GuShiio.com It is both a danger and an opportunity. Once the Federal Reserve officially launches a large-scale interest rate cut, it will also usher in a prosperous moment for the U.S. stock market and the crypto market.
Written by: Deep Trend TechFlow
Recently, both the U.S. stock market and the cryptocurrency market have ushered in a major correction. On the one hand, tariffs have been imposed, making it difficult for inflation to fall for a while, and the U.S. dollar index remains at a high level. Secondly, the poor economic data in the United States has also made investors feel uneasy., a trading recession may really be coming.
According to the Atlanta Federal Reserve’s GDPNow forecast data on March 3, the forecast for the U.S. GDP growth rate in the first quarter of 2025 has plunged to a contraction of 2.82%. On February 26, the model forecast a growth rate of 2.32%. In just 5 days (2 working days), the U.S. GDP forecast for the first quarter was quickly lowered by 510 basis points.
This is also the worst result of the model’s quarterly GDP forecast for the United States since the COVID-19 epidemic in 2020.
However, in the eyes of some Wall Streeters, this is Trump’s overt plan. Larry McDonald, a former Lehman Brothers trader, said in a new podcast that Trump is trying to deliberately create an economic recession in order to force the Federal Reserve to cut interest rates and reduce U.S. government interest expenses.
“You cannot curb inflation through massive fiscal spending, and the Trump team knows this. They need a recession to lower interest rates and extend debt maturity. The Trump administration is implementing financial repression and driving interest rates below inflation, which is the only way out of the $37 trillion debt dilemma, and there is no alternative to default. rdquo;
Related reading: “Full podcast| Conversation with former Lehman Brothers trader: Trump needs a recession to repair the economy
It has always been on the table that Trump and the Federal Reserve will not deal with each other. In order to reduce inflation, the Federal Reserve has many concerns and hopes to cut interest rates slowly. Trump demands that interest rates be cut quickly to reduce government debt spending. He wants to avoid falling during the mid-term elections. At the disadvantage, interest rates must be cut to promote the economy, provide sufficient liquidity to the market, and reduce pressure on American lenders.
According to estimates, if interest rates remain at current levels, interest on U.S. debt next year will reach US$1.2 trillion to US$1.3 trillion, which is much more than U.S. defense spending. You know, the current fiscal revenue of the United States is only about US$4 trillion, of which the state’s rigid expenditure is about US$3.5 trillion, and its medical insurance expenditure is about US$2.6 trillion. If interest expenditure is added, the entire situation will basically reach It is about 1.7 times the fiscal revenue.
This requires the United States to continue to rely on debt to support its debt in a high interest rate environment. Market liquidity continues to dry up, and the cost of U.S. debt is still soaring rapidly.
Therefore, in Trump’s eyes, not cutting interest rates is tantamount to an enemy and going against himself.
As a businessman who is proficient in negotiations, Trump chose to force the court at this time, through tariff wars and DOGE layoffs, and even threatened to conduct an audit and personnel optimization of the Federal Reserve.Putting the U.S. economy temporarily into recession,us stocksFalling once will increase pressure on the Federal Reserve and promote interest rates. At the same time, it can also dump the blame on the previous administration, and wait until U.S. stocks rebound and recover, they can boast of it as their own political achievements.
In addition, Nomura Securities ‘analysis pointed out that the Trump administration intends to trigger a moderate recession by reducing government spending and employment, as well as imposing tariff increases, in order to achieve a structural transformation of the economy from government dependence to the private sector.
This strategy may intensify downward pressure on the economy in the short term,The long-term goal is to break the U.S. economy’s long-term dependence on government spending, promote the private sector to become the dominant force in growth, and reshape the growth model of the U.S. economy.
No matter what, in the game between Trump and the Federal Reserve, the U.S. stock market and cryptocurrency market can only suffer first.It is a danger and an opportunity. Once the Federal Reserve officially launches a large-scale interest rate cut, it will also usher in.us stocksand the boom moment for the crypto market.
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