Trump Hopium is on Fire!
Is all going wrong or is it “all part of the plan?”
Last November sentiment turned euphoric in America. Trump’s resounding presidential victory in November ‘24 promised a new “Golden Age” and quickly ushered in a renewed optimism that the best of times were back, again. The feverish jubilation sent stocks to the moon, bond yields plummeting to earth, and green shoots falling from the sky. Less than 90 days into Trump 2.0 hopes are fading fast as harsh realities begin to reassert themselves.
The promise of Trump’s second term was three-fold: overseas deescalation, fiscal retrenchment, and economic reset. Whereas his first term stumbled awkwardly out of the gate, this time Trump was determined to sprint forward with an aggressive executive agenda: he promised to quickly end war in Ukraine, solidify cease fire in Gaza, DOGE the federal government, mass deport illegals, secure America’s border, and rebuild the rustbelt’s hollowed out industrial base by rebalancing a cavernous US trade deficit. Under no circumstances were these ambitious goals achievable without short-term pain, as Trump himself expressed.
“There could be a little disruption. You can't really watch the stock market.”
Donald Trump
Unfortunately, short-term pain is almost certainly the leading edge of a deeper, longer-term catastrophe. In recent weeks stock markets have shed $5T in losses, bond yields are resurgent, recession odds are up, cease fire talks are dead in Gaza, the War in Ukraine rages on and a border war with Mexico is probable. While there is still room for maneuver on tariffs, Canada, Mexico, China and others are gearing up for what looks like the beginning of a trade war. So, is all going wrong or is it “all part of the plan?”
Trump’s Targeted Tantrum
Despite the obvious cracks in Trump’s agenda hard core MAGAs remain True Believers. Trump’s team has a plan and pieces are moving into place they say. Roughly speaking, here is the logic:
Stocks are crashing because Trump is purposely using tariffs to scare markets into a selloff. Why shake up markets?
To rotate capital from the stock market (“risk-on“) into the bond market (“risk-off”) so the $7T+ in US Treasury debt owed this year can be refinanced at lower interest rates.
Trump’s resettlement plan for Palestinians has only added to the rancor against US backed genocide in Gaza from the Arab Street and the Muslim world. Why sow discontent?
Alastair Crook among others believe Trump’s outlandishness breaks historical narratives thereby softening the ground for favorable negotiation.
Trump has turned aid on and off again for Zelensky’s fragile government in Ukraine and spoken directly to Putin, bypassing irritable euro elites at the same time. Why send mixed signals?
So that he can negotiate the US into a stronger bargaining position as an intermediary, secure something (rare earths, nuclear power plants) and perhaps soften America’s reputational damage.
Trump’s forth coming tariffs agitate for a trade war with Canada, Mexico and China. Why provoke a trade war?
In Canada’s case, tariffs are a tool to renegotiate the United States-Mexico-Canada Agreement (USMCA); in Mexico’s case to reshore the Maquiladoras plants while pressuring Mexico to fight the cartels and stop drugs and human trafficking from its side of the border; in China’s case, to rebalance US trade deficits and reindustrialize the midwest all in the hopes of generating tax revenue (“External Revenue Service”) at the same time.
I could go on but the pattern is clear: disrupt to reorder. The backward reasoning above rests on at least a few assumptions taken as gospel inside the Trump White House:
America remains the strongest and most indispensable market to the global-economy
America remains the dominant power internationally, especially in the Middle East and Eastern Europe
Any collateral damage caused by disruptive Trump policies is incidental, short-term, and manageable; in other words, the juice is worth the squeeze
These baseline assumptions are repeated in MAGA circles on social media and beyond. Unfortunately, the holes in this theory are like dangerous tears in space-time that carry star destroying potential for the United States and the MAGA agenda.
Coming Recession or Rolling Recession?
Since 2020 America’s real economy, that is the non-financialized, non-governmental sectors have struggled. Industrial production has consistently shrunk, consumer wallets have been squeezed, and fiscal debt has ballooned. Mainstreet is hurting because inflation remains stubbornly high and job growth outside of the public sector is anemic. The massive market rally has only enriched a tiny percentage of asset owners without any trickledown to the real economy, accelerating a multi-decade trend. Government spending may have masked the true state of the economy but it has set the stage for a refinancing apocalypse soon to wallop households, banks and governments alike.
Refinancing at higher rates is indigestible in a financialized economy so many think rates must fall but inflationary pressures suggest otherwise. When debt levels soar high enough, creditors simply cut off funding or demand higher and higher interest rates until it breaks debtors, one way or another. Both are happening to US markets; foreign investors are liquidating USD denominated assets like Treasuries while rates are moving higher with inflation (yields, mortgages, credit card rates etc.) That means the commercial real-estate, government debt, and mortgage industry are vulnerable to a massive liquidation event as assets (stocks, bonds, homes etc.) collapse in value.
DOGEing the federal government and crashing stocks at this point will only guarantee recession. Government spending is at least 25% of GDP so even marginally cutting government will disrupt growth (however artificial) and falling stocks means marginal consumption and tax receipts decline sharply. Stock losses mean consumers feel less wealthy so they spend less and capital gains taxes decline so deficits rise, never mind the negative effects on business sentiment. In a sense, America has been in a rolling recession, or perhaps a depression at least since Covid and the novocaine of government spending is wearing off. In other words, the delayed recession is about to hit with full force.
Wars and Borders
Americans also voted for Donald Trump to end wars overseas and secure borders at home; neither is happening. 50+ days into Trump 2.0, President Trump has not meaningfully divested from any of Biden’s commitments to Netanyahu or Zelensky. Indeed, one could argue that Trump’s foreign policy team led by Zionists like Steven Witkoff is vested in perpetuating conflict with Russia, and furnishing the military resources to expand Israel’s “7-front war.” The singular nuance thus far seems to be Trump’s resolute commitment to expelling Palestinians from Gaza at the behest of Israel. What does any of this have to do with America First or MAGA is the question?
The America First focus on the Mexican border and illegal immigration has been deprecated to a rearguard action. Certainly, there have been strong statements from cabinet officials to assert “100 percent operational control of the border,” (whatever that means?) and verbal warnings to Mexican cartels. However, there remains no concrete plan guided by specific objectives nor is there a requisite military buildup to solve the border crisis. Trump has also failed to declare the Insurrection Act, which would grant the President broad powers to put US forces on a wartime footing against the Mexican Cartels.
The inescapable fact is that Trump’s Zionist dominated foreign policy team is steering America into another overseas war with devastating consequences.
The inescapable fact is that the Trump’s Zionist dominated foreign policy team is steering America into another overseas war with far more devastating consequences than Iraq or Vietnam. Since 2022, at least a million Ukrainians and probably more have been killed, millions more have fled the country, and Ukraine’s borders will now be redrawn at Russian discretion. Equally, militant Zionism’s destructive war in Gaza is combusting into a wider regional war between Israel and the House of Islam. The fact that Israel has become an international pariah State has not deterred ever greater US military support whatsoever. Lastly, let’s not forget hawkish Neocons like Secretary of State Marco Rubio want a pivot to the Pacific to fight China. What a mess.
Trump is a mercurial tactician who lives day to day, hour by hour, and headline by headline, perhaps the farthest impulse removed from strategy one can imagine. Behind any effective national strategy or foreign policy must be an accurate, bare bones assessment of national strengths and weaknesses. Given his age, Donald Trump’s frame of reference is stuck in the 20th century, a bygone era unambiguously dominated by US international, economic and military power. Likewise, Trump’s team believes America’s position remains dominant across hard power domains, and that seems to be what motivates a combative policymaking that externalizes America’s problems by pinning the blame on foreign powers. It seems only disaster is left to prompt an honest self-assessment.
A Perfect Storm
Trump 2.0 is crashing into a perfect storm. Economist Rudi Dornbusch said that “economic expansions do not die of old age; they are murdered.” The declinist view gaining traction for a decade plus now posits that America’s slide into deep decline will be a slow grind. However, something far more acute, sudden and tumultuous is unfolding that will bring festering problems to the surface in a thunderous climax. As Pierre Teilhard de Chardin wrote, “Everything that rises must converge.”
“economic expansions do not die of old age; they are murdered.”
Rudi Dornbusch
So what is converging? Roughly speaking it seems the Trump Administration could find itself entangled in at least 7 crises by the end of 2025, perhaps sooner. While it is always exogenous black swans that trigger the daisy chain, here are the immediate crises I foresee over the horizon:
1. Fiscal debt crisis
2. War with Mexico
3. War with Iran (ME regional War)
4. Recession
5. Banking crisis (“unrealized losses”)
6. Stock Market Crash (-30%+)
7. Trade war with China
Disturbingly, these seven rapidly converging crises on America can catalyze one another. A fiscal crisis could collapse the banking system, a stock market crash could spark a fiscal debt spiral, war with Iran could set off a global recession as could a trade war with China or border war with Mexico. Persistent inflation, DC dysfunction, and higher interest rates means there simply is not much margin of error and “unknown unknowns” are still out there. How much slack is left in the system?
There are many who proclaim, falsely in my view, that a standard page from the authoritarian playbook is to create external conflicts to distract the public from internal problems. However, in my reading of history, authoritarians tend to be very risk averse if for no other reason that losing power does not bode well for their livelihoods. By contrast, redirection via false flags has been the standard American playbook for sometime. Why here and not there?
Redirection via false flag has been the standard American playbook for sometime.
The reason is simple, overseas wars rarely effect average Americans domestically. We are insulated by two massive oceans, weak or unthreatening neighbors to the north and south, and access to abundant natural resources in North America. Historically, failed wars have been contained by geographical distance, economic resilience, and power asymmetry (hemispheric dominance). The worst that can happen to administrations that start wars is incumbent President’s lose reelection. There is no accountability, there are no punitive consequences and so wars continue unabated. This time Americans will suffer the consequences.
From Pluralism to Puritanism
America the nation birthed in July 1776 when the Continental Congress formally adopted the Declaration of Independence, though the revolution may have started a year earlier in 1775. Mundane astrologers use July 4th to declare America a Cancerian nation. As is customary with the sign of Cancer, Americans as a group are emotional. We swing from highs to lows and back again like the manic markets of Wall Street, or as Benjamin Graham so poignantly put it “from unsustainable optimism” to unjustified pessimism.” If true, what comes after the death of Trump Hopium? What happens when it becomes clear the nation is unfixable through the ballot box and is truly out-of-control?
I have said before that Donald Trump has become a false prophet, an American illusion. As Daniel Boorstin wrote decades ago, “The making of the illusions, which flood our experience has become the business of America.” Trump fits this mold perfectly: there was Trump the TV star, the billionaire mogul, the real estate tycoon, and now Trump the savior. While it is very early in his second term, the fantasy of Trump the savior is dissolving before our eyes. MAGAs are beginning to see behind the curtain and realize that Trump, like modern America itself, is an illusion. Dispensing with illusion is the solution - back to Boorstin:
“What we need first and now is to disillusion ourselves. What ails us most is not what we have done with America, but what we have substituted for America. We suffer primarily not from our vices or our weaknesses, but from our illusions.“
Daniel Boorstin
The perfect storm finally striking the shoreline of American consciousness will send us into a time of tumult unseen since the Great Depression or the Civil War. Soon, MAGAs will be forced to deal with this unavoidable fact and we shall see how they respond. My sense is that Americans will see-saw, perhaps violently, as they did during the Great Awakening that set the stage for 1776, or the abolitionism that inflamed the Civil War, or perhaps the Social Gospel Movement behind Prohibition. In short, the traumatic disillusionment to come will give rise to the next great nationalist movement in America. The rough contours of the inversion will be the collapse of pluralism, the bastardized woke nation of today, and the resurrection of puritanism, a fundamental reconnection with America’s true national identity.
As Abraham Lincoln said so many years ago in an equally troubled age: “The dogmas of the quiet past are inadequate to the stormy present…We must disenthrall ourselves, and then we shall save our country.”
And so it shall be, ever more.
Getting rid of a lot of it is what gives the hope that the good people can make it through the tribulations surely to come in the near future.
Like a heroic quest, where you finally kill the sneaking witch that has been hampering you during the journey.
The journey doesn't become easier, but you have more of your strength and spirit to see it through.
250 years is the benchmark lifespan of a country (as an unified political entity). In China, the major dynasties lasted about 250 years each. At this point, the rust in the political and economic system has reached the point beyond fixing. A clean slate is needed. Typically a violent revolution is needed for the rebirth of a new system. the US is at the point today where the old is dead but the new is still born.