I hope you had a wonderful Christmas holiday. This is such a magical time of year… and a great time to reflect on both our blessings and our aspirations.
It’s been over a week since I’ve written. We had an unexpected death in the family that called us to Cincinnati for a memorial service.
If I may, I’d like to share with you a picture I took of the memorial table:
See the large portrait in the center above the urn?
That’s a self-portrait that the man who left us drew of himself prior to his death. He wrote an accompanying note to his family and friends as well. It’s a short note that thanks the reader for their love and friendship during his lifetime.
Per his wishes, this portrait was printed onto a wallet-size card and laminated with his note on the back. The family placed hundreds of those cards on a table at the memorial service. Those who attended were invited to take a card home with them.
This struck me as an incredibly self-aware thing to do. It also illustrates something of a stoic mindset. To be comfortable with one’s eventual death is to know the ultimate peace.
Getting back to the realm of finance and economics…
We’ve been talking recently about the recapitalization of America. It’s a critical part of America’s Great Reorganization – which is the macro theme that I’ve been working to flesh out in recent months.
When we left off before Christmas, we raised the question – are we heading into a recession? I suspect this will become a hot topic after the inauguration next month.
If the DOGE team of Elon Musk and Vivek Ramaswamy start making progress in their effort to cut $2 trillion in federal spending to balance the budget, we’ll likely see what’s left of the media attempt to spin up a fear campaign around this issue.
After all, the $2 trillion figure we’re talking about represents the fiscal deficit. It’s money that the government “prints” and injects into the economy to pay for things that otherwise wouldn’t be paid for. How could you put a stop to that and not have a recession?
But as we noted previously, the modern idea of what constitutes a recession is flawed.
The formal definition was coined by Keynesian economist Julius Shiskin in 1974. He defined a recession as “two consecutive quarters of declining growth”.
That seems reasonable on the surface. But there’s a nuance here.
We tend to measure growth in terms of gross domestic product (GDP). But GDP is also a faulty statistic. It doesn’t measure production in the economy… it measures spending. This includes government spending, which is now greater than $6 trillion a year.
If the DOGE team is able to cut government spending dramatically, doing so will almost certainly will result in lower GDP readings for many quarters to follow.
That would be the definition of a recession. But would it be a bad thing? Would we see widespread economic hardship as a result?
Perhaps… but I doubt it.
DOGE intends to cut the most egregious and wasteful spending first and foremost. We’re talking about spending on things like:
- $15 million for upscale furniture in empty federal offices
- $12 million for a pickleball complex in Las Vegas
- $4.8 million for Ukrainian influencers
- $3 million for “Girl-Centered Climate Action” in Brazil
- $400,000 to study the impact of cocaine on lonely rats
- $375,000 for ice-skating drag queens and circuses in city parks
I pulled these examples from Rand Paul’s 2024 Festivus Report. And these items are just scratching the surface of the waste that we’ve been paying for.
So I have to ask – will we miss any of these things? Will cutting their spending create a sharp economic contraction and widespread recession?
I think it’s more likely that we would see a surge in private investment and true economic growth – especially if they manage to slash regulations as well. That would be good news for a lot of people.
Plus, inflation would disappear overnight. That would be a boon for everybody… except perhaps the ice-skating drag queens.
And here’s the thing – a large swathe of the American population has already had to deal with an undeclared recession for over a year now. We’ll talk more about that tomorrow…
-Joe Withrow
P.S. America’s Great Reorganization will have dramatic investment implications as well. Naturally there will be some investments that benefit tremendously from this fundamental shift… and some that don’t.
To that end, I’m hosting a webinar on January 8, 2025 to share with you my thoughts for how we should position our finances ahead of this generational sea-change in our economy. And I have to say – I’m very excited about some unique opportunities that will arise as this story plays out over the coming years.
At the event we’re going to talk about how to:
- Generate Consistent Monthly Cash Flow: Learn how to invest in mortgage notes to create a steady stream of passive income without the hassles of property management.
- Leverage Your Cash Flow: Discover how to use this income to fund other high-return investments, creating a self-reinforcing “snowball” effect that grows your wealth exponentially.
- Protect Your Wealth: Incorporate the best ways to backstop your finances with gold and Bitcoin, ensuring stability – even in a deflationary environment.
- Take a Comprehensive Approach: Let’s shed the piecemeal investment mindset and focus on how to build out a turn-key investment system, step-by-step.
We’re calling the webinar Secrets of the Turn-Key Investment System. It’s scheduled for 3:00 pm Eastern on January 8, 2025.
The core presentation will run for an hour or so, and then we’ll open it up to Q&A. And we’ll address all questions that come in – nothing is off limits.
You can register for the webinar at your convenience at https://phoenicianleague.com/secrets
I hope to see you there!