Trump Slump

To be specific: The US will go into acute stagflation inside of 4 months, which will then transition to a depression more severe than the 2008 crisis before the end of the year. And it's already unavoidable.

We are seeing the building blocks of a disaster the likes of which we haven't seen in generations, and it's a question of when, not if it goes off the rails.

First, there's massive inflationary pressure right now:

• Prices of imported goods have started to rise sharply because companies have to be prepared to weather tariff price spikes, if they actually happen or not
• International trade is no longer reliable, because the administration flip-flops on trade agreements daily, making goods less available
• Neighboring sources of vital construction materials are being antagonised while the country needs to rebuild after massive wildfires
• Agricultural output will be extremely unreliable due to... [gestures broadly at everything] but mostly deporting farm workers, bird flu and draining the california agricultural reservoirs

Second, those same things can also trigger a recession and there's more:

• The federal government is going to stop paying for things, basically at random. 20% of GDP is now unreliable.
• Crypto-bro tech-moguls are sniping at each other, presidents are hawking meme-coins, law enforcement is in the hands of partisan imbeciles and the SEC is about to be gutted. Fraud will run rampant. Noone knows if that will juice or tank the stock market, but it scares people
• Big Tech which contribues ~10% of US GDP directly has alligned itself with the government. Around the world but mostly in Europe boycots are forming. China releasing an AI competitor saw a 3% drop in the Nasdaq, with over half a trillion dollars wiped off of the valuation of one top stock. They are fragile, and particularly reliant on international suppliers like TSMC and ASML.
• It is entirely possible that the US will default on its debt, either by whim of its new rulers, or through gross incompetence of the hacker known as 4chan BigBalls who has been put in charge of the treasury payment system. Something nearly impossible in normal circumstances could be ordered by the president, and be carried out before anyone realises what has happened. And then the dollar is over.

Unemployment will be off the charts:

• Tens of thousands of government workers are being (illegally) fired, and contractors dumped, aiming at up to a million unemployed – but that's just the start.
• Right now 30,000 are confirmed. But OPM has mandated firing 200,000 probationary employees hired just in the last year to be let go by september, and that's not even counting contractors. Federal agencies rely heavily on contract employees, so we can expect 2-3 contractors to lose their income per federal employee lost.
• That's the direct workers, but there's much more: when something like HUD is dismantled by cutting 84% of the ~8000 workers, that means it simply cannot operate. HUD administers programs like LIHTC and JPIP which support over 90.000 jobs annually, primarily small businesses.
• With USAID shut down by cutting 14.000 employees the spending stops; billions of dollars of that spending went to farms in the midwest that have lost their contracts, their livelyhoods. 80% of that 60 billion dollar USAID budget went to US firms – it was an indirect subsidy that secured hundreds of thousands of jobs.
• Then there's the hiring freezes all over – not just in the government but the affected programs like university-administered medical research.
• There's maybe two dozen people authorized to actually administer and pay out the 30 billion dollars per year that the IRA distributes, fire them and all that goes away. It's authorised, the money is there, it just doesn't get spent. That's a lot of jobs.
• This isn't even taking into account the people losing their jobs to the tariffs and further trade war insanity.

The ripple effects here are going to greatly disproportional to the first-order numbers.

Inflation is manageable. A recession is manageable. High unemployment is manageable. A failed harvest is manageable. A trade deal breaking up is manageable. A constitutional crisis is manageable. A supply chain disruption is manageable. A war is manageable. A reduction in government spending is manageable. A breakup of an alliance is manageable.

But not all at once.

If these trends all manage to hit, which they almost certainly will, we will be seeing a collapse of employment and industry combined with rising prices: classic 80's style stagflation.

The inflation will be transitory – the prices will probably only go up initially as the tariffs are threatened, then imposed and trade starts to fail. After a short while of stockpiles depleting prices might go up a little more, but it would basically reach a new normal at a higher price point. Agriculture will recover, etc. Still, it's a good year or two of suck. In the mean time that inflation will paralyse the Fed: They'll want to lower rates to counter the recession, but bond markets would rebel because of the inflation. QE would be a possible response, but would also be seen as irresponsible with 'room to cut' being available and inflation already at a high point.

With the regime being too [redacted] to respond to the self-inflicted damage things will turn nasty. With most adults in the room purged outright or sidelined, the recession will quickly transition to a debt-deflation spiral, and somewhere along the way the massive bubble in asset prices is going to pop and we'll see the 3rd Minsky moment of the past century. That's when the Greatest Depression starts, folks.

Some believe that the regime's economic 'thinkers' (Bessent, Lutnick, Miran, Navarro) have explicitly planned to crush the economy as soon as possible so they can say it was “biden’s economy” that crashed; this would let them both profit off the collapse, and allow the president to swoop in and rescue the country. But be it malice or gross incompetence... such a rescue is not possible.

Roadblocks to recovery:

• The investments needed to re-shore and re-build the manufacturing capacity to compensate for supply that is being cut off internationally will not happen because expected returns are impossible to predict, and spending is already cratering
• Even if new factories are built – which would take years – to be profitable modern manufacturing is hyper-productive; it creates lots of product but almost no jobs. A few engineers and maintenance people can do the work of hundreds of manual labourers – there is no way to absorb the massive unemployment that's coming, and few able to afford the products.
• The last time the US was in stagflation was in the 1970s, it was ended with Volcker's Hammer – Paul Volcker, the head of the Fed, raised interest rates to 20%. This caused a severe recession which wrecked the economy and allowed a reset. The current leadership would not allow that. The president is pushing hard for interest rate cuts, and a head-on collision between the Federal Reserve and the office of the President will be intensely destructive to market confidence.
• Counteracting the collapsing stock market will require re-capitalisation by the Fed of various institutions that the regime does not like, and which its main economists would actively seek to prevent – by the time a 'healthy correction' had turned into a complete slaughter, the Fed will be powerless
• Recovery from any of these would be a difficult, long-term problem, maybe a decade or more. But the DOGE wrecking-ball is preventing anyone from even trying to recover or even maintain anything. They're gutting the federal government, firing everyone with the kind of institutional knowledge needed to staunch the bleeding or turn around a decline. At best there's going to be a survival situation, where they manage to salvage some of the nation's resources under their own control.

The modern world is filled with complexity that requires the admnistrative state, and despite claims to the contary it is not being made efficient... it is being systematically destroyed.

The theory (such as it is) is that all government spending is inefficient, and 'crowds out' private enterprise. So if you get rid of the government, private enterprise will flourish. What actually happens is that aggregate demand plumets, and GDP gets wrecked. That's how when Greece cut 30% of government spening, it also lost 30% of its GDP. It hasn't recovered since 2010 and the US is now doing that to itself.

If I'm right, we'll see the first major shock come in on March 7th, when the febuary unemployment numbers come in. That won't be the worst of it, because there's a lot of inertia in 'the economy'. It's like a big oil tanker, it doens't just change course on a dime. But someone decided to put a great big iceberg right in its path, and I'm betting that will bring it to a stop real fast.

Wildcards in the mix:

• An upcoming bird flu epidemic which has already jumped to cattle and cats with high mortality rate; but measles might get there first
• The FBI and CIA are being actively purged, leaving the country open to terrorist attacks
• Previously secure Federal IT has been breached creating breathtaking vulnerabilities in key system
• There is a cult of techno-feudalists who want the USA to collapse into Sovereign Crypto-bro Kingdoms, and both Musk and Thiel are part of it
• It is possible the regime is pushing for civil resistance to reach the level where they can declare martial law, which could lead to secession of Blue states and/or outright civil war

None of these are even neccesary for collapse, but they might speed up what I believe is already inevitable.

So good news everyone: there will be no Trump 3rd term, and the US won't be joining a new axis of evil... it will barely survive the coming year. This will take the world economy with it. Brace yourselves

Source: Reddit