Dear Reader,
Good morning!
Happy Monday.
Today I’d like to talk about a topic that has blown through my friend group like a wildfire:
Has Musk broken with Trump?
Elon Musk was recently interviewed and basically said he’s disappointed with the Trump budget bill that looks like it’s going to be passed.
He’s said he’s not happy with certain aspects of it.
“I think a bill can be big or it can be beautiful,” Musk told CBS News, “but I don’t know if it can be both.”
He went on to say, “I was disappointed to see the massive spending bill, frankly, which increases the budget deficit, not just decreases it, and undermines the work that the DOGE team is doing.”
Those are serious words.
And I’m disappointed, too, to be honest.
Remember something, folks -
We’re not talking about the trade deficit between countries; we’re talking about the budget deficit…
We spend $1.5 to $2 trillion more than we bring in in tax revenue.
We have to go out to the bond market to borrow this money. That increases our debt.
And now Trump’s budget, which has gone through the House and is in the Senate, adds another $300 billion a year on top.
We’re talking about $2.3 Trillion a year. Wow.
President Trump in his first term added $7.4 trillion in debt.
If this budget passes, that could be another $8 trillion in debt.
That would be $22 trillion in added debt since 2016.
That’s 59% of all debt ever since we started as a country.
And I really got behind Musk and DOGE.
Cutting spending is a big deal.
As Musk said many times in press conferences with the President, and without the President, if we don’t cut spending, we’re going to have a financial crisis.
I’ve been saying the same thing.
Countless smart people have been saying the same thing.
Think about it - right now we’re paying $1 trillion a year in interest.
By the end of President Trump’s term, it’ll be $1.4 trillion.
Wow. $1.4 trillion.
And nobody’s lending us money long-term anymore.
Only short-term. Two, three, four, five years.
So imagine China attacks us right now and we need to rush out and raise money from bonds.
All of a sudden our creditors have us by the short and curlies!
They could say to us, “you cut us great trade deals to get into your markets, or we’re not lending you money to fight this war.”
It’s not a good situation we find ourselves in.
Another reason I’m disappointed...
We hoped the President, given this kind of generational opportunity where he has Republicans locked in, would actually reform Social Security and Medicare.
Not to people who are retirement age - to people who are basically my age.
Because, there’s no way I’m going to get to retire until I’m at least 70.
People born 1950 to 1970 - you guys are basically locked in.
My generation is going to take a real big hit.
The question is, which one of our leaders has the courage to do this?
Ironically, President Barack Obama was the last guy who tried to get a deal done.
But the Republicans balked.
So, these things have to be reformed.
But basically what Musk is saying here is that the President kicked the can down the road…
Which increases the likelihood of a financial crisis.
Right now it’s like we’re borrowing money from the mafia and we have to pay every week instead of a long-term, 30-year loan.
The loans keep getting shorter and shorter.
So the credit markets are basically just lending us money short-term now.
And the next crisis we have, somebody’s going to have to bail us out.
It’s not going to look like you think -
It’ll look like a secret deal.
Remember after Germany lost World War II?
You remember all the rocket scientists and technology got taken to the United States and some to the Soviet Union?
Imagine a deal where we’re in a pinch for money and we could either pay 15% interest rates, which would mean we’d have to print so much money it wouldn’t mean anything…
We’d have an inflation spike…
I’m talking like pre-WWII Weimar Republic-style spike.
Or, a big lender, Japan or Europe, says, “we want access to all your foundational research and we’ll lend you this money.”
You never want to be in a situation in life or as a country where you’re beholden to your creditors, because that’s when they’ve got you.
So yes, I agree with Elon Musk.
I, too, am disappointed.
It’s a shame.
But, however this plays out, we are prepared.
When I published Midnight in America, I shared with you the playbook I wrote for my children…
That frankly made me the most money ever in my life through The Great Recession…
The step-by-step guide through anything the market can throw at us.
I published it because of my concerns over our nation’s debt. The same concerns Musk shares.
And a risk BOTH President Trump and Elon Musk have said would be “worse than losing any war.”
You can see the risk we’re most concerned about here.
That’s all for today. Speak to you tomorrow.
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