Viewpoint: Trump is actively triggering economic recession through DOGE and tariff war

Author: DeFi Cheetah, investor at Velocity Capital

I think in the short term, Trump will cause a sharp decline in the US stock market (and cryptocurrency market) through DOGE, tariffs, etc., which will trigger an economic recession.

Subsequently, a strong rebound occurred due to the subsequent sharp rate cut.

Why is it?

The reason why the United States cannot maintain its current interest rate is that it must extend the Treasury bond worth about $17 trillion in the next three years, with a face rate of only 25, 50 or 100 basis points! !

If issued at current Fed interest rates, the United States must pay more money every year - for every 100 basis points reduction, the U.S. government can save $400 billion! If interest rates remain at current levels, the U.S. government will have to pay $1.2-1.3 trillion next year.

Tariff wars and DOGE are means to significantly increase the unemployment rate. Tariffs have increased uncertainty, forcing U.S. companies to cut hiring. DOGE may also lay off more than 1 million people. ICE immigration raids remove cheap labor from the economy, which can both cause inflation and contraction because companies cannot work in the same efficient way. As a result, the weekly unemployment benefits applications surged to 20,000, one of the biggest increases in years!

As Stanley Druckenmiller said, no inflation cycle above 6% was killed without high unemployment (>5%). Unlike the Biden administration, Trump knows that large-scale fiscal spending cannot eliminate inflation. That's why they need to trigger a recession , which is why Steve Cohen said he expects GDP growth to be only 1%.

The U.S. stock market will suffer a heavy blow, as will the cryptocurrency market. Don't be aggressive now, just hold more cash first and wait for more signals.