Trump’s Desperate, No Good Rotten Plan Part 1
It's no surprise to those of us living outside the USA who follow real economics and deep finance that Washington is in a desperate situation. The American government is in the midst of a growing storm called an American Sovereign Debt Crisis and there's little Washington can do to fill the hole that decades of accumulating fiscal deficits has dug itself into...or will desperate times call for desperate measures? (Insert evil laugh and mustache twirling by cartoonish villain gif here).
See also: Blunt Force Trauma Perestroika in the US(S)A
Tariffs: Friend or Fiend? Part 1
Tariffs Friend or Fiend? Part 2
To begin with, let's cut through the trade wars noise, and define the issue at hand, so it can be measured in a sane manner.
The Bill for the Maxed Out National Credit Card is Coming Due
Everyone knows that the US has accumulated $37 trillion in federal debt, much of it in short term obligations, with the short-termist borrowing accelerating during Trump's first term to take advantage of temporarily low interest rates set by the Fed during the COVID P(l)andemic. That is obligations due in terms between 6 months to 5 years. The Biden Administration continued such borrowing in the T-bill markets after the P(l)andemic. Now the bill for that equivalent of racking up debt on a temporarily zero or low interest credit card offer is coming due. However, most Americans while fighting to survive day to day in the world’s “greatest” economy, living on short term credit cards just like the US government, but without the ability to refinance their debts, they aren't paying attention to the storm clouds gathering just a ways off.
One cannot blame ordinary poor folks for not paying attention, after all, the education level in the US has been falling and failing for the past 40 years, and this dumbing down has been done on purpose. Secondly, these folks repeatedly keep hearing that debt does not matter, that Modern Monetary Theory (MMT) can magically make all that debt go away and so on and so on…these are feelgood fairytales for dumbed down men and women-children, who are taught to put mindless social media dopamine hits and material pursuits before family and community survival.
Ray Dalio and Other Billionaire Financiers Sound the Alarm About a US Debt Crisis
The rumbles of thunder from the seemingly distant debt crisis storm “on the horizon” have come edging ever closer to the present. Many of the major players, including central banks and sovereign wealth funds, have been quietly heading for the exits while pushing gold above the psychological $3,000-$3,200 an ounce range barrier. Well-known financiers like Ray Dalio are sounding the alarm, saying the debt issues in American finance go much deeper than Trump's tariffs.
Leading the quests of stupidity and recklessness are of course American and Western European Baby Boomers, the most spoiled and self-centered generation that has ever existed anywhere. It's hard to even ascribe a section of human history that would correspond to the reckless actions of this western post WW2 generation, that has created this damning environment and has damned subsequent generations to decades of poverty and crushing debt, so that they can have the best of everything and enjoy retirement like no one else…and screw the kiddies and grandchildren and great-grandchildren.
Of course, this is all rhetorical until we get into the nuts and bolts of the issue, let's get to the point, shall we?
The US federal debt is $37 trillion with another $12 trillion in state and municipal debt. We will not bother with listing private and corporate debt, as it in no way affects this analysis. In truth, neither does the state and municipal debt, which is secured by future tax receipts servicing municipal bonds aka munis. Thus, if the state cannot meet its obligations, it just starts firing state employees and cuts off repairs on infrastructure and state services.
Even a Reversion to the Mean Cost of Money For the Last Few Centuries Would Be Ruinous for Uncle Sam
Now, for the nitty gritty: for the past 30 years, the US government has been able to sell bonds and treasury bills for zero or almost zero percent interest. Compared to the historic borrowing costs over the centuries, this has been a record low. However, while recognizing the fact of the record low, the so-called "Great Moderation" which coincided with the post-Cold War 'unipolar moment' lasted for so long, that Washington got very comfortable with what basically amounted to free or near free money. This was money that was often times earning percentages well below even the messaged “official” inflation rate admitted by the Federal Reserve (which as many Americans have realized, is neither federal nor a reserve but a front for the private banking cartel that has dominated the US economy since the Fed was established in 1913).
But as we all know, all good things must come to an end. Over the past two years, the US T-Bill interest rates have quietly climbed back to their historically normal rates of around 5%-5.5%. This may not seem like much to the average person, a rise in 3%-4%, but due to the absurd size of the US debt--and it is constantly growing--the ballooning in interest payments owed is huge. On this point, most Americans including the politicians are clueless. They know that the US government is running a debt-based economy, constantly running deficits and growing that debt, but for most who think on this, this is as far as it goes. They are shocked to learn that servicing that debt, that is, paying off the interest percentage on that debt, is piling another trillion dollars a year on top of the already giant debt.
The simple fact is, the US government already has to borrow to cover its spend, which is somewhere in the ballpark of $1.5-$2 trillion above its annual tax intake. So that extra $1 trillion also has to be borrowed and then the debt of borrowing, which was spent on paying interest, also has its interest added to that pile. Thus, the US economy starts circling the toilet bowl. As more is borrow to cover the interest, more has to be borrowed to cover the now bigger interest, and so on.
DOGE Cuts Thus Far Have Proven to Be a Drop in the Bucket
Of course, the US government can cut spending drastically, but who are you kidding? Whatever DOGE saved just got spent on the new and improved $1 trillion super-duper Pentagon budget, the largest ever, up $150 billon over the present $849.8 billion of the 2024 budget. According to DOGE, they have saved $150 billion so far, which covers the DoD increase. So in other words, we are at best at zero.
However, things cannot remain just this rosy, not with the gross mismanagement that is Baby Boomer Washington. That grinding followed by metallic groaning sound you hear is the debt iceberg ripping through the hull of Washington’s sinking Titanic.
Washington is facing the refinancing of $9 trillion from almost zero percent debt accumulated after the Fed slashed rates during the Global Financial Crisis (GFC) Unfortunately, for Washington, the lifeboats for the refinancing are only coming at a rate of 4.72%--too few for the USS Titanic. It's women and children first, or in reality, every man for himself. Hence all the weeping and gnashing of teeth over Trump destroying the so-called Rules Based Order, which was neither rules based nor an order save for what Washington and its London sidekick imposed.
How much is that amount per year in additional debt interest payments? Why a small inconvenient $425 billion more piled onto an already strapped budget. So in other words, unless Washington needs to sponsor an Israeli reconstruction plan (read: more free money for the Israelis to occupy Syria with) or to finance aeronaval war with Iran or God forbid, restart the full financing of the Ukraine War, by subsidizing US arms that will be manned by the Germans or other European cannon fodder, that will ONLY add another $3.5 trillion to the $37 trillion national debt. That is a 10% increase year over year, or another additional $150 billion in debt interest payments for 2026.
Consider if this stays only at a 10% increase year over year to 2030, that will be a debt burden of some $65 trillion by 2030--the 100th anniversary of the Great Depression. From that mountain of debt, interest payments will increase to nearly $2 trillion. Of course, if the US continues to create money at the present rate, that is, engaging in not-so-hidden Quantitative Easing, then the debt and debt interest payments will prove much higher.
In the case of a shooting war with Iran, US-subsidized engorgement of Israel or the Ukrainian gravy train restarting, those numbers could have no upper limits.
Another way to look at this, with a Federal revenue stream of $5 trillion and debt interest payments of $1.5 trillion, the US government is paying out 30% of its take home pay, just to manage its debts. All the while the binge spending continues, with only a few minor fixes. How minor? Even with an optimistic DOGE-achieved savings of $150 billion, we aren’t counting that all of this went away to DoD, over a spend of $7 trillion, not counting debt interest servicing, that is a cut in spending of a whopping 2%. Of course, this was instantly evaporated as a sacrifice to the deities of the Military Industrial Financial complex, which eats up more and more of the US GDP yearly, while producing overpriced crap NATO weapons and more debt.
Trump is the Right Man for the Job to Nuke the Post-1971 Monetary System
So what to do when faced with such an imminent catastrophe? Why the answer is easy, get the US interest rates down. And you do that by getting a massive new flood into US securities, which would overload demand compared to supply and force interest rates down, maybe even to the levels of almost-free money again. Now, just how do you do that? Well, you blow up the current global trading system, that's how. Enter Agent Orange Man Bad...
Trump riding the US Debt Bomb down to thermonuclear explosion, inspired by the stereotypical Texan Slim Pickens in Stanley Kubrick's Dr. Strangelove or How I Learned to Stop Worrying and Love the Bomb (1964)
This may seem farfetched, but this seems to have been at least partly the thinking behind the Trump Tariff Bonanza, that is Liberation Day, that came flying into the laps of everyone in this world, except Russia and Belarus--where there is no direct US trade to tariff.
Stephen Miran, Trump’s top economic advisor and the purported mastermind behind his trade war, gave a speech on 7 April 2025, laying out the Washington strategy: all countries should contribute (read: pay tribute) to Washington. So that the USA can maintain the rules (we make them) based order (which we give you to execute, peasant), otherwise known as the “Mar-a-Lago Accords”. With the name inspired by the Plaza Accords of the late Reagan Administration that forced a revaluation of the yen which roiled the USD-JPY carry trade, driving up the cost of Japanese exports in the late 1980s.
Trump is Dumping the Costs of the Empire into the Laps of America's Previously Pampered But Pathetic EUrovassals and Now They're Hopping Mad
So here is the 55D chess Trump is playing: disband the US empire of greed and corruption? Accept that an empire with hundreds of US military bases must be dismantled, starting with the occupation bases of Germany and Japan? Yeah right, dream on! In reality, the goal is plainly stated: dump the costs of this unsustainable late stage Globalist American Empire (GAE) onto the pathetic EUrovassals and the more reluctant not-so-vassals like the Saudis. Make the rest of the world pay for the onerous globalist warfare, unpayable debt and population control projects that Washington and their NYC and Silicon Valley psychopathic elites are still running--even with some populist opposition and Alex Jones types blowing off steam on X permitted. Are we serious? Of course we are, or rather, they are. And they admit what they're doing in their own words.
In his own words, Miran stated in his November 2024 manifesto: “Both of these are costly to us to provide (“global public goods”: a “security umbrella” and the dollar and Treasury securities)”. Miran continued: “Our military and financial dominance cannot be taken for granted, and the Trump Administration is determined to preserve them”. “The President has been clear that the United States is committed to remaining the reserve [currency] provider, but that the system must be made fairer” Miran has made it very clear.
The Final Bill for the Globalist American Empire Has Come Due
So much for the promise of Trump and draining the Swamp. The taxman for servicing the Swamp cometh!
So to move this brilliant plan along, Trump made five key demands on his victims…er clients of America’s Global Public Goods:
1. Countries can accept tariffs on their exports to the United States without retaliation, providing revenue to the U.S. Treasury to finance public goods provision.
2. They can stop unfair and harmful trading practices by opening their markets and buying more from America.
3. They can boost defense spending and arms procurement from the U.S., buying more U.S.-made goods,
4. They can invest in and install factories in America.
5. They could simply write checks to the US Treasury that help us finance global public goods.
In short, Trump, who has notoriously been through bankruptcy and shafted Trump Organization creditors multiple times as a real estate developer, is attempting the largest cramdown in history--over the screaming objections of many foreign creditors of the United States, led by the City of London.
How well has and will this Orange Madman genius plan, worthy of a Bond villain work? Tune in next time for Part 2 of Trump’s Desperate No Good Rotten Plan.