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March 6, 2025 - Epoch Times
22:44
$40 Trillion Debt, $11 Trillion Printed, Quarter of Purchasing Power Lost - What Now? Stefan Rust
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So in the last four years, we've seen an aggregate inflation of about 26%.
So that's a quarter of your purchasing power, fush, gone, just disappeared across the board.
So $11 trillion get printed in the last four years.
In this episode, I sit down with Stefan Rust, founder and CEO of Truflation, a blockchain-based financial data service that provides real-time economic and inflation data.
The budget deficit has just gone out of control where the debt has been accumulated nearly $40 trillion.
I think it's so hard to even fathom the magnitude of $40 trillion.
How big is that?
What will be the impact of Doge's aggressive cost-cutting?
Will it cause a short-term reduction in the size of the US economy?
Some people have been talking about the risks of deflation.
Is that really a concern?
And what will be the impact of Trump's tariffs?
This is American Thought Leaders, and I'm Jan Jekielek.
Stefan Rast, such a pleasure to have you on American Thought Leaders.
Thank you very much for having me.
Look forward to this, really.
There's been a lot of interesting things happening in the U.S., specifically at the U.S. Treasury, with the Doge efforts of Elon Musk and a number of others.
What's your reaction to this?
Fantastic.
Yeah, no, in summary, I think, you know, it's long needed.
I think budget deficits have been just growing and accumulating.
Regulations and bureaucracy has just been layered on top of each other every single year, every single new administration.
There's never an extraction of old laws.
Ultimately, this is a good thing.
It's cleaning up shop, really, and tightening up the budget again and trying to get back to normal household management and budget management, which is a good thing.
Lay out for me what that actually means.
Getting back to normal household management, how is it different?
So we at home, we all have to manage a budget, right?
We cannot spend more than we have, or there are times where we can spend a bit more and extend.
Our, you know, our sort of habits.
And there are times where we need to retract them and save a bit of on our, you know, expenditures.
And I think, you know, the government hasn't done that.
I think in a lot of the West, we've constantly expanded and there's never been a budget decline, a dropping of specific departments.
There's only been growth and especially.
In the government area, departments have grown.
Employees have grown.
Regulations have grown.
Legislation has grown.
And the whole sort of institutions as such has also grown.
When does it stop and when does it start leveraging technology to really start improving efficiency and driving efficiency in terms of, yeah, streamlining processes, using technology to minimize increase in labor, execution speeds.
How do I increase that using technology?
Standardization in terms of...
Once you've submitted, I have an identity.
It's already applicable on a permission basis across all the different government departments, etc., etc., so many angles.
So when we were speaking offline, you said that you actually see a future where the U.S. economy could grow quite a bit more due to such efforts.
But explain to me how that's connected.
So there are two elements there that I really highlight.
One is efficiency, right?
So having a bill, a mandate, a budget that actually gets converted into infrastructural improvement so that their actual allocation of funds gets deployed and gets...
Input into the economy, number one, and number two, the economy can reap the benefits of that new infrastructure in the marketplace thereafter.
So that's one element.
And then the other element is just the elimination of red tape.
As new businesses evolve and start up, they don't necessarily always have all the resources needed with legal, compliance, obligations that are set upon startups, let alone sort of small, medium businesses.
How do we let them innovate?
How do we let them build new products, drive new opportunities forward?
And I think with a lot of red tape in place, it becomes extremely difficult.
Very expensive for new startups to really innovate.
And I think that out of the way will allow entrepreneurs who already have an extremely difficult challenge to try and penetrate into new markets and disrupt existing industries, all of a sudden now they have the right to move and they have one burden less on the list of challenges in front of them as they launch new businesses.
Makes me think of how there's a rule that for any new regulation that is to come in place, 10 must be cut.
That's how Trump is rolling right now.
And I think that's the right way.
I mean, I also think that we should have time limits on new rulings.
So this new ruling should be in place for five years, and then we revisit after five years.
How it's going?
What's the progress?
What clauses do we have in here that are too many?
What are too few?
How do we adjust it and tweak it and then put in place for the next five years a better, more improved, more time-adjusted legislation?
And so that's ultimately, I think, where...
Ideally, we go to.
And that actually means, yeah, a lot of the governments are continuously optimizing and tweaking and improving their processes.
How do you understand the reaction to these efforts at Treasury and also now at USAID? Yeah, look, it's never nice.
You know, and as a founder and a CEO of a company, you know, it's always challenging.
You want to keep as many of the team members you possibly can, but you're always also looking to forward the business.
And, you know, reductions in headcount are never nice.
It's always tough.
And especially at big scales, right?
And you look at, you know, sort of Fortune 500 companies, when they have to cut, they cut 10,000, 20,000, 5% of their workforce.
That's a significant impact.
And now I think for the first time, a government is experiencing what that feels like.
We have to offload this department.
We have to shed this product unit.
Those are all sort of decisions.
That leaders have to make when forced with financial limitations that are put upon them either for not achieving revenue targets, for overexpending in specific areas, or not hitting the P&L targets that you wanted to hit.
And for the first time, the budget deficit has just gone out of control where the debt has been accumulated nearly $40 trillion.
I think it's so hard to even fathom.
The magnitude of $40 trillion.
How big is that?
I mean, nobody can even imagine what that means in scale.
Stefan, just one quick sec.
We're going to take a break and we'll be right back.
And we're back with Stefan Rust, founder and CEO of Truflation.com.
Well, so let's talk about the company that you are the founder and CEO of Truflation.
Of course, you look at inflation.
This is your bread and butter.
What is the connection between that $40 trillion debt and inflation?
So in the last four years, we've seen an aggregate inflation of about 26%.
So that's a quarter of your purchasing power just disappeared across the board.
And what does that mean?
That means that people that go to the grocery stores 10 times a month Are witnessing every single day, the increase in the price cost of eggs in the cost of goods in the gasoline at the gas pump.
So people are beginning to experience that and a feeling that, and if you're hitting 25% thresholds over a four year period, that's a lot.
And I think it hurts a lot of people.
And also, you saw the same time, you saw $11 trillion get printed in the last four years.
That's a lot of new money coming into the market, which debases the existing dollars in circulation.
So whatever you held would just get lost in value.
At the same time, that is solely related to consumer price index.
Another element that people forget is asset price appreciation.
We saw a very large increase in asset prices.
So everything started to become a lot more expensive.
That's why the stocks, the SP. S&P 500 is now at an all-time high.
Where are people putting that liquidity?
Not in new roads, not in new trains, not in better infrastructure, updating the IT systems available.
Instead, we're buying S&P 500. We're buying gold.
We're buying Bitcoin.
We're buying all these other assets in order to hide and store value, which we couldn't find in the dollar.
Well, so you've started talking about my next question, because this is actually somewhat of a debate.
Where does inflation actually come from?
Give me the picture.
So it really comes from overspending, right?
So I've overspent.
How do I overspend?
I need to print more money to keep up my spending habits.
And so in order to print more money, I drive up, I debase the existing value of amount of dollars in circulation.
Ultimately, $11 trillion of new printing to feed the budget deficit over the last four years has resulted in a significant increase in money supply, which ultimately means cost of goods go up in order to make up for that new supply and the assets that have been appreciated over time.
So the bottom line is balancing the budget solves the problem.
Is that what you're saying?
Yeah, because money is not free.
The new money that gets printed comes at a cost at 5% interest in order to hold inflation down.
And so that $11 trillion costs more money.
So I'm spending more, but I'm actually paying more for that additional spending.
It's like your credit card bills.
When you spend more money at home, you need more money in order to pay off the credit card bill or the debt that's accumulated on the credit card bill.
And it's not just the income to cover your day-to-day costs, but it's the income to cover your day-to-day costs.
The interest on the excess expenditure that you've been exercising on that credit card.
As all of this cost cutting starts happening, starting in the Treasury, going at department after department, that actually kind of reduces the size of the economy initially, doesn't it?
The cutting of expenditure reduces the size of the budget deficit and ultimately puts new people out of work, which means that they will have less spending power because they don't have an income.
However, I don't think they're out of work.
I think they're given a nice package to give them enough time to find new jobs.
I don't know the details associated with that, but I'm a big believer in leaning in.
I think there will be a whole new set of jobs that will come up over the next year or two, despite AI and everybody's looking at other technologies that are coming there that are going to increase productivity.
But there will be a whole new set of infrastructure that's going to be deployed.
And one thing we know and what we've learned over the last...
Centuries is that every new revolution brings out new types of jobs that we never thought of five years ago or 10 years ago.
One thing that I've heard raised, I'm curious what your thought is, is there any risk or perhaps benefit of deflation happening anytime in the near future?
How does that grab you?
Yeah, I mean, that's definitely a lot of debate.
Is there deflation?
Are we going to see disinflation?
Are we going to see stagflation?
You know, our view is we don't see any signs of deflation.
We actually see the opposite.
Sort of we think the new normal will be three.
So we won't see 2% of inflation.
We'll see 3% of inflation.
Why?
Because we just see the economy is really strong.
The markets, we're going to see more money printing.
We're going to see more investment into infrastructure.
We're going to see better allocation in funds.
We're going to see follow through into the market, which will generate income and increased income of the people in the workforce.
And so as a result, prices are going to stay at a pretty high level.
Or at the level that they are today, they're unlikely to go down and drop.
And the economy is going to pick up.
And we think the economy last year grew at about, I think, inflation adjusted about 2.5%.
So still really strong, the economy.
And bear in mind, that's a whole Sweden a year.
The US grew a whole Sweden last year.
So that's a significant growth that comes on top into the market, which is pretty phenomenal as the world's largest economy.
I love hearing how bullish you are on the economy, by the way, because that's certainly not where my head has been at.
Just looking at basically as we started talking about the size of the debt and the growth of the debt and the cost of the interest payments themselves being greater than major, major departments in the U.S. government.
And then, of course, the whole impact of that on the overall system, not just the U.S., Canada, my home country, and of course, Switzerland and Hong Kong and everywhere else.
You're not concerned?
No, I think as long as these Implementations can take place and the infrastructure investments and the commitments to improving infrastructure get put into place and red tape gets taken away.
No, I think this is going to be a phenomenal acceleration that we will see in the market that I think will herald the golden age.
I'm a firm believer in that taking place and I think the rest of the world.
Is experiencing and we've seen it happen in El Salvador.
We've seen it happen in Argentina, what that impact can have on an economy.
And how all of a sudden it is attracting investment.
It is attracting capital into those markets where capital can have a much higher conversion rate from money to energy and ultimately yield the return from that energy.
And I think that's ultimately what drives growth.
And if the U.S. and Trump and the Doge team and the whole administration can turn that around, then I think we're going to see really the next four years, maybe even the rest of this decade, see very attractive times in the market.
So I was looking recently at a graph which showed relative tariff rates.
The U.S. on There's a lot of thoughts about why and how.
There's some concern that these tariffs could have a negative impact economically.
Where do you stand on this?
Experienced firsthand as an entrepreneur building businesses in China, the benefit of tariffs and joint ventures and how China elevated itself from a developing country where everybody was riding around in bicycles to leading in terms of electric vehicles, modern cities, amazing airports, fantastic transportation systems.
All of that infrastructure was built off the back of And the only way you could invest in China was you had to build out a joint venture.
And so as a joint venture, you needed a local partner.
And that way you had to hire a certain number of local employees to be a part of.
That infrastructure or factory.
And so ultimately, that led to China being to where it is today astutely, but also efficiently and deploying five-year plans.
And if they don't hit their plan, whoever is fired or executed, which is not very nice, but that's ultimately how they enforce the achievement of their plan.
Reciprocity, I think, is the word that Trump and his administration is using.
And I think that is only fair to ask of in terms of trade.
We want trade is about is two way.
Or multi-party, but it's always two ways.
One part is a buyer.
The other part is a seller.
And at the exchange, a successful exchange, both parties leave happy.
I got money.
You got goods.
You got goods.
I got money.
And so ultimately, we're both happy with that outcome.
We got to know each other.
We negotiated with each other.
We communicated with each other.
We tried to understand each other's values.
And thereby, we executed on a trade once we managed to understand each other.
And we communicated along that way.
And that's ultimately where I think tariffs are going to be a good thing.
Not a blanket tariff, but more a tariff as in very targeted and concise and towards achieving reciprocity, hopefully.
Well, perhaps this is a discussion for another time.
But I would argue that Communist China's umpteen trillions of dollars worth of intellectual property theft over the last decades probably contributed more than the joint ventures, although the joint ventures were a very smart idea on how to further transfer technology.
Yeah, definitely.
But the joint ventures, think about it.
You're hiring local Team members to support the development within that joint venture, whatever that joint venture may be doing.
As a result, you're educating those team members on how you're doing your manufacturing processes, on the designs, on the architecture, and all the information that travels with the manufacturing of a given product.
And so as a result, not only You're educating and you're driving your intellectual property into those new team members.
So JVs have really turned out to be a very favorable long-term investment on part of the Chinese into acquiring Western talent, Western methods, and Western practices, and Western intellectual property.
A hundred percent, because part of that deal is also the full transfer of that technology into the joint venture.
And it's kind of astonishing where we're at when it comes to the abject lack of reciprocity, as you kind of outlined.
Stefan, this has been an absolutely fascinating conversation.
Any final thoughts as we finish?
It is just really how do we keep this culture alive of continuous pursuit for improvement and creating a world that is better for the next generation than extracting value out of what we have created or what...
Our previous generations have created.
How do we add new value into the economy?
And I think it's a golden age.
We have so many opportunities.
Technology.
We've got blockchain.
We've got AI. We've got genetics, biotech.
We've got so many different robotics.
We've got all these innovations that are taking place that represent so many opportunities.
How do we lean in and create and build and find new, better lives for the next generations around those technologies?
Well, Stefan Rost, it's such a pleasure to have had you on.
Thank you very much.
Really nice being here, Jan, and really enjoyed this a lot as well.
Thank you all for joining Stefan Rust and me on this episode of American Thought Leaders.
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