I love Elon’s sense of urgency. It’s no wonder he gets stuff done when others can’t. (And I love how he brings his kid with him, a little mini-me. That kid is getting quite the lesson in life and business.)
Musk realizes there is no time to lose. The U.S. is on the verge of bankruptcy. As the Wall Street Journal reported, the payments on the national debt increased 13% in just the last few months! That’s 13% on payments of $36 trillion! That’s because the debt continued to increase as Biden and then Harris breathed their last gasps for air in their campaigns, shoveling out as much taxpayer money as possible to (indirectly) buy votes. But it’s also because Fed chair Powell opened his big mouth after he lowered interest rates and basically nullified his own rate decreases with his statements, thereby causing the treasury yield – the rate charged by lenders to the U.S. treasury for borrowing money – to go back up to what it was before! The ten-year treasury rates have been now hovering around 4.5% to 5%, whereas the rate had gone as low as 3.6% prior to that.
That 100 basis point increase adds $360 billion, yes billion, a year in additional interest costs!! Right now, the cost of the national debt in just interest is about $1.8 trillion per year! (Some estimates are lower, but they are looking in the rearview mirror, whereas I am estimating the cost for this year.)
If the Fed were to lower rates back down to what they used to be, around zero, surprise! The annual interest cost on the national debt would be near zero! Not only would that additional cost be added to the national debt, the U.S. could actually start to pay down the national debt by cutting costs – exactly what Elon is doing, in order to produce a surplus. (But right now the interest on the national debt is being paid by either borrowing or printing more money; it’s like borrowing money to pay the interest on your credit card debt or school debt, piling up more debt until it crushes your soul.)
The Wall Street Journal also reported that CFPB (Consumer Financial Protection Bureau in Washington double-speak) acting director notified the Fed (yes, the Fed, not the treasury department) that CFPB will not be drawing its monthly allocation of money from the Fed as usual. Now, did you get that? The Fed has been directly funding the bureau (and God knows what else) rather than those agencies going through the treasury department. (Unfortunately, like all lazy reporters these days, the report didn’t bother to ask or tell us what the amount of the draw was to be.) This also means that the bureau was avoiding federal accounting and oversight since no one would know what amount of money it was spending except the Fed. And Powell was ok with this? That’s like the bank sending money out of your account each month to your kid and not telling you. Hmm, what could go wrong?
This seemingly harmless disclosure is a monumental issue. It proves my theory that the Fed under Powell has been complicit in funding the massive national debt. You’ll note that Powell was more than satisfied with assisting Biden in bankrupting the U.S. Whereas, his high and mighty questioning Trump, the tariffs, etc. is showmanship. If Powell really cared about the U.S. or about inflation, he would lower rates – to cut government spending on interest, slowing the rise in the national debt, reduce the cost of businesses borrowing so that they could borrow to add new capacity to increase supply and cut inflation, and cut interest rates to reduce the cost of housing. (And Trump opening up the national forests to selective and responsible lumbering will help bring down housing costs also, and offset those U.S. tariffs on Canadian lumber – or we can continue to watch those trees go up in smoke in wildfires.)
We also need that tax cut to offset the tariffs. Cutting the massive size of the federal government will also mean reducing inflation because it will mean less borrowing or printing of money by the Fed.
Think about this irony for a moment – the Fed didn’t care when inflation was 9%, calling it temporary and transitory, like a homeless man who was just going to go away after a while. Whatever it took to help Biden bankrupt the country, Powell was on board for that. But now that Trump is in office, Powell is really, really concerned about knocking inflation down from its roughly 2.9% annual level. That’s right, Powell had no problem with 9% inflation when Biden was in office, but now with Trump, well, being 0.9% over the Fed target of 2.0% is a real problem for him. Does anyone besides me see a problem here?
Powell says, “We don’t need to be in a hurry” to reduce rates. Really?! Holy crap dude, don’t you understand that every month it’s costing taxpayers approximately $150 billion in added interest on the debt! or $5 million per day! And he’s in no hurry. Good to know whose side he’s on.
It’s time for Powell to go. He is personally bankrupting the country. And like child psychology, whatever he says, you can count on the opposite actually happening. Maybe Elon should run the Fed too! Anyone but Powell, please.
