Back to episode — Episode 2533 CWSA 07/11/24
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d $6 trillion. So that's the US budget. But we don't take in that much in taxes. So about 1.2 trillion of it is borrowing. So if you just round off, what is 1 trillion of 6 trillion? About 17%, right? So no, cutting 7 or 8% isn't going to get you close. You have to cut more like 17% of everything. Do you think there's any chance we would cut 17% off the budget of everything? And again, if we don't…
← Previous segment →nedy did a service. He actually nailed somebody down and forced him to give them a number, because nobody wants to do it. The reason nobody wants to do it is the number is unsurvivable. Nobody wants to say honestly it's unsurvivable. There's no way to cut it, and there's no way to survive it. That's the truth. It's unsurvivable.
Now, does that mean we're doomed? No. Let's go back to General... I'm sorry, just General, you know the thing, Flynn. General Flynn. So we go back to his optimism. Is this a worse problem than the Civil War? No. Is it a worse problem than World War I or II? No. Is it a worse problem than the pandemic? Maybe. But it's within the realm of things we solve. How? I have no idea. But let me give you some just brainstorming to give you a sense it might be possible. All right, because you need to feel it might be possible.
Number one, Elon Musk says that Tesla might be way more valuable because of all the robots. We're going to go through a one server robot cycle where we will sell probably, I don't know, make and sell a hundred million robots pretty soon. What if we tax the robots and just stop taxing people? So if you were to get a robot, you got to pay something per robot, because nobody already has a robot like a personal robot. So if you just said, all right, here's the cost of a robot. It's going to be $25,000, and there will always be a 10% robot tax. Well, if you never had to pay a robot tax because you never bought a robot, it doesn't look so bad, does it? It just looks like it's the cost of the robot. And you'd say, well, I have a maintenance program that's on. I have insurance for my robot that's ongoing. What if I have a little tax that's ongoing too, just part of the cost of owning?
Now, who's going to be buying these robots? Not poor people. So it wouldn't be a tax on poor people. It would be very much on rich people. And most of the robots will probably be by big companies who buy all of the robots and then they rent them to you. So it'll be robot as a service. So you're not going to have necessarily a robot in your house, but you might have a robot that drives up to your house in a self-driving Tesla, cleans your house, and then goes back to its business while you're at work. That might happen. Probably will happen. So everybody's going to be renting a robot even if they don't own one. So could you get to a point where the robot tax is paying all of your costs?
How about AI? AI is going to be wildly profitable for some companies and wildly gigantic. Suppose you say I put a special tax on, I don't know, data centers, because we know we're going to build like trillions of dollars of data centers. So suppose you say 10% tax or something, and suddenly you're talking about things that are so big and so new that there's some chance that growth gets rid of some of your deficit. Some chance. But you would also have to almost stop spending. You'd have to just flatten spending for a long time.
The other thing you could do is use AI to recommend where the cuts are. The reason you could use AI is that Congress will only vote for things for which they won't be blamed later. Right? If you say who's in favor of cutting these budgets 20%, no Congress person signs up for that, because that's the end of your job, because you would be blamed for cutting 10% or 20% of their Social Security. They're going to take it personally. So how could you make it so that Congress could vote in the way that's the best for the country and not lose their jobs? I have a suggestion. You delegate the suggestion for the cuts to AI. Now, will AI make the best decisions? Nobody will ever agree on that. No, we'd fight it. We'd say no, don't listen to that AI. But what AI would do, it would give the Congress people an out. If they could sell the AI version of the cuts to the public, then they can say, look, if it were up to me, if it were up to me I wouldn't have done that. But we had decided on a process in which AI would make the decisions because we all agree that if the humans try to make the decisions we'll just delay it. So can we all agree — this is what you can imagine Congress saying — can we all agree that if you leave it to us we won't do it, we'll just kick the can forever? You agree it has to be done. Let's agree that we'll use this objective standard that doesn't care about us one way or the other. AI. Let AI make the decision.
And AI might be more rational. For example, if you and I were going to cut, we might say, oh, I think they can handle 2%, but I can't go further. But the AI might say, oh, you realize if you just redo this whole department you can lower the expenses 90%, because that's something humans wouldn't necessarily see. But maybe the AI would say, oh, we could just automate this whole thing. I can get rid of the entire Department of whatever, just make it AI. It'll take you two years, 90% reduction in cost. So the AI could do things that the humans can't do only because the AI won't be blamed for being biased. I mean it will be biased, but it won't be as blamed. So is there any path? Yes. I don't know what it will be, but I think we have a chance.
Now here's an update. I was talking about the idea of using a magic crypto to pay off our debt, and I kept asking for people to validate whether that was the dumbest idea in the world because it sounds like it, or the smartest idea in the world, because sometimes the smartest idea and the dumbest idea sound the same. It's really hard to tell sometimes. So I did get some expert smart people who contacted me separately and explained to me, nope, you can't do it.
So here's the simple explanation. If you add money to the system in any way, whether it's regular money or crypto, it's too much money in the system. It's inflation. Everything crashes. Now that I knew, of course. But I was thinking what if you just replaced US dollars with crypto? Does that create money out of nothing? And here's the other problem. Apparently even if a space alien came down and gave you somehow, magically gave you money to pay off all $35 trillion national debt, it would destroy the country. Didn't see that coming, did you? If some outside third party who magically had $35 trillion appear tomorrow and says I'll tell you what, I could write a check, we'll just get rid of all this debt, it would be so disruptive that the economy wouldn't recover. So you need some kind of debt because the debt is doing work too, right? Debt isn't zero money. Debt is somebody gave the government money, and then the government can allow banks to lend more money, and then the economy works. That's the quick expression.
But here's my updated suggestion. Suppose you created a crypto but it could never compete with money. How is that possible, you say? Well, like this. Suppose the government said we're going to make a program for people who don't have a lot of money that they can buy all these goods and services that are super designed so that they're cheap and effective and healthy, but you can only spend crypto on it. Now that doesn't work because the crypto would still have to get into the system. If you were only spending the crypto for the government... well, here's the idea. It's a bad idea, but could you bifurcate the economy so that it introduces new money but that new money can't get to the rest of the economy to cause inflation? In other words, could you create fake money just for poor people so the poor people could have goods and services but it wouldn't add money to the system because they'd be set off. They couldn't buy a car with it. They could only buy food and shelter and stuff. I don't know. I think that doesn't work either. Pretty much all the ideas don't work.
But here's the thing I want to tell you. Paying down the debt doesn't seem that important, but getting rid of the deficit is critical to survival. Does that make sense? You got to make sure that your budget every year is good, because if you drive the 3
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5 trillion up to 100 trillion, we are definitely all dead. So something is too big for sure, but it's not too big yet. It's getting there. But if the only thing you did is keep it the same, you could limp along and inflate it away over the years. So you either have to massively increase taxes by massively increasing productivity or else you cut things massively. But your choices are some kind of m…
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