2Sem.·

Trump is not stupid. 🇺🇸🧐

What is happening right now is more than a trade war. It is an interest rate war - and it is hitting the USA right where it really hurts: its gigantic national debt.

The USA is facing a wave of refinancing of historic proportions. Over 7 trillion dollars in government bonds expired in 2024 alone. More to come in 2025. And all this at a time when key interest rates are at a multi-year high.

For every percentage point increase in interest rates, the state pays hundreds of billions of dollars extra. That's not play money - it's a political explosive device.

Now Trump comes into play.

He is imposing aggressive tariffs, angering trading partners and bringing uncertainty to the markets. Stock markets are plummeting, economic expectations are falling - and that is precisely the point:

Trump is artificially increasing the pressure on the US Federal Reserve (Fed) to lower interest rates.

Because: lower interest rates = cheaper refinancing for the state.

The result?

The interest burden is falling.
The avalanche of debt becomes politically more manageable.
The stock market gets a tailwind.
And shortly before the election, Trump can present himself as an economic savior.

Is that sustainable? Probably not.

But is it clever? Absolutely.

He is not using tariffs to "win" trade, but to manipulate the Fed.

Tariffs as a means to a monetary policy end.

This is not chaos. This is calculation.

What do you think - clever maneuver or economic madness?

125

61 Commentaires

Tenbagger2024@Tenbagger2024

2Sem.

However, it also drives up inflation through tariffs. And rising inflation is not necessarily a reason to lower interest rates.

•

sodium@TomCOR

2Sem.

@Tenbagger2024 That's exactly how I see it, because none of this has the effect of lowering interest rates

•

Thoranos@Thoranos

2Sem.

@Tenbagger2024 Drill baby drill" and the lower oil price will not bring inflation back.

•

Europoor@Europoor

1Sem.

@Thoranos reality shows that this is not true. The price of eggs is higher than before the elections and the USA is begging for eggs from countries that impose tariffs on them and instigate territorial disputes.

••

The W.@thewolfofallstreetz

1Sem.

@Tenbagger2024 This is where opinions differ. That seems to be the textbook explanation, but it doesn't reflect reality, as there are many mechanisms that can come together and cushion tariff effects. In his last term there were 20% tariffs on China and over the next 4 years there was a price increase of just 0.7%. Anything but hyperinflationary, right? I see a good chance that the Fed could cut interest rates in the course of the year despite the tariffs. Everyone knows what that means for equities.

•

Tenbagger2024@Tenbagger2024

1Sem.

@thewolfofallstreetz
That's also what Trump intends to do to reduce his debt.

••

The W.@thewolfofallstreetz

1Sem.

@Tenbagger2024 Absolutely. The 10-year yield has to come down. Oil is coming down too. All good things for the bottom 50% of Americans and currently uncomfortable for shareholders. In my view a buying opportunity as I see a good chance the Fed will intervene at some point and it will probably come down to the 10% for all on tariffs. The rest is distraction and negotiating tactics for fairer trade conditions with the US.

••

Omar B.@Omar_Bertola

1Sem.

@Tenbagger2024 Truflation says otherwise

•

www.dividenden-rechner.de@Dividenden-Rechner

@Tenbagger2024 but when inflation picks up, debt is cheaper. 😅

•

NEWT@SteelAnacott

2Sem.

I'm actually afraid the man doesn't think that far ahead. I think all the experts and think tanks who are now racking their brains about it are thinking too complicatedly. If I've taken anything away from the two biographies I've read about Trump, it's that we have a man here who is driven by such superficiality, hubris, a craving for grandeur and recognition, impulsive, irrational and immature behavior that the explanations of rational, mature people fall flat because they still can't imagine that a person in his position can act like this.

Unfortunately, his character, which actually disqualifies him for any important public office, is also the reason why many people voted for him. Does not reflect well on the former leading nation of the free world.

•

Epi@Epi

2Sem.

@SteelAnacott You've read two biographies about Trump: Respect!

I have one question: after reading them, do you believe that Trump would turn the USA into an autocracy if he were allowed to?

••

NEWT@SteelAnacott

2Sem.

@Epi Thank you, I have read "The Trump File" and "The Truth About Trump".

In both books you recognize a narcissistic and sociopathic character who hardly trusts anyone - which is not surprising since he himself is far too fickle and untrustworthy and people like to infer from themselves to others - and that he will hardly give up power voluntarily. We already saw that in 2020-2021 with the Stop The Steal campaign. Yes, I trust that he will go even further this time to secure power for himself and his family in the future.

Trump and Putin have one trait in common. They go as far as they are allowed to go.

•

Europoor@Europoor

2Sem.

If the plan doesn't work, he'll still have high interest rates bad economy and a crappy stock market. Sounds like a stupid plan.

•

Ph1l1pp@Ph1l1pp

2Sem.

@Europoor 1) Crash due to government debt or 2) 20% correction, with a large part being the Mag7 (whose premium was too high anyway)?

••

Europoor@Europoor

2Sem.

@Ph1l1pp The tariffs affect all areas of the US economy. The interest could have been achieved through frugal budgeting, higher taxes on the super-rich and further economic growth. But of course taxes on the rich would be communism.

••

Apfelmus@Apfelinvest

1Sem.

@Europoor bullshit, if you tax the rich even more, they will leave the country and invest elsewhere

•

Europoor@Europoor

1Sem.

@Apfelinvest The USA is a safe haven for the high net worth and emigrating is not even possible due to the exit tax.

••

Michael D.@Angstundbange

2Sem.

Trump is stupid!

•

beetlejuice@beetlejuice

1Sem.

@Angstundbange why are you commenting in this forum and he is president? Michael D. 4 President 🇺🇸

•

Golden Boy@randomdude

2Sem.

I think this is a highly idiosyncratic and far too short-sighted interpretation of events. Perhaps that's what his advisors have sold him. He himself is driven above all by a primitive friend-enemy mentality and is prepared to plunge the world into chaos to satisfy it. Because he can.

•

Malte@Malte123

2Sem.

@randomdude It's good that you can assess him so well, your analysis of things with the "friend-enemy thinking" is also much more profound than that of the thread creator.

•

Mister_ultra@Mister_ultra

2Sem.

It's a bit like when I, as a person with statutory health insurance, can't get an appointment with a specialist and then shoot myself in the knee twice so that I can get an appointment straight away.

You can do it, it's just stupid

•

GG H.@GGHyperX

2Sem.

Just looking at his face makes me want to vomit.

The guy has bankrupted 6 companies. The guy only knows the 🔨, but that doesn't always work.

•

batic420@batic420

2Sem.

First of all, the whole thing sounds like a clever move, but he is not only manipulating the FED to lower the key interest rate, but the entire global economy.

In many companies, heads are spinning and billions are at stake that may simply evaporate into thin air. Take the example of $AAPL, where we have the problem that almost the entire iPhone is actually produced in countries such as China, which are now subject to tariffs of up to 54% - deadly for Apple's supply chain.

The whole thing is also a potential opportunity for brands like Samsung to grab market share, as Apple may have to raise prices to somehow compensate for these tariffs.

Too harsh in my opinion, but there's really no other way to describe Trump. 😕

•

Anne@AnneS

2Sem.

Would love to know what Jerome Powell is thinking right now 🥲🤣

•

Dan@fizzelfritz

2Sem.

It wasn't like that:
Never argue with an idiot! He drags you down to his level and then beats you with experience.

What about government bonds? I'm not well versed here, but if everything goes down the drain and interest rates become more favorable. Government bonds become more attractive. And someone has to buy them, right? So isn't Trump pushing the USA into health?

And who knows how Trump invests his money.

•

The W.@thewolfofallstreetz

2Sem.

Kalkül

•

Mark777@Mark777

2Sem.

Good theory👍
The dollar is simply too strong and needs to be lowered in value so that US exports are more profitable again and this is happening with a crowbar.
That would be my crystal ball🔮

•

asset_architect_1435@asset_architect_1435

2Sem.

You're falling for what Trump voters fell for in November: thinking Trump was smart

•

doyoueventradebro@doyoueventradebro

2Sem.

you lost me at "Trump is not stupid"

•

sodium@TomCOR

2Sem.

I am increasingly of the opinion that this is a "show me your money" move. Consumers are pulling out their wallets in anticipation of higher prices ...

•

John@Transporter

2Sem.

But someone will have to buy the new bonds. What would happen if, for example, China stopped buying bonds? Will it get rid of them all domestically?

••

Mo@BigMo

2Sem.

Step 1: Make grandiose promises to get elected
Step 2: Put incompetent but loyal followers in positions of power and oust anyone who opposes you
Step 3: Crash the global economy and drive up inflation massively
Step 4: Provoke a civil war to declare martial law. Crush the uprising with your superior military power
Step 5: Stay in power indefinitely

••

Europoor@Europoor

2Sem.

@BigMo Step 4 assumes that the citizens in uniform want to do this. In contrast to the Middle East, there is no religious, tribal or family bond here. Americans join the military because they can earn money and make a career.

••

Anas@risk_minister_341

2Sem.

I think so too, but whether trump thinks so too, which I hope and wish that his plan is so !!!!
then everything will actually go according to plan

••

Dirk@d031692

2Sem.

Good thesis!
I believe he will lift or reduce the tariffs in 3 months at the latest. He is a dealmaker. As an entrepreneur, he repeatedly put his contractual partners under massive pressure in order to get the best deal. In my opinion, he is trying to do that again. But the across-the-board tariff increases make everything more expensive, even raw materials that serve his own industry.

••

Brokémon@Brokemon

2Sem.

The title has enough potential for discussion that I didn't read the text

••

strategy_pro_pmjoz@strategy_pro_pmjoz

2Sem.

He wants to make the market crash so he can lower interest rates on vehicles, houses etc, smart move on Trump! ❤️

••

viqing999@viqing999

2Sem.

He just shot his entire economy in the foot. Nothing about this seems calculated. Why would the Fed reduce rates just to heat up the over-spent, over-levered market even more? Prices will rise, growth will slow down, Americans will pay even more for good and products.

Let’s hope you’re right though, for the sake of my portfolio.

••

bull_investor_vkmhk@bull_investor_vkmhk

2Sem.

I have considerable doubts that the planned causality will work out. The market is tough as nails and does not follow politicians' trains of thought.

••

Daniel@Bidax

2Sem.

It sounds like a perfidious plan and, unfortunately, somehow makes sense. But I still have my doubts as to whether this plan is suitable for MAGA.

••

Gomerdoc@Gomerdoc

2Sem.

Sounds plausible, but overestimates Trump. People in the background who pull the strings and try to steer and direct the guy: they may have such thoughts. He himself certainly doesn't.

And according to general economic theory, the whole thing will initially lead to a veritable recession in the USA (they're already in it!), and economists around the world always respond to this with interest rate hikes by central banks.
So according to theory, the scenario you describe does not work.

••

Eugen@user89ef2f727eb541b9

2Sem.

It's a double-edged sword, does more harm to the US economy!

••

Unbekanntovic@Unbekanntovic

2Sem.

If there are other ways to strengthen the finances, this is playing with fire. To all those who accuse him of intelligence and calculation: this man is a populist, a gambler, a demagogue. The day before yesterday, 8 children were killed in Ukraine, on a playground, Digger, on a playground...and Selensky is asked why he is not wearing a suit.

1. secure refinancing - but without market uncertainty
2. growth policy instead of customs policy
3. make debt policy transparent
4. leave the Fed alone
5. strengthen foreign trade, not block it

The independence of the Fed is under attack here, a cornerstone of the dollar. USA as an investment country? Not like this!

••

strategy_pro_pmjoz@strategy_pro_pmjoz

2Sem.

Trump is a master chess player who has been playing chess way before he even took office. Granite he was best friends with RFK Jr. they wanted to take down this system just like RFK. Trump knows exactly what he is doing, I live in Tx and I stand with Trump 100%, if we have to raise things here to take down the system then let’s do it! You have no idea what it’s like to live paycheck to paycheck under this gov system who steals from you from the day you were born. I’m so ready for Trump to break this system so we all can live in this golden era!

••

𝒻𝓇𝓊𝑔𝒶𝓁 𝒻𝓇𝑒𝒾 𝓈𝑒𝒾𝓃 🗽@frugalfreisein

2Sem.

I think similar like you. I guess he makes big pressure to the stock markets so that much investors flee into bonds. that means that the bond prices will hike and so the gvt. bond yields will fall down. And here is the trick: Trump has to refinance the expiring bonds and than he will be able to issue new bonds at a lower interest rate level. The consequence of this is a lower interest burden for the state and a lower value at the spending site of the US balance sheet.

••

G$$$@GMoney8

2Sem.

Lots of things can break on the way down that will be out of his control. It is stupid….

••