Opinion: Trump is actively triggering a recession through DOGE and the tariff war

Author: DeFi Cheetah, Velocity Capital Investor

I think in the short term, Trump will cause a recession by causing a sharp drop in the US stock market (and the crypto market) through DOGE, tariffs, etc.

Then there will be a strong rebound due to the subsequent sharp interest rate cuts.

Here's why?

The reason why the US cannot maintain current interest rates is that it must roll over about $17 trillion worth of Treasury bonds over the next 3 years with a coupon rate of only 25, 50 or 100 basis points!!

If issued at the current Fed rate, the US has to pay more money every year - For every 100 basis point reduction, the US government can save $400 billion! If interest rates remain at current levels, the US government will have to pay $1.2-1.3 trillion next year.

The tariff war and DOGE are a means to significantly increase unemployment. Tariffs increase uncertainty, forcing US corporate CFOs to cut back on hiring. DOGE could also lay off 1 million more people. ICE immigration raids remove cheap labor from the economy, which is both inflationary and contractionary because companies can't work as efficiently. As a result, weekly unemployment claims surged to 20,000, one of the largest increases in years!

As Stanley Druckenmiller said, no inflationary cycle above 6% was killed without high unemployment (>5%). Unlike the Biden administration, Trump knows that massive fiscal spending can't kill inflation. That's why they need to trigger a recession, and that's why Steve Cohen said he expects GDP growth of only 1%.

The US stock market will suffer, and so will the cryptocurrency market. Don't be aggressive now, but hold more cash first and wait for more signals.