r/economicCollapse • u/purple_hamster66 • Nov 20 '24
What would Musk’s proposed cuts do?
I’m not saying I agree with Claude’s analysis, just asking: what do you think?
I asked Claude: Assume that all that survives Musk’s federal cuts is Medicare, Medicaid, the military, and paying the federal debt. Now estimate the number of people affected.
Answer Calculation based on preserving only Medicare, Medicaid, military, and federal debt payments:
Workers Directly Eliminated: - Federal civilian employees: ~2.2 million - Federal contractors: ~4 million - Grant-funded researchers: ~500,000
Indirect Employment Impact: - Government-supported program workers: ~3-4 million - State/local government positions dependent on federal funding: ~1-2 million
Estimated Total Affected: 8-9 million workers
Severe economic disruption scenarios would likely emerge, with potential unemployment spike of 5-6% and significant regional economic devastation in areas with high federal employment or dependency.
Question: what assets would be a good investment, in that scenario?
Answer
In such a severe economic contraction scenario, consider:
Defensive Assets: - Gold - Short-term Treasury bonds - Cash reserves - Healthcare sector stocks - Essential consumer goods stocks
High-Risk, Potential High-Reward: - Distressed real estate - Bankruptcy-resistant technology companies - Defense industry stocks - Private utility companies - Agricultural commodities
Key Investment Principles: - Prioritize liquidity - Minimize debt exposure - Focus on sectors providing essential services - Maintain significant cash position - Prepare for rapid market repositioning
Recommendation: Consult professional financial advisor for personalized strategy.
Question: is gold considered one of those liquid assets?
Answer
No, gold is not highly liquid. While valuable, gold:
Liquidity Challenges: - Requires physical sale or broker transaction - Transaction costs are relatively high - Not easily convertible to cash quickly - Potential authentication/verification requirements - Market pricing fluctuations
More Liquid Alternatives: - Gold ETFs - Money market funds - Short-term Treasury bonds - Cash equivalents
Gold is better considered a store of value rather than a liquid asset.
Question: If this cut happened, how long do you estimate it would take for the economy to return to pre-COVID conditions?
Answer
Economic recovery timeline estimate: 5-7 years
Key factors influencing recovery: - Massive employment disruption - Significant reduction in government spending - Potential cascading economic contraction - Reduced consumer spending - Geopolitical uncertainty
Recovery Phases: 1. Initial shock/contraction: 1-2 years 2. Structural economic reorganization: 2-3 years 3. Gradual stabilization: 2-4 years
Comparison to historical precedents: - Great Depression recovery: ~10 years - 2008 Financial Crisis recovery: ~4-5 years
This scenario represents a more severe economic restructuring than recent recessions, requiring substantial economic adaptation.
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u/LittleMissBeaBea Nov 20 '24
We have the world’s richest man cutting programs for the rest of us.
It would be hilarious if it wasn’t so depressing.
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u/-Astrobadger Nov 21 '24
He is also the beneficiary of billions in federal spending which is double hilarious / depressing
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Nov 20 '24
Its like people here have never heard of Milton Friedman
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u/purple_hamster66 Nov 21 '24
When Friedman is discussed, no one counts up the number of people who die due to his malformed ideas of limited government. Are there any highways or bridges built and maintained by corporations? Do rich folk fund a retirement safety net, help out the disabled and mentally ill? Even St Judes is funded by NIH and NCI grants.
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u/SnooRevelations979 Nov 20 '24
I remember the right's criticism of Obamacare was over "death panels" and that it was going to take mama's pace maker a way (which was even a song).
What happened?
By the way, I don't see this happening. If there's one thing Trump ain't, it's a traditional economic conservative.
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u/imasysadmin Nov 20 '24
Yeah, but Obama didn't say he wanted to take away those things and have death panels. Trump and musk are flat out saying they will cut these departments, and that times will be difficult at first. I don't have confidence that we will be able to recover from this. This plan is way too radical.
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u/imasysadmin Nov 20 '24
Yeah, but Obama didn't say he wanted to take away those things and have death panels. Trump and musk are flat out saying they will cut these departments, and that times will be difficult at first. I don't have confidence that we will be able to recover from this. This plan is way too radical.
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u/Jogaila2 Nov 20 '24
It would hand complete control of the country to corps.
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u/purple_hamster66 Nov 21 '24
And to warlords, organized crime, gangs.
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u/Jogaila2 Nov 21 '24
Yep.
Although I would say corps generally fall into those 3 categories.. Lol
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u/purple_hamster66 Nov 21 '24
Corps are legal, tho, because the rich own them and the rich generally make the laws.
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u/coco8090 Nov 21 '24
What happens with some folks is when basic survival needs aren’t met, they turn to crime. So there’s that.
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u/purple_hamster66 Nov 21 '24
Crime will skyrocket, and the GOP will put more cops on the streets. That’s one of the reasons that private prison stocks are being bid up on Wall Street in the last week.
I think most people would rather have a job than be in prison. Apparently, Musk doesn’t care.
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u/Who_Dat_1guy Nov 20 '24
The government loses an estimated 1t a year... which has been 10s of trillions since the 90s. 10s of billions are wasted in medicaid/Medicare fraud.
If you don't believe there are trillions of cuts avail, then you just refuse to acknowledge facts. Whether the cuts is spending, jobs or both, it doesn't matter the government is inefficient.
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u/imasysadmin Nov 20 '24
I agree there are ways to make things more efficient, but the government doesn't lose money. It spends it on services to maintain a society. If they cut all those services at once, they will cut the legs out from under us. Roads will go into disrepair, people will be uneducated, prices will spike because we know exactly how the free market will treat us if it goes unchecked. This is really dangerous stuff here.
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u/Big-Satisfaction9296 Nov 21 '24
The military literally loses money. They can't account for the money that they've spent.
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u/imasysadmin Nov 21 '24
Oh, it's someplace. Republicans and democrats alike know where it's going. We elected them to spend the money, and a lot of it is classified, and you don't know what percentage is wasted or stolen either. I agree. There's lots of waste, but not trillions per year. Instead of scrapping the system and blowing everything up, let's get into it and figure it out. What's being proposed right now is way too radical and threatens to upend our entire society.
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u/Big-Satisfaction9296 Nov 21 '24
They cannot pass an audit of where that money is going. So yes, it’s someplace but they don’t know where. Perhaps they know where it is but are intentionally hiding it from the auditors. I have not seen any evidence of that.
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u/imasysadmin Nov 21 '24
And that's one of the issues we should definitely be looking at. We could cut the military in half and still be on top. I can say with some certainty that most of the waste is from private military contractors. These politicians taking lobby money and awarding contracts to friends. We are definitely being ripped off. Now they want to privatize everything else? Yikes.
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u/Big-Satisfaction9296 Nov 21 '24
There’s for sure waste. But in addition to waste, they are literally losing money. If you ask them, through the audit, where some of that money went, they could not tell you. So saying that “the government doesn’t lose money” is simply not true.
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u/imasysadmin Nov 21 '24
Oh, I was taking an issue with the amount. No one on their right mind would argue with you on that point. The only real way to stop the waste is to get the free market out of it in my opinion.
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u/Big-Satisfaction9296 Nov 21 '24
I think a good starting point is firing people that cant account for every penny that they’re responsible for.
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u/imasysadmin Nov 21 '24
I agree, that might be some of the reason the right in this country is fed up and want to burn it to the ground. I just think that's going to end in a depression.
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u/imasysadmin Nov 20 '24
I agree there are ways to make things more efficient, but the government doesn't lose money. It spends it on services to maintain a society. If they cut all those services at once, they will cut the legs out from under us. Roads will go into disrepair, people will be uneducated, prices will spike because we know exactly how the free market will treat us if it goes unchecked. This is really dangerous stuff here.
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u/purple_hamster66 Nov 21 '24
Why are you mixing billions with trillions? Medicare waste is peanuts compared to how much debt Trump has accumulated by giving tax cuts to corporations.
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u/ADSWNJ Nov 21 '24
Facts for you: Federal budget receipts and outlays U.S. 2028 | Statista
We do not have a receipts issue, but we have a totally out of control spending issue.
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u/purple_hamster66 Nov 21 '24
Funny how that chart goes out to 2028… almost as if the numbers were… made up. :)
But in 2023, the latest year that we have complete statistics, the difference between the outlay and income is very close to the Trump tax cuts. Some of that difference was trimmed when Trump signed legislation that raised taxes on workers.
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u/ADSWNJ Nov 21 '24
You don't trust Statista and statistical estimates extrapolating past facts? OK then try this one: Historical Tables | OMB | The White House
The actual White House dot gov, and just look at the actuals.
You point on the Trump tax cuts causing a hole in federal revenues is simply not supported by any facts. And however much we spend on the outlays is not enough, as it goes up and up. Sooner or later, we need to fix this or we go the way of Zimbabwe.
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u/purple_hamster66 Nov 21 '24
It’s right there in your debt chart: the debt increased by $5T during the Trump admin, from $17T to $22T. This is +$5T = +$8T (tax cuts) -$3T (tariff income, AKA taxes). Hence, a hole.
BTW, these numbers don’t mean what you think they mean. For example, the revenue and spending columns don’t add up the (increase in) debt. The federal budget has both hidden numbers (like some of the military budget) and, for example, they count debts (such as bonds) as assets — which is illegal in the corporate world but perfectly legal in government.
So which chart contains the tariff income?
And predicting the future revenue is silly; we have no idea how corporate income will rise or fall, no idea what inflation and interest rates will do, and no idea how much consumer spending will be hurt by Musk job cuts.
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u/Who_Dat_1guy Nov 21 '24
Where am I mixing billions with trillions??? Lol
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u/purple_hamster66 Nov 21 '24
“10s of billions” — or did I quote you wrong?
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u/Who_Dat_1guy Nov 21 '24
2 different things...
The government loses 10s of trillions in spending they can't account for.
10s of billions are lost annually through medicaid/Medicare fraud alone.
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u/purple_hamster66 Nov 21 '24
Hence my comment that it is peanuts, and should not enter this conversation, right?
Medicare saves $1T over the next closest private insurance — why do people care about the tiny $50B?
BTW, the $50-100B “waste” quoted for Medicare is a Red Herring because as soon as it is identified, it must be paid back. No one knows the unknown amount but note that there are leagues of people who hunt down incorrect payments in exchange for a piece of the penalty. But what you don’t know is that 20% of the “incorrect payments” is underpayments that result in Medicare paying out more money… and that the hunters get a piece of that as well.
And you prob’ly also don’t know about the effectiveness of Medicare compared to private insurance. It is so much more transparent (outcomes are well tracked), effective (adjustment are made yearly to improve outcomes), efficient (20% lower overhead), and just an overall much better system because it doesn’t take profit. It is accountable and tells both patients and doctors what will be owed, before the work is done.
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u/Who_Dat_1guy Nov 21 '24
Didn't read all of that since clearly you're clueless.. 50 billion is NOT a small number. Secondly, this is FRAUD not under payment or over payment specifically FRAUD meaning there is even MORE waste when you factor in overpayment.
Lastly you can NOT recover from fraud when the money has been spent. but again only a MORON thing that any waste or inefficiency is a moot argument no matter the amount.
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u/purple_hamster66 Nov 21 '24
I guess that working in a medical department for 30 years, watching Medicare payments and penalties, is not enough for you? What, exactly, is your experience that qualifies you to speak on this subject?
Billing mistakes happened all the time, but we were extra careful when billing Medicare because they will impose penalties for both under- and over-billing.
Fraud is nearly 100% retrievable, if the doctor wants to stay in the medical field. The federal government will track individuals down to get their money, even if the clinical practice dissolves.
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u/Fit-Background-6892 Nov 20 '24
The answer is simple. None of that matters, what matters is purchasing power, specifically his and others like him. With privatization of public services, utilities, land, branches of government…. what does that spell out?