Trump and Musk seem intent on creating a limited crisis to pierce the U.S. stock market and create conditions for the Federal Reserve to inject liquidity.
Facing the colossal beast of $36.3 trillion in national debt (expanding by $3 million every minute), Trump's calculations echo loudly in the Oval Office: for every 1% cut in interest rates by the Federal Reserve, he can break free from the noose of national debt interest by $400 billion.
This amounts to obtaining the military spending equivalent of ten Ford-class aircraft carriers out of thin air each year. When the debt scale exceeds 120% of GDP, traditional economic tourniquets have already lost effectiveness. The Trump team seems to be planning a path filled with gunpowder—forcing monetary easing through economic recession.
This operation of 'negative leverage' can be considered the most dangerous balancing act in modern financial history: smashing global supply chains with the tariff stick, using government layoffs to create a chilling employment market, and allowing the stock market to plummet, resulting in a wealth evaporation effect, forcibly turning the flames of inflation into a deflationary wasteland. As revealed by former Lehman trader McDonald, the 'financial repression' strategy is to forcibly keep interest rates below inflation rates as a last-ditch survival tactic, and it is a targeted explosion of the debt empire's own blood vessels.
Federal Reserve Chairman Powell's tough stance serves as a perfect footnote to Trump's tactical sandbox. When unemployment data rises alongside a wave of corporate layoffs, and when the PMI index plunges into contraction territory under the impact of tariffs, the central bank, which once shielded itself with 'data dependence,' is now being undermined by the very rules it set. In this ultimate power game, Trump nonchalantly states before the cameras of Fox News: 'The pain of the transition period will eventually pass,' while Powell's toolbox is left with only the morphine of interest rate cuts.
This gamble is not without precedent. The lessons of the Great Depression of 1929 warn that natural bubble bursts can lead to systemic collapse, while the Bank of Japan's proactive deflation of the bubble in 1990 resulted in the 'lost thirty years,' but preserved the industrial foundation. Trump clearly chooses the latter—manufacturing a limited crisis to exchange for strategic depth in dollar hegemony.
Nomura Securities' analysis unveils the steel blade beneath the gentle veil: the so-called 'mild recession' is, in fact, using the unemployment rate as a bulldozer for supply-side reform. When the federal government trims the 'excess' from a $1.5 trillion deficit, and when tariff barriers force manufacturing to return, this operation requires not only cutting away the rotten flesh of debt but also reshaping the skeleton of the American economy. The mass layoffs led by Musk's department are merely props for this grand drama.
This heroic economic experiment will ultimately answer a fundamental question: when an empire stands at the edge of a debt cliff, what kind of courage and madness are needed to accomplish the turn without plunging into the abyss? The answer may lie in Trump's monologue: 'Either achieve success or be shattered to pieces'—this is a gamble of an era, and the final frantic self-rescue of dollar hegemony.
When the guillotine of Nasdaq falls on the last bullish head, and when Tesla's stock price is halved, a harsh truth emerges: the darkest hour for U.S. stocks is the blood-red dawn of dollar hegemony. The Trump-Musk alliance is reconstructing the underlying logic of global capital flow with 'creative destruction'—using a controllable financial market earthquake to replace the engine of the dollar system, welcoming a low-interest range, and once again gaining comprehensive means to stimulate the economy.
The cost of this operation is bound to be brutal: the evaporation of middle-class pension accounts, the halving of tech giants' market values, the severe restructuring of global supply chains... But from the perspective of the empire, this may be the only antidote to prolong the 'American exceptionalism' narrative. After all, under the Damocles sword of $36 trillion in debt, no country can elegantly resolve the crisis—either suffocating in a bubble or rebuilding anew in bloodshed.
The darkness before dawn is the most perilous, but those wielding the scalpel have already seen the light of dawn through the bloodshed.
Buffett has long sensed the scent of blood, holding over $300 billion in cash, waiting for the collapse to buy the dip; Wall Street is caught in a collective frenzy of 'recession trading,' with the plummeting yield of two-year U.S. Treasuries indicating that rate cut expectations have become consensus.
When the flood of liquidity surges again, the only word left for the crypto market is up, up, up.
