$40 Trillion Debt, $11 Trillion Printed, Quarter of Purchasing Power Lost - What Now? Stefan Rust

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 um across the board you saw 11 trillion dollar get printed in the last four years in this episode I sit down with Stefan rust founder and CEO of true flation a blockchainbased 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 doa'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 leader and I'm Yan Kellick Stefan rust such a pleasure to have you on American thought leaders thank you very much for having me look forward to to this really there's been a lot of interesting things happening in the US specifically at the US Treasury with the Doge efforts uh of of Elon Musk and a number of others what's your reaction to this fantastic um yeah no in summary I think you know it's it's long needed I think budget deficits have been just growing and accumulating um 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 um and ultimately this is a good thing it's cleaning up shop really and tightening up the budget again and trying to get back to uh normal household management and budget management which is good thing well so lay out for me what that actually means right getting back to normal household management how is it different so we at 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 um and I think 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 a dropping of specific departments there's only been growth and especially in you know the government area departments have grown employees have grown regulations have grown legislation's grown and the whole you know sort of Institutions as such has also grown and so 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 uh 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 AC across all the different uh government um departments etc etc so many angles so when we were speaking offline you said that you actually see a future where the US 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 a bill a mandate a budget that actually gets converted into infrastructural Improvement so that the 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 um as new businesses evolve and and start up they don't necessarily always have all the resources needed with legal compliance um 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 iive 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 or even start new companies 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 that's how Trump is rolling right now and I think that's um that's 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 um legislation and so that's ultimately I think where ideally we go to and that actually means yeah a lot of the governments are are continuously optimizing and tweaking and improving their processes um how do you understand kind of their reaction to these efforts at Treasury and also now at usaid yeah look it's never nice um you know and and as a founder and a CEO of of a company uh 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 in nice uh it's always tough and especially at M 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 um those are all sort of decisions that leaders have to make uh when forced with financial limitations that are are put upon them either for not achieving Revenue targets for overexp anding in specific areas or not hit 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 dollar I think it's so hard to even fathom the magnitude of $40 trillion doar how big is that I mean nobody can even imagine what that means in scale Stefan uh 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 true.com well so let's talk about the company that you are the founder and CEO of true flation and so 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 fo gone just disappeared um 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 EXP experience that and are feeling that and if you're hitting 25% thresholds over a 4-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 dollars get printed in the last four years that's a lot of new money coming into the market um which debases the existing um yeah 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 500 S&P 500 is now at an all-time high where a 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 started uh 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 over spent 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 I I drive up I debase the existing value of amount of dollars in circulation and so now um ultimately 11 trillion dollar of new printing to feed the budget deficit over the last four years has resulted in a significant increase in uh money supply which timately means cost of goods go up in order to make up for that new Supply and the assets that have been appreciated over over time so the bottom line is balancing the budget solves the problem is that is that the 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 play the pay off the credit card bill or the debt that's accumulated on the debt 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 and the interest on the excess expenditure that you've been exercising on on that credit card as there 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 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 um package to give them enough time to find new jobs um I don't know the details associated with that um but I 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 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 leared 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 you know one thing that I've heard raised I'm curious what your thought is is there any risk or you know perhaps benefit of deflation uh happening in the anytime in the near future how does that how does that grab yeah so we yeah I mean that's 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 um is we're actually see we don't see any signs of deflation um 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 uh why because we just see the economy is really strong um you know 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 uh we're going to see follow through into the market which will generate income and increased income uh of the people in the workforce and so as a result prices are going to stay at a pretty high level um or at the level that they are today they're likely to go down and drop um and the economy is going to pick up and we think the economy last year grew at about I think inflation adjusted about two and a half percent so still really strong the economy and that's 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 um yeah phenomenal as the world's largest economy it's it's I love hearing how bullish you are on the economy by the way because you know that's certainly not where my head has been at um you know just looking at you know the basically as you we started talking about the the size of the debt and the growth of the debt and the cost of the interest payments themselves being greater than you know major major departments in the US government and then of course the whole impact of that on the overall system not just the US Canada my home country and and of course Switzerland and Hong Kong and and and and everywhere else um 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 yeah the Golden Age um I'm a firm believer in 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 in Argentina what that impact can have on an economy and and how all of a sudden it is attracting investment it is attracting Capital into those markets where 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 US and Trump and the Doge team and the whole Administration can turn that around then I think we're going to see really you know the ne uh the next four years maybe even the rest of this decade see very um attractive times uh in the market so I was looking recently at a graph which showed um relative uh tariff rates uh us on various countries and those countries on the US and of course we know that the president is quite interested in using tariffs as a tool as a way to raise money um uh as perhaps as a political tool as well uh there's a lot of thoughts about why and how um there's some concern that that these tariffs could have a negative impact economically where do you stand on this so look um I 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 you know in terms of electric vehicles modern cities amazing airports fantastic Transportation Systems all of that infrastructure was built off the back of tariffs um 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 Factory and so ultimately that led to China being to where it is today astutely but also efficiently and deploying fiveyear plans and if they don't hit their plan whoever is fired or executed which is not very nice but 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 uh 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 manage to understand each other's values and what the yeah um and we communicated along that way so how and and that's ultimately where I think um tariffs are going to be a good thing not a blanket tariff but more a tariff as in very targeted and concise and and towards achieving reciprocity hopefully well perhaps this is a discussion for another time but I would argue that uh uh communist China's you know Ting 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 and I mean 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 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 the manufacturing of a given product and so as a result not only you're 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 100% because part of that deal is also the the full transfer of that technology into the joint venture um and it's kind of astonishing where we're at you know when it comes to the the 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 this culture alive of of continuous Pursuit for improvement and creating a world that is better for the next Generation than extracting value um 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 uh biotech we've got um 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 Generation a around those Technologies well Stefan rust it's such a pleasure to have had you on thank you very much really nice being here Yan and really yeah enjoyed this a lot as well thank you all for joining Stefan rust and me on this episode of American thought leaders I'm your host Yan Kell [Music]