The current environment in the U.S. is that the real economy is hollowed out; almost all economic development is in the virtual economy, whether in technology or capital markets. Trump has been calling for the manufacturing industry to return to the U.S. since 2018, and the series of mysterious operations today are still striving for this slogan.
In the current cycle, if the United States continues to move from the real to the virtual, an economic collapse is only a matter of time (Ponzi). Currently, U.S. debt accounts for 120% of GDP. If this cannot be digested, it will lead the U.S. government to complete bankruptcy in an era of high interest rates, ultimately resulting in a recession. What is imminent is to pull the economy back to the real sector, effectively narrowing the current huge wealth gap, reducing internal conflicts, and stabilizing the foundation of dollar hegemony.
So what is Trump doing? He needs to create a crisis, to push inflation, which was originally controlled, back up. Therefore, he continuously raises tariffs with various countries. The benefit of this approach is to make imports more expensive in the U.S., enhancing the competitiveness of domestic production while reducing the value of the dollar. Furthermore, this will lead to a certain degree of inflation, forcing the Federal Reserve to cut interest rates, which is beneficial to dilute its debt pressure; rate cuts will also further cause the dollar to depreciate.
The risk of doing this is that the economy may stagnate due to inflation, ultimately leading to stagflation and then recession. But these are secondary issues; standing at the present, we should first study the current trends.
After the dollar depreciates, it is a big benefit for U.S. exports, positively impacting the short-term economy. Of course, it is an even greater benefit for capital markets, especially Bitcoin. As the dollar depreciates and interest rates are lowered, Trump can reclaim a large amount of foreign debt while inflation can also dilute a significant amount of debt. As a strategic reserve, Bitcoin will naturally help to perfectly consume a large amount of debt with the next wave of increases.
Another benefit of the dollar's depreciation is that dollars from outside will accelerate their return to the U.S., converting cash assets into value-preserving assets like real estate and commodities, further boosting the U.S. real economy. As for whether this can truly solve the problem of economic development in the future, no one knows. However, based on the large axes wielded since Trump took office, we can basically confirm one thing: the dollar will announce a weak dollar, marked by the Fed's next announcement of a rate cut.
So the conclusion is that, on the surface, Trump appears to be raising tariffs, but in reality, he is creating a crisis, devaluing the dollar, and returning to inflation. Once Powell eases up, the dollar will enter a rate-cutting window, leading to further depreciation. This will benefit internal debts and the economy, and the increase in liquidity will significantly favor risk assets like Bitcoin and U.S. stocks. The uncertainty of the future economy is not the focus of this discussion; as long as we know that the current monetary easing cycle has not ended, Bitcoin's bull market has not ended either. Ignoring the short-term volatility, this year is not over yet. As long as the dollar index steadily declines, the crazy bull market has just begun.
In the end, with this set of combinations, the Trump family and American billionaires will once again enjoy the pleasure brought by capital; this is the greatest joy of a businessman being president, right? If it directly turns into a bear market, can he still be called a businessman? Ultimately, the feast will end; enjoying the bubble, embracing the bubble, and withdrawing before the bubble bursts—life is a Ponzi journey~$BTC