Elon Musk, perhaps you've heard it. I think we, we can do at least 2 trillion. Yeah. If we don't do this, America will go bankrupt. Looking at what Trump is and, and Musk say they're going to do, you can expect a serious crisis in this year, in the next year out of the cut in the government deficit 20th century and beginning of the 21st. The government has run deficits, not surpluses. The only, uh, sustained periods of surpluses have been in the 1920s and the late, uh, 1990s, early two thousands. Very unhappy. Say, if you are, well throw 'em out here. But if Trump behaved like Calvin Coolidge, then we're gonna see a recession, at least five Inspector Generals that were looking into Elon Musk's companies. We're fired by the Trump Musk administration, influential contrarian economist, Steve Keane, brilliant economist that criticizes much of modern economics, the research fellow at the Institute for Strategy, resilience and Security at University College in London. He is someone that each and every one of us has to listen to, whether we agree or disagree. Here's Steve Keen. To steal a line from a great book. In the beginning was the word, and the word was doge. Here is Trump introducing both Doge and Elon Musk to the United States Congress to further combat inflation. We will not only be reducing because of energy, but we'll be ending the flagrant waste of taxpayer dollars. And to that end, I. Created the brand new Department of Government Efficiency, doge. Perhaps you've heard of it, perhaps, which is headed by Elon Musk, who is in the gallery tonight. What is Doge supposed to do? The main focus, as well as getting rid of government waste is to eliminate the deficit. Elon Musk, as was recently confirmed, is set to become the head of what he calls the Department of Government Efficiency, or you guessed it. Doge for short. I think the funniest name is, is DOGE, the the Doge, department of Gov, department of Government Efficiency. And from what he said so far, it seems his primary goal is to simply cut out all the waste and inefficiency that's currently seen in the government. From my research, this all boils down to two key objectives. One, reducing the government deficit, and two, deregulation. Now, I'll talk about both, but I wanna start with the idea of reducing the deficit and so do I. Let's actually take a look at the data and see if there's been any previous period in America's history where the government has actually reduced the deficit. And you can find that by going to the. Gov info site and you'll find a table there, uh, called Summary of receipts, outlays and surpluses, or deficits from 1789 to 2029. And even you look at that data, I'll show it in my Ravel software here, uh, what you can see in 20th century and beginning of the 21st, the government has run deficits, not surfaces. The only, uh, sustained periods of surfaces have been in the 1920s. And the late, uh, 1990s, early two thousands. This is under President Calvin Coolidge, and this was under Clinton, but it continued under Bush as well. Now let's look at the attitude of the, those two presidents to what they were doing and what they thought the impact would be on their economy. And we can find that, uh, the first one with Calvin. Cool. State of the Union address in 1928, December, 1928. Unfortunately not recorded, uh, but here we find the words. And he opened with a wonderful opening line. No Congress of the United States ever assembled on surveying the state of the Union as he met with the more pleasing prospect than that, which appears at the pleasant time. And why was it a pleasing prospect? Because we have. I mean, coming into a period which may fairly be characterized as conservation of a national, national resources, wastefulness and public business and private enterprise has been displaced by constructive economy and by constructive economy. What he meant was a drastic reduction. I. In government spending and taxation four times, we've made drastic revision of our internal revenue system abolishing many taxes and substantially reducing almost all others. Each time. The resulting stimulation to business has so increased taxable incomes and profits that a surplus has been produced and one third of the national debt has been repaid. So we know the 1920s were a time of prosperity. What about the 1930s? Not so good. Let's take a look at the data again. This is in my RA software and I've just focused here on the period 1921 to 29, and if you just look at that time period, everything from conventional thinking looks great, falling level of government debt, I. Uh, the numbers here don't quite line up with the numbers from the gov info side, it's so the US census numbers here, but the same basic story, either very small deficits or surpluses through the whole time period. And what you saw was, uh, in substantial growth, a very negative start to it because of going back on the gold standard and the end of World War I and so on. Positive growth all the way through the 1920s, falling unemployment and very benign inflation, low rates of inflation, and in the final few years actually falling prices. They're not falling very substantially. Now, what happens if we just extend the time period and go from 19? 29 out to 1940, then everything looks very different. We get a substantial increase in government debt, a deficit running up to 8% of GDP. And of course, the reason was a drastic co collapse in the economy. Growth went from being, uh, of the order of 7% to minus 30. Percent deflation falling prices became extreme at 10% per annum. And unemployment rose from four or 5% to 25% of the employable population of the states out of a job. It was a deadly period. So what on earth happened? You have to look at something other than the government sector. You've gotta look at private debt as well. So you can see this period of falling debt here. And I'll just go back. So I'm focusing just on the, uh, on that 1929 period. Now, if we take a look at private debt as well as government debt, what we see that is that while government debt was falling, private debt was rising. It was a low of about 138%. It rose to 160%. So as the government was cutting its debt by a small amount each year, the private sector was increasing it by substantially more. And if you look at the. Credit, which is the change in private debt as a percentage of GDP and compare that to the deficit. You see that the increase in credit based money far outweighed what was happening with the government sector. So the government's reducing its, uh, deficit and going into negative, uh, rather having a surplus rather than a deficit. But at the same time, the private sector's borrowing up to 8% of GDP per year. Now, is there a relationship. Uh, with that to the rate of economic activity, we bet your bottom dollar rate is, I'll show you using the, uh, data under the, uh, Clinton and Bush period, because of course we know that there was a global financial crisis after the Clinton and Bush administrations. If we now look at private debt as well as government debt, here, you see the same stories, the 1920s, a drastic increase in private debt. So if again, that's, that's over the whole post-war period. Let's just, uh, dive in here and look at a bit more detail on the, the period between, uh, Clinton and uh, uh, the end of the Bush administration. That's starting in 19. That started in 1988, go to 2015 roughly. And then what you see is this period of, as the government's reducing its debt, the private sector's drastically increasing its debt. We have. The deficit falling and becoming a surplus at the same time as credit rises from of the order of, uh, 2% of GDP to 15% of GDP. And then for the first time in post-war history, it goes negative credit goes from plus 15% to about minus 5% of GDP. The same story turns up in the. Economic data as well, not as severe as the Great Depression, but the same basic story. You have economic growth all the way through, uh, except for the 2000 recession, but then you get a serious drop in the rate of economic growth. You have inflation, uh, running at 5% of GD 5% per annum going down to minus two. So deflation again, and a drastic increase in the unemployment rate. The patterns are the same. And if I take a look at the, uh, relationship of unemployment to credit. We see an overwhelming correlation between the two, and it's more than correlation. This is causation. Rising credit is causing falling unemployment because rising credit, credit causes rising economic activity. Credit going from positive to negative drastically turns things around. You go from low unemployment to higher high unemployment. Uh, we have had two periods where the government has obsessed about eliminating its. Deficit and the private sector has responded by borrowing large amounts of money from the private banks and then speculating on the stock market in the 1920s on housing in the two thousands, we got a bubble and then a bust in both cases. And is there a causal relationship between these? First of all, good. And then. Disastrous, uh, economic stats and then what's happening with both government spending and the borrowing by the private sector. And we can look at this in another aspect of ra, which is its capacity to model financial transactions. And what I've got here is a model, very simple model of the government running a deficit, which increases the amount of money in the economy, uh, of the private sector, borrowing money, which also increases. Amount of money in the economy, and I've set up the numbers so that it roughly corresponds to the situation for the uh, uh, for the beginning of the 1920s. And I have the government running a surplus at a negative deficit, so a negative deficit of. Minus, I just actually that's minus 1% of GDP per annum and I've got credit running at 5%. In fact, it was higher, as you saw from like about 8% according to the, uh, figures by the, uh, United States census. So I run that combination of numbers with the government running it a surplus, and the private sector. Uh, borrowing money within, in credit, at 5% of GDP annum, you get a growing economy, rising level of private debt to gdp. As we saw on the data falling level of government debt to GDP, uh, overall looks good. Okay. What went wrong? I. Well, what went wrong is that the economy did not boom because of the surplus as Coolidge was running, it actually grew more slowly and the private sector responded by borrowing money to gamble on share prices. You had the roaring twenties, and then the whole crash occurred after that. What would've happened if the private sector didn't borrow that money? What would've happened to the rate of economic growth? So I've turned off credit. Now that's actually. Uh, and I've got, still got a 1% surplus being run by the government. You run that and you don't get a rising GDP, you get a falling GDP. Running a surplus takes money out of the economy. That's why it slows it down. So the whole idea that you can make the economy grow more rapidly by slashing government spending actually turns out to be the reverse of the truth. Now, if you have the government running a deficit, and I'll now put that inside here, so a 1% of GDP deficit rather than surplus, you get a rising GDP out of that with no credit and a falling level of, of, uh, private debt. Uh, because there's no change in private debt while the economy is increasing inside a rise in government debt, but nothing, nothing deadly about that. Uh, this what what it actually happens, and this is what a politicians and mainstream economists are simply are not aware of, is that when you run a government surplus, you take money out of circulation. When you run a deficit, you put money into circulation. The deficit itself is the way you create fiat money. And if you stop creating fiat money, you have a downturn in the economy Now. Looking at what Trump is and, and must say they're going to do, you can expect a serious crisis in this year and the next year out of the cut in the government deficit. At the same time, uh, what Trump is promising in term of terms of tax cuts for the wealthy may well reverse that ti that that depressing impact. So there's no guarantee yet we're going to see a serious recession. But if Trump behaved like Calvin Coolidge. That's a stretch, but if you did and actually cut government spending and and didn't give large amounts of money away in tax cuts, then we're gonna see a recession. 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