Tag: monetary sovereignty

NEWS! The Republicans actually are right (sort of) about something. The “Current Policy Baseline.”

If you voted Republican in previous elections, you probably thought you were voting for conservatives, not those big spending, big taxing bleeding heart liberals. You were fooled.

It’s almost like falling in love with a beautiful, kind, intelligent, compassionate college girl, and today you are shocked and dismayed to discover she has become a gnarly, mean-spirited, ugly wicked witch.

WHAT IS CONSERVATISM?

Conservatives support reduced government spending to limit the size and scope of government. They push for cuts to social programs and other non-defense discretionary spending.

Conservatives prioritize balancing the budget and reducing deficits. They support tax cuts, simplifying the tax code, and measures like a flat or national sales tax.

They are concerned about the national debt and argue that high debt levels can lead to higher interest rates, reduced economic growth, and increased vulnerability to financial crises. They propose measures to reduce spending and reform entitlement programs to address this.

TODAY’S REPUBLICAN PARTY

There was a time when the Republican Party was conservative.  However, under Trump, there has been some slippage.

They still favor reduced spending, but only when the reductions don’t touch the very rich. They want to cut (they call it “reform”) Medicare, Medicaid, Social Security, school lunches, and other programs that primarily benefit the middle and the poor.

They still favor tax cuts and tax simplification, but only tax cuts that benefit the rich. And the simplification should not affect those complex tax loopholes that allowed billionaire Donald Trump to pay $500 a year in taxes.

The still claim to worry about the federal debt, but here is the sticking point. To give their millionaire and billionaire voting base those juicy tax cuts, the GOP has to cut other spending or increase the federal debt. But there isn’t enough “other spending” to cut, unless the radically cut all the social programs the majority of voters treasure.

They sent out Mad Dog Musk mindlessly to fire hundreds of thousands of good working people (without considering them as individuals), to take dollars from their pockets and to line the pockets of the millionaires and billionaires.

But even with those dollars stolen from the poor and middle-income families, there isn’t enough money to satisfy the rapacious rich.

Ah, what to do? What to do? While always lacking ideas to help poor and middle-income people, the Republicans never lack for ideas to enrich the rich. Here is the latest:

THE CURRENT POLICY BASELINE Imagine that your credit card spending is $10,000 a year. Based on your income, you say, I can handle that. I’ll be able to pay it.” But you don’t. So, at the end of the year, you owe &10,000.

The following year, again your credit card spending will be $10,000, and you say, “Last year, I spent $10,000 and my income stayed the same, so I can spend another $10,000 this year.” Do you see anything wrong with that?

That is “Current Policy Baseline,” and it is the gimmick being proposed by fake conservatives to claim they still are being conservative, by following last year’s policies again this year. They want you to forget that the debt grows while the deficit remains the same.

There is a huge difference between the “Current LAW Baseline and the Current POLICY Baseline, Here is the argument proposed by the U.S. Chamber of Commerce:

Under a current-law baseline, preventing the scheduled expiration of key individual, business, and estate tax policies enacted in the 2017 Tax Cuts and Jobs Act (TCJA) would be considered to cost around $4 trillion over 10 years.

Consider a family that paid $10,000 in federal taxes for 2025 but for whom, under existing law, tax rates are scheduled to double in 2026, meaning the family would have to pay $20,000 in federal taxes that year. A current-law baseline would assume this planned change in the law.

But if Congress later decides to increase tax rates by only 50%, using a current-law baseline would count the family as having received a $5,000 tax cut.

Of course, in the real world, the family didn’t receive a tax cut at all; they got a $5,000 tax increase.

Get it? Congress passes a law that calls for a $10,000 tax increase, a later passes a new law that calls for “only” a $5,000 tax increase. Under the “current law” baseline, they could tell the voters they just cut taxes by $5,000.

MAGAs might believe it, but would you?

Suppose Congress adopts a current-law baseline in its FY 2025 budget resolution. In that case, it is all but certain that most—if not all—of the TCJA’s temporary tax provisions would once again have to be sunset to comply with the Senate’s Byrd rule, under which titles in reconciliation bills cannot increase the deficit in years beyond the usual 10-year budget window.

This is because making the TCJA’s temporary provisions permanent would be considered to increase the deficit when measured against current law.

If, on the other hand, Congress were to adopt a current-policy baseline, then lawmakers would have a real chance to deliver permanent tax relief to American families and employers because extending the TCJA’s temporary provisions would not increase the deficit relative to current policy.

It’s all hocus-pocus designed to confuse you, allowing the Republicans falsely to claim they are not increasing the federal deficit while it and the federal debt rises massively.

I AGREE WITH THE DECEPTION OF THE CURRENT POLICY BASELINE

Yes, I agree with the deception because:

1. The federal debt and deficit are not burdens on the government, the taxpayers, or the economy.

The so-called “federal debt” is neither federal nor debt. It is the total of deposits into Treasury Security accounts. These deposits are, and remain, owned by depositors who want a safe interest-paying place to store otherwise unused dollars.

The accounts resemble bank safe deposit boxes in that ownership never passes to the government, which only holds the dollars for safekeeping.

Our Monetarily Sovereign government does not offer these deposits to acquire spending money; the government already has infinite spending money. The sole purpose of T-security accounts is to provide a safe storage place for those unused dollars (which stabilizes the U.S. dollar) and to help the Fed regulate interest rates (by providing a base rate).

Taxpayers do not pay for the debt. Upon maturity, the stored money is returned to the depositors along with interest created by a government computer. Federal taxes don’t fund federal spending.

2. Federal deficit spending benefits the economy by adding growth dollars to GDP. 

What does Congress do whenever we have a recession or even a threat of recession? It spends more to stimulate growth.

We have recessions when federal deficit spending growth (blue) declines (vertical gray bars). The government cures these recessions by increasing deficit spending growth.
Nine consecutive recessions have followed this pattern:
  1. Spending growth declines
  2. Recession begins
  3. Spending growth increases
  4. Recession is cured.
It is not a coincidence. It’s simple cause and effect.

SUMMARY

A growing economy requires an increasing supply of money. The so-called “federal debt” (should be termed “economic income”) is not a burden on taxpayers, the government or the economy. Concerns about the so-called “federal debt” and federal deficits hinder economic growth.

Under the “fight fire with fire” concept, I agree with deceiving the public about the Current Policy Baseline not increasing the deficit, because deficit increases are necessary for a healthy economy.

It’s like telling your kids that spinach will make them as strong as Popeye. It won’t, but the spinach is good for them, so  . . . I see the current policy baseline as a white lie meant to accomplish a good purpose, though it exposes the hypocrisy of the GOP.

Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell; MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell; https://www.academia.edu/

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A Government’s Sole Purpose is to Improve and Protect The People’s Lives.

MONETARY SOVEREIGNTY

Gold giddy. Yet another ridiculous idea.

So much of what Donald Trump does is thoughtless, cruel, unnecessary, nutty, senseless, or based on a lie one can feel is unnecessary to critique. It stares us in the face.

But, so long as there are gullible MAGAs who still believe the idiocy, we’ll keep writing about it..

His instigation of massive import duties and simultaneously claiming to combat inflation is senseless. Announcing that Ukraine started the war with Russia is nutty and based on a blatant lie. So is the claim that Jan 6 was a typical tourist day, not a riot and that the election was stolen.

Hiring Elon Musk to mass fire thousands of government workers without considering their contribution to our economy falls into the thoughtless, cruel, and senseless territory.

There are too many in that vein to list here, but I feel compelled to address one because it’s so stupid as to be humorous.

Musk Signals Looking Into Gold at Fort Knox—Here’s What to Know. 

Auditing Fort Knox gold reserves is “several decades overdue,” says a sound money advocacy group executive.
Tech billionaire Elon Musk indicated that Fort Knox, the Kentucky-based facility famous for storing U.S. gold reserves, could be investigated.
“Looking for the gold at Fort Knox,” Musk wrote on social media platform X on Feb. 18. “This gold is the property of the American people. I sure hope it’s still there!”
“Who is confirming that gold wasn’t stolen from Fort Knox? Maybe it’s there, maybe it’s not,” Musk wrote. Last week, Musk was encouraged by Sen. Rand Paul (R-Ky.) to review Fort Knox’s gold reserves. .

During a Feb. 17 interview with “FOX & Friends,” Paul revealed that he has been trying to obtain greater transparency for the last decade “to make sure it’s all there.”

The Kentucky senator also believes an audit can confirm that the precious metal “still has value” and can implicitly provide “value to the dollar.”
That’s why we don’t get rid of it. We’ve got it. .

The IMF has it, the World Bank has it. Most central banks worldwide have gold, and it’s an implicit trust that the dollar still has some backing,” Paul told host Lawrence Jones.

Let’s begin with Musk and his entourage marching into Fort Knox “to make sure it’s all there.” Really?
Will they go around counting bars? Will they weigh every bar? Will they check each bar to see whether any are gold-painted bricks? Will they do anything of value on their tour? Can they be trusted not to scratch some gold off a few bars?
.

Fort Knox Gold: Everything You Need to Know | TCBG
Is there any need for “Efficiency Elon Musk” to fly his gang down Fort Knox’s warehouses?
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This trek is even more useless because only half of U.S. government gold is at Fort Knox. The rest is stored at West Point Mint, New York, Denver Mint, Colorado, and Federal Reserve Bank of New York, and some are held as working stock across various Treasury facilities for minting coins.
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So even the most thorough, intensive, expensive examination of Fort Knox won’t answer the questions, “How much gold do we have,” and “Has any been stolen or lost?”
.

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$20 Liberty Gold Coin (XF) | U.S. Gold Bureau
$20 gold coin. Weight: approximately 1.075 troy ounces, Gold Content: 30.093 grams (approximately 0.9675 troy ounces, Purity: 90% gold, with the remaining 10% typically of copper
.

Then there’s the question, what is a gold bar? There are many different purity levels in the government’s bars, ranging from 99.99% all the way down to 90% pure..

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Now let’s get to basics; Gold is not money. And gold does not back the U.S. dollar. Gold is nothing more than a metal. It is desired because it is pretty, fairly rare, a good conductor of electricity, and easily malleable. Iron, silver, and numerous other substances are far more helpful. .

> Gold doesn’t back the dollar, simply because the price varies wildly, and the federal government can, and often has, adjusted the exchange value of gold for dollars. .

If gold backed the dollar, a $20 gold coin would be worth $20. But it isn’t. A $20 gold coin is worth close to $3,000 at current gold prices, and a different amount to coin collectors. .

So, how can one reasonably claim that the U.S. dollar is “backed” by gold? It isn’t and never has been. There could be an argument that the U.S. dollar once was backed by silver, in that the government offered to buy and sell silver at $35 per ounce. .

However, that silver “backing” no longer exists, and no such buy/sell agreement exists for gold. .

The government also stores silver at various locations, including the West Point Mint in New York and the Denver Mint in Colorado. Will the Musk gang also measure our silver holdings? .

So, what backs the U.S. dollar if not silver or gold? Answer: The full faith and credit of the U.S. government. Click the link to read more about “full faith and credit. .

Finally, the Musk jaunt is asinine for yet another reason. Gold represents only a minuscule fraction of federal government assets. .

As of Feb 28, 2021, Fort Knox had about $6 Billion of the $11 Billion in gold owned by the federal government. .

Compare that to M1 Abrams Tanks: We have about 4,650 of those tanks, with a unit value of $14.5 million. In total, our tanks are worth about  $67 Billion. Think about that. All the gold owned by the federal government is worth just one-sixth of our M1 Abrams Tanks. .

Just one aircraft carrier, the USS Gerald R. Ford, is worth $16 Billion.  Our B2 Stealth bombers are worth $15 Billion. Is Musk going to forget about tanks, carriers, bombers, and all other military hardware that totals Trillions of dollars, but focus on inventorying gold? .

And then, there are all the other federal assets: The federal government owns approximately 640 million acres of land, about 28% of the total land area in the United States. Will Musk inspect those to see how they are being used? The U.S. federal government owns and operates approximately 5,399 dams. Should Musk look into them, too? .

The U.S. government stores various strategic and precious metals, including copper, nickel, palladium, uranium, and platinum; I don’t know how much of each, but each one is more useful than gold and perhaps monetarily more valuable. Do they deserve a Musk visit? .

THE BOTTOM LINE .

Gold is a minimally functional, lovely-to-look-at metal that comprises a miniscule amount of federal assets. It is not money, nor does it back the U.S. dollar. Those Abram tanks are worth more and do more to back the dollar than gold bars. .

Musk is visiting Fort Knox to get his face on TV, not for any practical purpose. It is just one more extremely nonsensical idea from the current administration.

The irony is that Musk is the head of the mythical Department of Government Efficiency, and he is wasting thousands of federal dollars to go on a useless, nonsensical jaunt. That’s “efficiency”?

Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell; MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell; https://www.academia.edu/

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A Government’s Sole Purpose is to Improve and Protect The People’s Lives.

MONETARY SOVEREIGNTY

Is this what you voted for?

The Federal Government cannot run short of dollars. Your taxes do not fund federal spending. The federal government pays all its bills with newly created dollars. Because the federal government is Monetarily Sovereign, it is not like you and me. It does not need to “save money.” Who says so?

Former Fed Chairman Alan Greenspan: “A government cannot become insolvent with respect to obligations in its own currency. There is nothing to prevent the federal government from creating as much money as it wants and paying it to somebody. The United States can pay any debt it has because we can always print the money to do that.”

Former Fed Chairman Ben Bernanke: “The U.S. government has a technology, called a printing press (or, today, its electronic equivalent), that allows it to produce as many U.S. dollars as it wishes at essentially no cost. It’s not tax money… We simply use the computer to mark up the size of the account.”

Fed Chairman Jerome Powell: “As a central bank, we have the ability to create money digitally.

Statement from the St. Louis Fed: “As the sole manufacturer of dollars, whose debt is denominated in dollars, the U.S. government can never become insolvent, i.e., unable to pay its bills. In this sense, the government is not dependent on credit markets to remain operational.”

Is Elon Musk's government role unconstitutional? What the Supreme Court might say. - ABC News
The Boss and his underling.

So if the government isn’t running out of money, why is Musk/Trump (MT) firing so many federal employees?

US President Donald Trump fired at least 40% of workers at the Federal Housing Administration, which provides mortgage insurance on loans for people who otherwise wouldn’t qualify for one. One of the largest mortgage insurers in the world, the FHA helps American homebuyers secure a loan if they can’t afford a down payment or have below-average credit scores. It was the latest in a series of mass firings of federal employees by Trump and comes just days after the Department of Housing and Urban Development, the FHA’s parent organization, announced it would terminate half of its workers at Trump’s direction. Over the weekend, amid Presidents’ Day protests against the administration across the country, the Department of Health and Human Services began jettisoning employees in some of its biggest agencies—the Centers for Medicare and Medicaid Services, the Food and Drug Administration and the Centers for Disease Control and Prevention. Those fired Saturday included employees who evaluate the safety of medical devices and conduct oversight of Affordable Care Act exchanges. (Congress meanwhile is considering major reductions to Medicaid in order to pay for the renewal of 2017 tax cuts). And on Monday, the National Science Foundation fired 11% of its staff while, despite recent plane crashes that have killed scores of Americans, hundreds of employees were being dismissed by the Federal Aviation Administration. —Jordan Parker Erb

Why gut these agencies? Because making the rich even richer requires making everyone else poorer.

The Game of Wealth: How the Rich Stay Richer

Wealth is relative. If you have $100,000, you’re rich when all others have $20,000—but poor when all others have $1 million.

For the ultra-wealthy, getting richer isn’t just about making more money. It’s also about ensuring the rest of us have less—widening the income, wealth, and power gap.

How do they do it?
✅ Tax cuts for the rich
✅ Cutting healthcare and social services
✅ Making basic necessities like housing and vaccines unaffordable

This isn’t about “saving money.” The government creates money at will.

In short, the very rich constantly try to widen the income/wealth/power Gap between themselves and the rest.

So, ask yourself: Is making the very rich even richer—while the rest of us struggle—what you voted for?

Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell; MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell; https://www.academia.edu/

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A Government’s Sole Purpose is to Improve and Protect The People’s Lives.

MONETARY SOVEREIGNTY

“Chainsaw Elon” and how to lose weight

In the last thirty years of my business career, I specialized in turning around unprofitable small (under $10 million) businesses. There are two ways to improve profitability: Reduce costs and increase sales. I did both, but mostly the latter. When cutting costs, one must be careful to cut fat without cutting too much meat. Growth requires keeping good people, not merely keeping fewer people. Short term, it’s easy to increase profitability. Merely fire everyone. Long term such a path can destroy a company. Watching cost-cutter Elon Musk and his boss, Donald Trump, I am reminded of the notorious Albert John Dunlap. From Wikipedia:
Albert John Dunlap (July 26, 1937 – January 25, 2019) was an American corporate executive. He was known at the peak of his career as a professional turnaround management specialist and downsizer. The mass layoffs at his companies earned him the nicknames “Chainsaw Al” and “Rambo in Pinstripes”, after he posed for a photo wearing an ammo belt across his chest.

Can Chainsaw Al Really Be A Builder? America’s most ferocious cost cutter says he wants to make Sunbeam bigger. Jan, 1998.

When Sunbeam announces year-end results in January, people will see that sales, not just profits, are rising dramatically. (Dunlap eliminated) 16 of 26 factories, five of six headquarters, and half the 12,000 employees, Dunlap extracted $225 million in annual savings.

Then again from Wikipedia:
It was later discovered that his reputed turnarounds were elaborate frauds, and his career was ended after he engineered a massive accounting scandal at Sunbeam Products, now a division of Newell Brands, that forced the company into bankruptcy. Dunlap is on the lists of “Worst CEOs of All Time” published by several business publications. Read the list and you’ll find that many of the “worst” were massive job cutters, whose overall philosophy was. “We don’t need people. Just pay me more.” Fast Company noted that Dunlap “might score impressively on the Corporate Psychopath measure” and in an interview, Dunlap freely admitted to possessing many of the traits of a psychopath but considered them positive traits such as leadership and decisiveness.
“Mass layoffs, “frauds,” “bankruptcy,” psychopathy” “accounting scandal,” — do those terms remind you of our leaders? Consider these articles:

FRAUD and ACCOUNTING SCANDAL New York judge rules Trump committed fraud and lied about his net worth for years The judge, Arthur Engoron, also denied Trump’s bid to dismiss the New York attorney general’s $250 million lawsuit against him and his company.

According to the ruling, which allows the civil trial to begin next week, Trump lied to banks and insurers by both overvaluing and undervaluing his assets when it was to his benefit while exaggerating his net worth to the tune of billions of dollars.

BANKRUPTCY Why Donald Trump’s Companies Went Bankrupt, Details About the 6 Trump Corporate Bankruptcies The New York Times, which conducted an analysis of regulatory reviews, court records, and security filings, reported in 2016 that Trump “put up little of his own money, shifted personal debts to the casinos and collected millions of dollars in salary, bonuses, and other payments.

“The burden of his failures,” according to the newspaper, “fell on investors and others who had bet on his business acumen.”

PSYCHOPATHY How much of a psychopath is Donald Trump? Worse than Hitler, apparentlyImage result for hurray, i'm exonerated Saddam Hussein tops the list ahead of Henry VIII and Idi Amin

According to the Hare psychopath checklist, psychopaths tend to feel a lack of remorse for destructive acts, but they are unable to feel empathy, impulsive, manipulative and sexually promiscuous.

MASS LAYOFFS Trump officials fired nuclear staff not realizing they oversee the country’s weapons stockpile. by Rene Marsh and Ella Nilsen Trump administration officials fired more than 300 staffers Thursday night at the National Nuclear Security Administration — the agency tasked with managing the nation’s nuclear stockpile — as part of broader Energy Department layoffs, according to four people with knowledge of the matter.

Fired federal workers decry ‘arbitrary,’ ‘haphazard’ terminations

Carly Arata received an email around 9 p.m. on Thursday saying her position in the federal government had been terminated. When she saw the email, Arata told ABC News that she “screamed.”

“I didn’t think it was real at first, so I reread it like three times, then kind of started crying because I was relying on this job,” Arata said. “My husband and I just purchased this house in December, and now we’re not really sure what we’re going to do.”

Arata is one of possibly more than 200,000 workers affected by mass firings of probationary employees.

Arata had been a probationary employee since September with the Department of Agriculture’s Natural Resources Conservation Service but had worked as a contractor in the role for a year before that. Arata, who turns 32 on Sunday, has experience in this area. She obtained her bachelor’s degree in environmental science and her master’s degree in ecological restoration.

“We’re relying on this job and we’re qualified for this job, and yet, we’re losing it just because we’re under a year,” Arata said.

“Chainsaw Al” fired his good, experienced workers, not for efficiency reasons but to demonstrate his frugality. Cutting payroll initially increased profits but losing good people helped destroy his company. Trump/Musk are firing their good, experienced workers, also not for sound efficiency reasons, but to demonstrate frugality. The two are destroying government services, especially services to the middle-classes and the poor. Does the Trump/Musk Joint Presidency claim a good way to lose weight is to cut off your arms and legs? THE CHAOS PRESIDENT The computer people have a slogan, “Move fast and break things.” Musk seems to believe this idea defends his wild and reckless firing and deporting of good people. The saying embodies a Silicon Valley ethos that encourages rapid change, even at the expense of stability or quality. But what may be acceptable for electronic program development is completely wrong for government programs that are supposed to “Improve and Protect People’s Lives.” The destruction of a test rocket, as Musk has often done, doesn’t equate with the mass destruction of people’s jobs, lives, and financial protections. Firing an entire police force will save money, but it opens the door to crime. If you have hoped that the U.S. would completely depart from democracy and adopt a dictatorship, your dreams are being answered. Now, the Supreme Court. having given Trump limitless power, must worry that he will use the power to ignore and disobey every Court’s ruling. According to SCOTUS, Trump cannot be punished for any crime, so long as he can claim it was an official act within the scope of his presidential duties. If Trump believes the Democratic Party is a threat to America, he could jail Democrats. He already has claimed that Barack Obama, Hillary Clinton, and Joe Biden, along with all the judges who have ruled against him, are corrupt and should be jailed. The Supreme Court has opened that opportunity. Trump even claims he is king. Recently he said, quoting Napoleon, “He who saves his Country does not violate any Law.” Apparently, SCOTUS doesn’t realize flouting the law is not a Trumpian bug; it’s a feature of the Trump persona and the solid step toward a dictatorship, where courts are puppets of the leader. In short, SCOTUS has voted for its own irrelevance. IN SUMMARY Elon Musk and Donald Trump (MT) are clueless about the differences between business goals [monetarily non-sovereign finances] vs. federal goals [Monetarily Sovereign finances]. In the MT business world the primary goal is to maximize profits, while spending is limited by income and borrowing. When MT began to cut federal expenses, mostly by mass firings, the naive public believed this benefitted the government and taxpayers. But federal cost cutting benefits no one, not the public, not the government, not anyone. Given the infinite power to create dollars, the federal government does not use taxpayers’ money to pay for things. To pay for everything, the federal government creates new dollars, ad hoc. Taxpayer dollars are destroyed upon receipt. They begin as part of the M2 money supply measure, but when they reach the U.S. Treasury they instantly cease to be part of any money supply measure. They effectively are destroyed. The sole purposes of federal taxes are to assure demand for the U.S. dollar by requiring taxes to be paid in dollars, and to control the economy by taxing what Congress wishes to discourage and by giving tax breaks to what Congress wishes to reward–not to provide spending money for the federal government. (State and local taxes do provide spending money to monetarily non-sovereign state and local governments.) By contrast, in the federal world, the goal is to “Improve and Protect the People’s Lives, and the spending is unlimited. Federal deficit spending benefits the public and grows the economy at no cost to taxpayers. By attempting business solutions to federal government problems, the MT pair solves nothing while causing great harm. While other nations (particularly oil nations) are pouring vast amounts of money into artificial intelligence (AI) and massive infrastructure projects, the Make America Great Again bunch tries to make America smaller, weaker, and even more bigoted than ever — much like its current leaders. MT are pushing for a $2 Trillion reduction in federal spending, based on the formula, GDP = Federal Spending + Non-federal Spending – Net Imports, this is what would happen to the economy: Estimated GDP: $29.2T: Federal Spending: $6.5T: Non-Federal Spending: $22.83T: Net Imports: $0.1335T. Superficially, GDP would fall 2T or 7% However, Federal Spending also affects Non-federal Spending and Net Imports. A reduction in federal spending leads to:
  1. Fewer government contracts for businesses. This could lead to less spending and less investment by businesses
  2. Private sector layoffs, reducing consumer income and spending.
  3. Fewer government workers, further reducing consumer income and spending
  4. Federal funds often support state programs (infrastructure, education, healthcare). A federal cut may force state governments to reduce their own spending, further shrinking GDP.
  5. A spending cut could lower the deficit, leading to lower interests, i.e. less federal interest paid to the private sector by federal T-securities.
If we assume each $1 cut in federal spending reduces non-federal spending by $0.50 (admittedly a guess, based on the certainty there would be some negative effect on Non-federal Spending), then:
  • Direct Federal Cut: $-2.0T; Indirect Non-Federal Spending Reduction: $-1.0T; Total GDP Reduction: $-3.0T
So instead of just a $2T drop, GDP could fall by $3T, making the contraction even more significant. A reduction in GDP is defined as a recession or a depression, depending on length. Therefore:

The Musk/Trump (MT) spending reduction promise is, in fact, a promise to cause a recession or a depression.

Fortunately, the MT pair seldom keeps its promises, so they probably will fail, at which time they will blame Hillary Clinton, Barack Obama, Nancy Pelosi, the “fake” media, “crooked judges,” Joe Biden, and the entire Democratic Party. Rodger Malcolm Mitchell Monetary Sovereignty Twitter: @rodgermitchell Search #monetarysovereignty Facebook: Rodger Malcolm Mitchell; MUCK RACK: https://muckrack.com/rodger-malcolm-mitchell; https://www.academia.edu/

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A Government’s Sole Purpose is to Improve and Protect The People’s Lives.

MONETARY SOVEREIGNTY