Viewpoint: Trump actively triggered economic downturn through DOGE and tariff war

Author: Decentralized Finance Cheetah, Velocity Capital investor

I believe that in the short term, Trump will cause a sharp decline in the US stock market (as well as the cryptocurrency market) through DOGE, tariffs, etc., thereby triggering an economic recession.

Subsequently, due to the subsequent sharp interest rate cuts, there was a strong rebound.

The following explains why?

The United States cannot maintain the current interest rate because it must roll over approximately $17 trillion in government debt over the next 3 years, with coupon rates of only 25, 50, or 100 basis points!!

If issued at the current Federal Reserve rate, the United States will have to pay more each year - for every 100 basis points reduction, the U.S. government can save 400 billion dollars! If the rate remains at the current level, the U.S. government will have to pay 12-13 trillion dollars next year.

**The tariff war and DOGE are means to significantly increase the unemployment rate. Tariffs increase uncertainty, forcing CFOs of American companies to cut hiring. DOGE may also lay off over 1 million people. ICE immigration raids remove cheap labor from the economy, leading to both inflation and contraction as companies cannot operate as efficiently. As a result, weekly jobless claims have surged to 20,000 people, one of the largest increases in years!

As Stanley Druckenmiller said, there has never been a period of inflation of more than 6% that was not killed without high unemployment (>5%). Unlike the Biden administration, Trump knew that massive fiscal spending could not eliminate inflation. That’s why they need to trigger an economic recession, which is also the reason Steve Cohen expects a GDP growth rate of only 1%.

The U.S. stock market will suffer heavy losses, and the cryptocurrency market will do the same. Don’t be aggressive now, but hold more cash first and wait for more signals.