possible temporal turmoil

With a week until the presidential election, Donald Trump's close associate and economic advisor Elon Musk warns that if Trump wins, we should expect economic turmoil, stock market crashes, and "temporary" financial "hardship." Musk stated, "We need to reduce spending to live within our means," adding that "this will inevitably involve temporary hardship, but will ensure long-term prosperity."

This suggests severe federal budget cuts, which could trigger serious initial economic overreaction and market crashes. Currently, two-thirds of the federal budget is allocated to Social Security, Medicare, debt interest, and defense. Cutting this implies dramatic spending reductions in fundamental federal government support programs like Social Security and Medicare.

While various social repercussions will emerge, as investors and entrepreneurs seeking funding and solutions, the individual's focus should start with simple questions:

• In a stock market boosted by government spending, what happens when that spending decreases?
• What happens when household income supported by subsidies and government employment decreases?

While market interventions and various macro factors exist, the stock market fundamentally relies on corporate growth and value creation. A company's essence is creating value by selling products, tangible or intangible, to customers. Stock prices represent the converted sum of total expected value a company will create during its existence. Therefore, stock prices rise when currency value falls or demand for corporate value increases. The upcoming situation signals potential reverse movements in both directions, as lowering inflation will slow currency devaluation, and eliminating basic guaranteed benefits through fiscal policy could strongly suppress demand.

Post-COVID America has been stimulated through strong government fiscal policies. The job market has grown remarkably strong, showing little weakness despite interest rates approaching 5.5%. While recent inflation figures are higher than expected, they show dramatic decreases from post-COVID peaks. Third-quarter economic growth is strong at 3%. As Trump's election probability increases, individuals should prepare for a new era. With turbulent international conditions creating unprecedented entropy, we should increase cash positions and prepare for the prosperity era that will follow a brief period of pain. Though short-term, this period could feel quite long for individuals. We must prepare for a sharp preventive injection for normal functioning.