the long
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  Speaker 1: term bond market, you know, the market as that they say,
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  Speaker 1: the wise market has been pricing and inflation, and so
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  Speaker 1: it's been a governor on the long term interest rate environment.
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  Speaker 1: And so usually we would think one to one almost
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  Speaker 1: short term rates start to come down, we'd expect the
• 4:00
  Speaker 1: mortgage rates to start to come down. But I think
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  Speaker 1: ultimately to bring it back to doze, Doze is going
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  Speaker 1: to have to go a little bit further for the
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  Speaker 1: market to start to actually believe that the spending levels
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  Speaker 1: are non inflationary.
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  Speaker 4: Yeah, So what does it take.
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  Speaker 3: I'f those really cut a trillion dollars out of the
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  Speaker 3: budget and send the twenty percent of it to the
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  Speaker 3: US taxpayer, so they actually cut the deficit by eight
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  Speaker 3: hundred billion. Does that restore credibility to the federal government?
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  Speaker 1: I think, I don't know if it would make it
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  Speaker 1: a perfect reputation, but I think it would go a
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  Speaker 1: long way with the markets. And one person I follow
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  Speaker 1: really closely is Ray Dallio's you know, different things he publishes,
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  Speaker 1: and he's talked a lot about this three percent solution.
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  Speaker 4: And to your point, if we cut out.
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  Speaker 1: A trillion dollars out of the budget, that'll have huge
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  Speaker 1: effects on our deficit spending. Right now, it's very well
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  Speaker 1: highlight The deficit spending is seven and a half percent
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  Speaker 1: above GDP. And so the idea is is if we
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  Speaker 1: can cut significantly and strategically enough to get that below
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  Speaker 1: not seven and a half percent, but down to even
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  Speaker 1: a three percent level, still a deficit, but a three
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  Speaker 1: percent deficit above GDP, and we can get the economy growing.
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  Speaker 1: That essentially will restore credibility for the markets to believe
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  Speaker 1: again that we're not going to have an inflationary environment
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  Speaker 1: and long term rates can actually safely come down.
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  Speaker 4: All right, So what is current GDP? Now? Do you
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  Speaker 4: know that number?
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  Speaker 3: Oh?
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  Speaker 1: She sho off the top of my head. I think
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  Speaker 1: it's I actually don't know it off the top of
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  Speaker 1: my head. I have to double check.
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  Speaker 3: I think it's getting close upwards twenty eight to trillion,
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  Speaker 3: if I'm not mistaken. Uh uh so yeah, twenty nine
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  Speaker 3: point seven trillion, So that's thirty thirty trillion dollars, so
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  Speaker 3: three percent that is nine hundred billion. So I think
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  Speaker 3: right there, basically have to cut the deficit in half
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  Speaker 3: to get to dhia's target, right, Yeah, a.
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  Speaker 1: Little bit more than half, just from a percentage standpoint,
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  Speaker 1: but absolutely, and so you know, do you to your
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  Speaker 1: point too, are we going to throw the baby out
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  Speaker 1: with the bathwater with these government workers the hockeymoron that
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  Speaker 1: you highlighted there. I think that that will have some
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  Speaker 1: negative effects. But the hope in you know, certainly the
• 6:26
  Speaker 1: development of that strategy is that those workers are able
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  Speaker 1: to then participate in the growing economy and actually provide
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  Speaker 1: productivity instead of essentially a dragon a taxpayer.
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  Speaker 3: Well, you know, you look at AI and start thinking
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  Speaker 3: how many jobs are really going to be left in
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  Speaker 3: the real economy by the time AI reaches its not
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  Speaker 3: even its full potential ted.
• 6:55
  Speaker 1: No, yeah, I think that that's an honest concern that
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  Speaker 1: I've thought a lot about.
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  Speaker 4: And a lot of people have.
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  Speaker 1: The more I really get into it, though, I think
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  Speaker 1: I believe in a more positive AI outcome than a
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  Speaker 1: sort of apocalyptic view. The truth is is, I don't
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  Speaker 1: know if you've you know, started to interface with AI
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  Speaker 1: and your day to day work life, but it really
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  Speaker 1: just takes a worker and makes them significantly more productive.
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  Speaker 4: Right now, and.
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  Speaker 1: Sure, there's this sort of very scary AGI world, which is,
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  Speaker 1: you know, I suppose there's some probability that that could happen.
• 7:33
  Speaker 1: But ultimately, at least the way I'm seeing it being
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  Speaker 1: applied today, it's tending to make the workforce hopefully more
• 7:40
  Speaker 1: and more productive, which is how we've seen technology continue
• 7:43
  Speaker 1: to affect the economy, you know, over not just ten years,
• 7:48
  Speaker 1: but hundreds of years.
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  Speaker 3: All Right, Well, it's going to be interesting to see
• 7:53
  Speaker 3: because it looks to me like there's a lot of
• 7:55
  Speaker 3: job categories that are going to be eliminated, that are
• 7:58
  Speaker 3: no longer going to be necessary, and what are all
• 8:01
  Speaker 3: these people going to do? But I guess, according to
• 8:05
  Speaker 3: Elon Musk, if the labor component of producing goods and
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  Speaker 3: services goes to you know, decreases by ninety percent, then
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  Speaker 3: it'll be free money. I guess we won't even need money, right.
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  Speaker 1: I think that some of the applications for AI robots
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  Speaker 1: like Optimists basically give you know, I would say even
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  Speaker 1: the lowest income tier in our country access to very,
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  Speaker 1: very i'll say, productive service sort of jobs.
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  Speaker 4: Right.
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  Speaker 1: You know, if I have an AI robot that costs
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  Speaker 1: twenty thousand dollars as much as a Toyota, does you
• 8:46
  Speaker 1: know even a generally more lower income person could have
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  Speaker 1: access to you know, like kind of like a housekeeper, butler,
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  Speaker 1: you know, a cook, you know, a maid, basically all
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  Speaker 1: these different types of things. And so I think that
• 8:59
  Speaker 1: that sort of the hot more positive future view that
• 9:02
  Speaker 1: you can take. But obviously it's really reasonable to say, hey,
• 9:05
  Speaker 1: a lot of people are going to potentially lose their
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  Speaker 1: jobs and there needs to be some kind of path
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  Speaker 1: to help still make them successful in a.
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  Speaker 4: Part of the economy.
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  Speaker 3: All right, Well, I think it's a challenge ahead, but
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  Speaker 3: maybe AI will figure out what the solution is the
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  Speaker 3: problem that it creates, right, That would do you the hope,
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  Speaker 3: wouldn't it?
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  Speaker 4: All? Right?
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  Speaker 3: Well, Ted, definitely a fascinating conversation here, a lot of issues.
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  Speaker 3: What do you guys out there think? How is AI
• 9:33
  Speaker 3: going to affect your jobs? How is DOGE going to
• 9:36
  Speaker 3: affect you? Are you totally in favor of doge? Do
• 9:39
  Speaker 3: you think it's going to work? Let us know? Send
• 9:42
  Speaker 3: an email to kl at Harry Lutts dot com.
• 9:45
  Speaker 4: Ted, where do we find you?
• 9:46
  Speaker 1: You can find a songline at Brightlakewealth dot com.
• 9:50
  Speaker 3: Right Brightlakewealth dot com link is in the show notes
• 9:53
  Speaker 3: of this interview on Financial Survival Network dot com And
• 9:56
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• 10:01
  Speaker 3: community members have ted pleasure. We will talk to you
• 10:05
  Speaker 3: again soon.
• 10:06
  Speaker 2: Great to see you, Ker, Thanks for listening to Carrie
• 10:08
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• 10:14
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• 10:18
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