THE TRUMP / BESSENT 3-3-3 STRATEGY

OBSERVATIONS: WHAT DOGE HELPS REMIND US ABOUT GOVERNMENT

Though most would agree that too large a government could lead to an inefficient bureaucracy. Small is better to too small could create and even worse problems. How do you continuously determine the level?

Bureaucracies have no natural method of having Schumpeter’s “Creative Destruction” occurring, which forces corporations to change and adapt or die. Additionally, waste, abuse and fraud are simply too costly for the private sector to survive the competition rigores that Governments simply don’t face.

GOVERNMENT “RIGHT SIZING” & COST CUTTING

With every election Americans have been desensitized to claims of cutting spending and somehow getting everything they want at the same time.  Most expect that candidates will say we can have it all.  Hypothetically we know that cutting spending and government waste are good things, but they always take second priority to whatever urgent situation or desires we face. 

The Department of Government Efficiency (DOGE) takes a radically new approach to this problem of motivation and has created a new means for waste to be cut.  It is important to not disregard the fact that there have been many government oversight organizations with the sole purpose of focusing on fraud and waste. DOGE has begun their own efforts of documenting waste and directly cutting excess spending, but they do not seek to undercut previous attempts.  Impressively, DOGE has an ability to act that has not been matched by other waste-cutting agencies.

THE CONCERN WITH DOGE

While the goal of cutting spending is undoubtedly good and we are in a situation of spending crisis, DOGE’s unorthodox methods may set a dangerous precedent for future administrations.  It serves as an all purpose task force for the president to enforce his will and identify weaknesses in government spending.  While past presidents have been frustrated about being stonewalled by various bureaucrats, DOGE creates an embedded network of control that makes the president’s proclamations much more effectual.

While even the left appreciates cutting waste in theory, it is easy to see how such a vital approach to government could be harmful in the future. In the past, layers of inefficiency protected us from radical policies and made systemic change slow. There is no guarantee that a DOGE-type force will only be applied to cutting waste.  Even DOGE’s current actions may suggest motives that are less than wholesome. Musk made sure to first attack USAID, which had recently scrutinized him for overcharging the government for Starlink he claimed he would donate. With such an atypical and unsteady start, in the future it could be used to enforce radical social policies or even set the undergirding for a military takeover. DOGE’s effectiveness is the center of its danger.

THE DEBT CRISIS REQUIRES A NEW APPROACH

While there are dangers to be wary of, DOGE could provide a much needed reset for government waste and set the standard for fulfilling campaign promises.  It often feels like once elected, presidents have their hands tied and are unable to be judged on the merits of their actions because what happens cannot truly be said to be “them.”  This lack of responsibility means that the public is unsatisfied and few things actually happen in a powerful enough way that the citizen can see or feel.

The cutting of DOGE will most likely undo bureaucracies that took decades to establish, creating a new normal that will benefit even the most democratic of presidents. If this process was going through Congress, it would be impossible to make real change in four years. Our debt and interest payments are unsustainable and require this sort of radical action if our country is to continue sustaining itself rather than sinking deeper into destruction through indulgence.

• • Critics and Supporters of DOGE are quick to point out its unfettered nature.
  • The Critics are hesitant of its freedom from Congress and point out that it seems dangerously near an oligarchy.
  • Supporters see its unfettered nature as necessary to compete with the droves of unelected officials and agencies relatively free from Congress. 

Countless agencies existing outside of congressional concern and control make it nearly impossible for Congress to understand what they are doing, or even which pathways they must use to rein them in. 

LACK OF FOCUS, BANDWIDTH & EXPERTISE

DOGE is a good solution to the fact that Congress will never have the bandwidth to understand the minutiae of waste and fraud occurring in the federal government. 

Additionally, much waste and lack of oversight has simple and truly bipartisan solutions. For example, the treasury not having to state what their specific payments were for should be questioned by anyone. This small administrative detail would have never been brought up in congress, but it will ultimately return so much accountability to the American people.  If agencies have been able to deny the public the ability to see what’s going on, the public cannot vote accurately. 

The freedom of DOGE is necessary to restore faith in the government and make a new standard of transparency. 

Even if they overstep and do things that Congress should be responsible for, let us fully realize that we need more transparency and active cost cutting urgently or this country will pay for its nonchalant attitude towards responsibility. 

WHAT YOU NEED TO KNOW!

GLOBAL AI ADOPTION – MAJOR GLOBAL PRODUCTIVITY POTENTIAL

The Cumulative Effect of AI Adoption on Productivity Growth

According to Goldman Sachs’ Global Investment Research the global adoption of AI is expected to significantly boost labor productivity and drive economic growth, potentially leading to substantial increases in GDP.

To the right the illustration grades the countries where the greatest potential may be realized.

RESEARCH – MARKET DRIVERS

1- THE TRUMP / BESSENT 3-3-3 STRATEGY

• • Treasury Secretary Bessent thinks 10-year yields can decline as a result of his “3, 3, 3” economic policy targets – 3% Real GDP growth, a 3% Fiscal Deficit and a 3m Barrels per day (bpd) increase in oil production.
  • To reduce the fiscal deficit from 7% to 3% of GDP there are only three routes: 1- 10% nominal GDP growth, 2- $1T rise in revenues, and 3- $1tn cut in spending or some combination of the three.
  • Our back of the envelope calculations suggest this will take the form of:

1- $400B in Annual GDP Growth through Reduced Oil Prices via a Riyadh Accord

2- $200B in Tariff Revenues

3- $400B in DOGE Savings regarding Waste, Corruption & Fraud

========

$1T

2- NVIDIA UNDERWHELMS – The MAG-7 Becomes the LAG-7

• • Nvidia Corp. beat expectations for its earnings and sales Wednesday. Yet the share price fell 8.5% the next day. Its growth continues to astonish, but investors were deterred by a dip in the company’s formidable profit margins, and so Nvidia is again worth less than $3 trillion. The total loss in market cap since last month’s tip stands at $730 billion.
  • It’s best to take this as confirmation that the market’s demands of Big Tech are changing. 
  • AI has entered the “show-me” stage. The hit to Nvidia does suggest that investors care about profitability now.
  • Investors have come to prefer tech groups who can show they’re profitable, after a protracted period since the launch of Chat GPT when they were most excited to buy anyone who was pouring money into research and development.

DEVELOPMENTS TO WATCH – POLICY DRIVERS

1 – PRESIDENTIAL MEMORANDUMS – China is now an ADVERSARY!

• • President Trump released two unprecedented Presidential Memorandums to the US Government on Friday 02-21-25.
  • These directives remove the 2013 preferential nation status given to China by Joe Biden in 2013, along with serious restrictions to China investing, operating or controlling US assets.
  • China is now officially a “Foreign Adversary”.
  • China is preparing for War according to the official news source for the CCP and statements / directives by President Xi Jinping.
  • The US under Trump, armed with sufficient proof, is now taking a formal position and preparing for all possible outcomes.

2 – WHERE TRUMP CAN FIND $600B/ANNUALLY OF TAXPAYER MONEY AT THE FED

• • Richard Duncan spells out exactly where Trump can find $600B annually of taxpayer money at the Fed, (without Doge’s help or an audit of the Fed).
  • The Fed has unwittingly (or possibly worse) trapped itself into paying banks and financial institutions interest on Bank Reserves and Repos.

GLOBAL ECONOMIC REPORTING – ECONOMIC DRIVERS

STAGFLATION MONITOR: SLOW GROWTH & INFLATION

• • Q4 GDP GROWTH
    • Atlanta Fed Model Suddenly Signals US Recession As Stagflation Takes Hold.
    • A recession starting in 2025 would be a real market shocker!
    • The Atlanta Fed’s GDPNOW model – forecasting US economic growth – just downgraded its estimate of Q1 2025 GDP growth (or lack of it) from +2.3% to -1.5%.