BUYER BEWARE - USA Hollowed Out
MAGA is now trying to make America Great for CryptoGrifters and All Types of Crime
In my post of January 1, 2025 (Titled “Efficiency in Government may not be What is Good for Society”) I finished the piece with the following predictions (look it up):
2025 and Beyond Economic Forecast
The stock market (at least 2 of 3 major averages) will have a 10-15% correction within 100 days of Donald Trump’s Inauguration. (This may have already started.)
The S&P 500 index will have at least one 30% decline during Trump/Vance’s term in office.
We will have a recession and unemployment will exceed 5% for at least a year during Trump/Vance’s term in office.
US inflation will not fall to the Federal Reserve’s 2% inflation target during Trump/Vance’s term in office.
Now I’m not trying to make this substack a financial tip sheet, but these were and are my views. I figured we were due for a market correction and the NASDAQ index was down 10% by March 6th. The next day was see-saw in the markets. I do not want to see bad outcomes, but the behavior of the Trump administration since taking office has been compared to Nero presiding over Washington D.C.1 It is as if Trump & Co were trying to destroy the economy.
Well-being is more than the stock-market and jobs: it is kids getting school lunches or measles vaccines, it is the US honoring legal contracts and agreements we have made with foreign governments. For every USAID project we pull out of, it is not just children going hungry or people not getting AIDS medication, it is the USA breaking an agreed upon support to a foreign government. Every HUD grant, every layoff at the Federal Housing Administration means someone will have more trouble buying a house or funding a daycare center. In short, if you constantly lie and renege on contracts, people don’t trust you, and markets don’t trust you. If I had to adjust my economic forecast it would be that we will have a stagflation period, perhaps this year, that will be “cured” by a recession.
By precedent (an important legal term!) and law, if Congress has appropriated money for an activity or agency, and the bills pass into law, it is not legal (illegal?) to simply undo them, or not do them, or render the doing of them impossible. Usually, Congress - who passes most laws in a bipartisan fashion - will vigorously resist a President who tries to undo the laws. Sixty days in though, there is only one Republican who will ever vote or speak against Trump. Bizarrely, the Democrats are pretty quiet too. Several lower Federal Courts have rules against the actions of Trump, Musk, and DOGE2 to hollow out the federal government. The Supremes made one encouraging ruling but there is a lot to undo. While these firings are really vicious and stupid, the biggest concern is we are watching MAGA shifting gear into facilitating an era of graft, fraud, and loss of trust in the government’s honesty that is so great that it will severely destroy the US’s standing financially, in addition to making into another cheap dictatorship rather than stand as one of the few really democratic countries.
Among some of the criminality-encouraging proposals from the Administration:
Treasury will not force small businesses to disclose who their beneficial owners are. The is undoing an anti-money laundering rule previously in place.
The government plans to start a “strategic wealth fund” or “a strategic crypto reserve”. This would involve the US issuing US debt to buy dubious financial assets from probably unknown individuals.
Commerce Secretary Lutnick is proposing rewriting the GDP numbers the US publishes. He wants to exclude Government spending, because he claims the government doesn’t really provide anything. In taking this step, Lutnick and Trump risk undermining confidence in all financial statistics issued by the US government. He even suggested - without any evidence - that statistics issued in the past were made up. They are opening the door for themselves to manipulate statistics, which affect rates paid on bonds, adjustments to pensions, and other massively important indicia.
This last point of undermining the reliability and believability of economic statistics will harm the US’s standing as the leader of the free world (that might already be shredded) but also our reputation for having the broadest, and most creditworthy financial markets in the world. Perhaps MAGA’s goal is, at a minimum, to hide the effects of the mindless cuts they are making to federal spending - so it won’t look as bad, and they even can hide the recession they are causing. It is amazing that Howard Lutnick would insult the effects of government spending, when his own life experience as Chairman of bond trader Cantor Fitzgerald, the firm ravaged by the 9/11/2001 terror attacks. His brother and over 600 of his employees were killed in the attack on the WTC. Cantor was criticized soon after for not paying deceased employees but Lutnick argued - probably correctly - they did not have the money. The Federal government funded what was initially a $3 billion survivor’s family fund (has since grown to over $13 billion) for all impacted physically by the attacks in the New York area. I am sure his late employee’s families are grateful for the millions of dollars they received from the government - compensation rarely funded in other tragedies. In the intervening years Lutnick and Cantor Fitzgerald have made a big deal about their corporate giving. Maybe they got religion on the subject, but the US Government was there when Cantor was not. Don’t tell me all the scientists and doctors and engineers who work for or receive funds from the government do nothing. Howard Lutnick is simply a hack.
Perhaps MAGA’s goal is, at a minimum, to hide the effects of the mindless cuts they are making to federal spending - so it won’t looks as bad and, they even can hide the recession they are causing.
The methodology for calculating US GDP, and all the national income and inflation data around GDP if pretty “well-ploughed” ground. Quite a lot is written and published about it. It is quite transparent if you look it up. The “G” in GDP = C + I + G - Net exports is already corrected for transfer payments (Social Security, Medicare, Disability, etc.) C is consumption spending, I is investment spending. Transfer spending by the government IS NOT included in government spending. Other people on thin ice like Elon Musk have weighed in on the G in GDP, saying that spending is not measured by whether the spending was any good, i.e. the quality of it. I could almost guarantee you that the money for the SpaceX of Musk’s that blew up off the coast of Florida this week will be included as Investment spending (the “I” in 2025’s GDP).3 Actually none of the components of GDP are measured for quality. Is a $5,000 jacket really worth 50 times more than a $100 jacket? I certainly don’t want the goverment making these decisions, certainly not this crowd.
I don’t want to talk about the idiotic tariff drama other than to say some in MAGA are proposing cutting fine wood, old growth forest, if we get into a fight with Canada and lumber costs more. I don’t believe for a minute that Trump and his henchmen would actually do this for the benefit of US builders and homeowners and renters. No, it is just a new grift - give away trees, develop land, steal the money. By the way there’ve been some excellent articles here on Substack about the economic damage Trump is doing. Noah Smith (writes Noahpinion) and Larry Kotlikoff (writes Economic Matters)4. Larry is a highly respected guy, and is basically recommending to people that they adjust their finances in anticipation of chicanery by MAGA. A few mainstream outlets of people who write for places like Yahoo Finance are speaking up.
Things will be really bad if a Free Press is denied access to what is going on with these programs. Elon claims he wants to improve transparency but very little is being revealed about what and how much he and Donald plan to do. Much of what they’ve said about their findings - 150 year-old Social Security recipients - have been lies, since retracted. Be suspicious of any claim that we’ve saved so much we can cut taxes and even give people money directly5. It would be the robbery of the 21st century.
DOGE, the so-called Department of Government Efficiency, was not even set up by law, it is a contrivance of Elon Musk, the worlds’s richest man, and ever more extreme than before, President. The basic legal problem with the disgusting mass firing and suspension of, in many cases life-saving foreign aid, is a constitutional law dispute between the President’s powers and the Congress’s legal powers.
I wonder if there was any federal money in that rocket?
See Larry’s “Boycott America?” March 2.
Musk, among others, has discussed DOGE refunds, where the government would send some members of the public money (not clear if they’d borrow money to facilitate this.) Of course, households that receive more than they pay, however defined, would not get DOGE refunds, so of course the poorest of the poor and such would not receive any of this pirate’s booty.