Elon Sounds the Alarm

Key Points:

• Elon Musk is concerned about the U.S. national debt, which is growing by a trillion dollars every 100 days.
• The U.S. now spends more on interest payments than on its defense budget.
• Proposed solutions like taxing the wealthy would have minimal impact on the massive debt.
• One of the best ways to protect yourself in a downturn is high-quality dividend stocks. Smart money is scooping up these two dividend legends before word gets out.

Doug and Lee discuss Elon Musk’s increasing concern over the national debt and the implications it could have if left unchecked. They highlight that the U.S. is now paying more in interest than on its defense budget, an alarming shift given the enormity of the defense budget. Musk, who has transitioned from being a moderate Democrat to a more concerned observer, is vocal about the need to address this debt. They also touch on the possibility of the U.S. being downgraded again, which could raise borrowing costs and create further economic challenges. They conclude by noting that while a billionaire tax might generate revenue, it wouldn’t be sufficient to solve the larger issue of the national debt.

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Edited Video Transcript:

So Elon Musk, maybe the greatest genius of the last fifty or a hundred years, you know, Tesla.

Yeah.

And sort of a friend of, you know, of the Trump campaign is now starting to beat the drum about national debt.

Now, he may end up holding a position in the Trump administration.

He may, if Trump gets in.

Right.

So he may actually have some influence that’s more than the bully pulpit on this.

But he is really anxious about the national debt, isn’t he?

Yeah, and with good reason.

I mean, it’s gotten out of hand to the point where it’s absolutely absurd.

And, you know, some of our younger readers and viewers may not even realize this, but the last time we had a balanced budget was when a Democrat was in office.

And that was our friend, wild Bill Clinton back in the nineties.

But that just shows you that just short years ago, people were concerned and made an effort to control our debt.

Now it’s rising at a trillion dollars every hundred days.

And this is the kind of thing that Musk sees is that beyond above and beyond other things that can wreck this country, this crushing debt has got to be maintained and then lowered rather than continue to throw it on the fire.

Because like you’ve stated, you know, we just talked before, it’s fanning the inflation.

Well, the other thing that people don’t know is that for a long time, the biggest piece of the budget, well, and I don’t mean Social Security.

The discretionary budget was the cost of defense, the military budget.

Right.

We now are paying out more in interest than we are in defense.

And the sheer enormity of that is almost something that’s hard to comprehend, given our huge defense budget.

It’s the biggest in the world, I think.

And I think, you know, why does it always take somebody like an Elon Musk who was a committed sort of middle of the road, moderate Democrat until recently.

And even he’s like, these people are insane.

You know, they won’t, they, they, nothing gets stopped, nothing.

And so, and then this is a part of our bureaucratic government because that’s who runs everything.

And when a bureaucrat gets in to Washington, to any agency, you can’t get them out.

It’s almost impossible.

Well, you remember that we were downgraded, the U.S. downgraded.

It probably has not affected the interest rates that we pay, but I do believe there’s a chance that we will get downgraded again.

To like single A.

And look, at some point the borrowing costs of the United States are going to go up.

I mean, right now because a lot of people consider us the only show in town we’re still able to stick all this paper out and and get it bought some of it by sovereign, you know, sovereign wealth funds and countries.

But I think the days of that are are over.

And if you’re an investor, that’s something you want to look at.

What happens to U.S. paper if it gets downgraded once or twice?

Yeah.

And, you know, the thing that’s, you know, some, you know, Wall Street is perpetually bullish.

And I’ll tell you, I should know.

I was an institutional sales guy for twenty years on Wall Street.

And it is, you know, always bullish.

And the reality is, is they’ll point to, well, interest rates are coming down and the Fed’s going to cut rates.

And OK, so by twenty twenty six, Fed funds is three and a half.

OK.

Well, they still have to fund all this.

And even though they can do it with a little bit of ease as it comes down, it’s still so gigantic.

It’s thirty five trillion dollars.

And even if your rates drop two hundred basis points, that’s still a really big hickey they have to cover every month.

Well, and there’s a lot of argument that there should be a billionaire tax and that assets should be taxed among the rich instead of income.

But I’ve looked at that and you’re talking about billions of dollars, which means making a dent in trillions of dollars.

I’m not saying it’s a bad idea to bring in some money to the treasury, but it doesn’t solve the problem.

No.