This post gives too much credit to the Trump administration, implying they knowingly lie with a grand strategy in mind. I don't think they see their falsehoods.
Musk believes he's cutting the deficit when he's not.
Trump sees tariffs as a powerful tool when they aren’t.
The economy isn’t ready to capitalize on AI, but Trump and his team likely don’t realize that.
As someone in AI, I know its value comes from training on internal data—90% of companies lack the data quality to make it work.
Trump isn’t trying to break the economy on purpose; he’s playing chicken, convinced Canada and Ukraine will blink first. He and his team believe they can thread the needle—but they can’t.
I believe that very soon, the private worries of business leaders and politicians will start to spill into the open much quicker and more aggressively than Trump anticipates. When that happens, how he reacts remains to be seen, but he certainly won't be able to maneuver like he is now.
I especially loved a post you had earlier on how we are misunderstanding our competitive position against China.
That We need to become better at building things people need and use vs digitization of everything. That In order to do that we need to continue our massive inflows of capital but perhaps utilize them better.
All 100% on point. That’s the kind of stuff we need more discussions on.
Totally agree, you see it with them saying tariffs are sike no there not. She also has quotes for the administration. My thinking is how can those people be trusted? Where is the data to back up there claim? I find it laughable that we take these people at there word without evidence.
I became a supporter after this post. There’s lots of creator commentary on this administration but not enough breakdown of the plan and vision. This provided me with some relief by understanding the administrations plan in more detail with references.
I also feel that this administration is trying to orchestrate a recession. The fear I have is once you unleash this shit storm, it will lead to more disorder and uncertainty with unanticipated consequences that can cause irreversible harm.
The other policy is deporting undocumented immigrants. With many of those working in blue collar jobs, construction, meat packing plants, agriculture, etc. The implication being that laid off US citizens will be desperate to take these jobs. I find that hard to believe. A recession like this also exposes hidden debt. The banking system could be threatened, bank failures occur, lots of potential unknown unknowns. But this group thinks they’re smarter than all the rest.
Good post. This seems like a departure from Trump's first term and the populist rhetoric in general.
Based on Trump's first term, I never would have guessed he'd be interested in concepts like "taking our medicine" to "get to the other side" or whatever. It seemed like in his first term he just wanted to do whatever he could do at a given moment to juice the economy and leave the consequences for someone else down the road.
In this case it's also not quite clear what the "medicine" is. Obviously the deficit is too high, but if you would have told me 5 years ago that future Trump would be a deficit hawk I never would have believed it.
I don't get how semi-intentionally pushing the economy into a recession is better politically than just continuing to run high deficits and keeping the party going for a little longer.
It is a good analysis but completely ignores that the stability of the last few decades comes from an unsustainable zirp and debt-fueled economy that has allowed conspicuous consumption.
There needs to be adjustments made and adjustments are generally not easy. The current path is unsustainable and the last 4 administrations had kicked the can down the road.
The current administration might have a right or wrong approach(we will find out sooner rather than later) but at least they are taking decisive action.
Thank you for attempting to make sense of the administration's policies. Frankly, I don't think the Trump team has any overarching strategy other than to keep the MAGA base energized and using continuous disruption to dominate the news cycle. The potential emergence of AGI (or whatever label is used to characterize the models that may emerge in the next 2-3 years) will be another source of disruption, especially in the entry level white collar labor market. I don't think the results are going to be good. Lots of very frustrated Gen Zers and millennials. Meanwhile, the "decoupling" of the American consumer from foreign sources of manufactured products (and agricultural produce), will drive up prices for many households that are already close to living "paycheck to paycheck". Trump will try to blame their hardship of the immigrants but at some point many of them will finally realize his plans will undermine both their financial wellbeing and health care.
Very interesting perspective. Slowing things down, Fedex interest cuts, economy goes up again. Not sure if anyone knows or cares about "who" will actually lose jobs.
There a whole lot of assumptions built into this whole approach of "we will first bring a recession and then create conditions for a rising tide to lift all the boats" As Prof Scott Galloway always reminds us, "market dynamics trump indvidual wisdom almost always" The current crew at the helm in the WH might just be the individual in this scenario!
There's definitely some (self-aware) tea-leaf reading here. However, I love the forward-looking analysis of a constellation of symptoms. Most discussions (favorable or not) focus on moral arguments, which are awfully poor predictors of long-term results. Your analysis is second-to-none for people who are more interested in guessing what's GOING TO happen, rather than preaching to our respective bubbles about what SHOULD happen.
It’s really hard to say whether it is comforting or not that all of this chaos is being orchestrated with a complex end goal in mind. And that’s on top of the question of whether or not we’re just finding order where there isn’t any because the human brain loves a good story. Maybe creating chaos for change just looks bad when we don’t like the change that is being offered. Or actually that nothing is being offered. I mean, one might disagree with the cuts and all the disruption that will ensue but be able to have an actual conversation about them if the effect was to cut the deficit. Unfortunately these guys want to have it both ways: cut spending and cut taxes. Which does what exactly? Bring us back to the status quo but worse?
The simple answer is that, as you’ve said, “chaos is the recipe,” but I’m sure most of the folks running the show aren’t exactly dumb. Is there a method to the madness? After listening to the Ezra Klein interview on AI I’m left wondering if the appeasement of Russia isn’t just so the administration can pivot more resources to head off what they see as an inevitable conflict with China on the horizon.
This is useful and really well done. There's so much coverage of individual parts of this and not enough big picture, 100,000 foot thinking. I'm not sure whether all of these things are a deliberate strategy, or if Wall Street creatures like Bessent are on board with it, but it's an interesting (and scary) hypothesis. It really seems like someone is in a hurry to rip the economic Band Aid off so that by the time the next presidential election rolls around, if not congressional midterms, we'll be in a new boom and the architects of this slump can claim credit for making the stock market great again, or whatever. If that's the plan, though, there are some big holes in it. For example, if long-term Treasury yields don't come down because fiscal worries outweigh the pressure from a recession then it might take more QE to make things right. And Xi Jinping certainly isn't going to waste this opportunity to annex Taiwan in the next couple of years.
This post gives too much credit to the Trump administration, implying they knowingly lie with a grand strategy in mind. I don't think they see their falsehoods.
Musk believes he's cutting the deficit when he's not.
Trump sees tariffs as a powerful tool when they aren’t.
The economy isn’t ready to capitalize on AI, but Trump and his team likely don’t realize that.
As someone in AI, I know its value comes from training on internal data—90% of companies lack the data quality to make it work.
Trump isn’t trying to break the economy on purpose; he’s playing chicken, convinced Canada and Ukraine will blink first. He and his team believe they can thread the needle—but they can’t.
I believe that very soon, the private worries of business leaders and politicians will start to spill into the open much quicker and more aggressively than Trump anticipates. When that happens, how he reacts remains to be seen, but he certainly won't be able to maneuver like he is now.
Yes, I mention it's very speculative. Thank you for these additional notes, I agree the path will change
No thank you!! Everything you write and create is so well done. We need more of it not less!! Keep up the great work! You are a star!!!
I especially loved a post you had earlier on how we are misunderstanding our competitive position against China.
That We need to become better at building things people need and use vs digitization of everything. That In order to do that we need to continue our massive inflows of capital but perhaps utilize them better.
All 100% on point. That’s the kind of stuff we need more discussions on.
Totally agree, you see it with them saying tariffs are sike no there not. She also has quotes for the administration. My thinking is how can those people be trusted? Where is the data to back up there claim? I find it laughable that we take these people at there word without evidence.
I became a supporter after this post. There’s lots of creator commentary on this administration but not enough breakdown of the plan and vision. This provided me with some relief by understanding the administrations plan in more detail with references.
I also feel that this administration is trying to orchestrate a recession. The fear I have is once you unleash this shit storm, it will lead to more disorder and uncertainty with unanticipated consequences that can cause irreversible harm.
Trump has cost America its reputation, globally. Full stop.
Economic hardship for the American people is going to be the natural consequence of his foolishness.
The other policy is deporting undocumented immigrants. With many of those working in blue collar jobs, construction, meat packing plants, agriculture, etc. The implication being that laid off US citizens will be desperate to take these jobs. I find that hard to believe. A recession like this also exposes hidden debt. The banking system could be threatened, bank failures occur, lots of potential unknown unknowns. But this group thinks they’re smarter than all the rest.
Good post. This seems like a departure from Trump's first term and the populist rhetoric in general.
Based on Trump's first term, I never would have guessed he'd be interested in concepts like "taking our medicine" to "get to the other side" or whatever. It seemed like in his first term he just wanted to do whatever he could do at a given moment to juice the economy and leave the consequences for someone else down the road.
In this case it's also not quite clear what the "medicine" is. Obviously the deficit is too high, but if you would have told me 5 years ago that future Trump would be a deficit hawk I never would have believed it.
I don't get how semi-intentionally pushing the economy into a recession is better politically than just continuing to run high deficits and keeping the party going for a little longer.
Debt Crisis. The party is over.
As an aside, I don’t see how all of the horrors described in this article are much different than what Europe has been living through since the GFC.
Thanks for this Kyla.
It is a good analysis but completely ignores that the stability of the last few decades comes from an unsustainable zirp and debt-fueled economy that has allowed conspicuous consumption.
There needs to be adjustments made and adjustments are generally not easy. The current path is unsustainable and the last 4 administrations had kicked the can down the road.
The current administration might have a right or wrong approach(we will find out sooner rather than later) but at least they are taking decisive action.
Thank you for attempting to make sense of the administration's policies. Frankly, I don't think the Trump team has any overarching strategy other than to keep the MAGA base energized and using continuous disruption to dominate the news cycle. The potential emergence of AGI (or whatever label is used to characterize the models that may emerge in the next 2-3 years) will be another source of disruption, especially in the entry level white collar labor market. I don't think the results are going to be good. Lots of very frustrated Gen Zers and millennials. Meanwhile, the "decoupling" of the American consumer from foreign sources of manufactured products (and agricultural produce), will drive up prices for many households that are already close to living "paycheck to paycheck". Trump will try to blame their hardship of the immigrants but at some point many of them will finally realize his plans will undermine both their financial wellbeing and health care.
Very interesting perspective. Slowing things down, Fedex interest cuts, economy goes up again. Not sure if anyone knows or cares about "who" will actually lose jobs.
Such an amazing post, Kyla. Congrats.
There a whole lot of assumptions built into this whole approach of "we will first bring a recession and then create conditions for a rising tide to lift all the boats" As Prof Scott Galloway always reminds us, "market dynamics trump indvidual wisdom almost always" The current crew at the helm in the WH might just be the individual in this scenario!
There's definitely some (self-aware) tea-leaf reading here. However, I love the forward-looking analysis of a constellation of symptoms. Most discussions (favorable or not) focus on moral arguments, which are awfully poor predictors of long-term results. Your analysis is second-to-none for people who are more interested in guessing what's GOING TO happen, rather than preaching to our respective bubbles about what SHOULD happen.
Awesome piece Kyla. You're putting rubber to road on what the vibes look at through all the smoke and mirrors.
It’s really hard to say whether it is comforting or not that all of this chaos is being orchestrated with a complex end goal in mind. And that’s on top of the question of whether or not we’re just finding order where there isn’t any because the human brain loves a good story. Maybe creating chaos for change just looks bad when we don’t like the change that is being offered. Or actually that nothing is being offered. I mean, one might disagree with the cuts and all the disruption that will ensue but be able to have an actual conversation about them if the effect was to cut the deficit. Unfortunately these guys want to have it both ways: cut spending and cut taxes. Which does what exactly? Bring us back to the status quo but worse?
The simple answer is that, as you’ve said, “chaos is the recipe,” but I’m sure most of the folks running the show aren’t exactly dumb. Is there a method to the madness? After listening to the Ezra Klein interview on AI I’m left wondering if the appeasement of Russia isn’t just so the administration can pivot more resources to head off what they see as an inevitable conflict with China on the horizon.
This is useful and really well done. There's so much coverage of individual parts of this and not enough big picture, 100,000 foot thinking. I'm not sure whether all of these things are a deliberate strategy, or if Wall Street creatures like Bessent are on board with it, but it's an interesting (and scary) hypothesis. It really seems like someone is in a hurry to rip the economic Band Aid off so that by the time the next presidential election rolls around, if not congressional midterms, we'll be in a new boom and the architects of this slump can claim credit for making the stock market great again, or whatever. If that's the plan, though, there are some big holes in it. For example, if long-term Treasury yields don't come down because fiscal worries outweigh the pressure from a recession then it might take more QE to make things right. And Xi Jinping certainly isn't going to waste this opportunity to annex Taiwan in the next couple of years.
Great analysis thank you Kyla