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