Wall Street widely believes: Trump deliberately triggers economic recession to resolve the $36 trillion debt crisis

The Trump administration is currently implementing 'financial repression,' pushing the Intrerest Rate below the Inflation rate. This article is sourced from The Julia La Roche Show interview, compiled, translated, and written by Wall Street Insights. (Background: Moody's warns that Trump's tariffs & immigration policies may lead the US into 'stagflation' and force the Fed to raise rates.) According to former Lehman Brothers trader and Bear Traps Report founder Larry McDonald, the Trump administration is intentionally triggering an economic recession to address (alleviate) the US's $36 trillion debt problem. Larry McDonald stated in an interview released on March 3 that if the Intrerest Rate remains at the current level, the US's debt interest will reach $1.2 to $1.3 trillion next year. This is much higher than defense spending. So Trump needs to drop the Intrerest Rate, and if they can drop the Intrerest Rate by 1%, they could save nearly $400 billion in interest next year. No inflation cycle with a rate of over 6% can end without an unemployment rate reaching 5%, 6%, or even 8%. The US government cannot suppress inflation through massive fiscal spending, and the Trump team knows this. They need to trigger an economic recession to drop the Intrerest Rate and extend the debt term. Larry McDonald warns that the US is currently in a period where even in an economic recession, the Intrerest Rate will remain high, a very typical stagflation period. This is similar to the situation from 1968 to 1981 when the market was essentially flat. However, commodities, hard assets, and companies with underground assets are the things that can withstand inflation. Key points from the interview: Currently, the top 10% of US consumers account for 60% of consumption, as the bottom 0% of consumers are heavily affected. Due to the top 10% accounting for 60% of consumption, it is nearly impossible to drop the Intrerest Rate and inflation without lowering asset prices. The Trump team is actually trying to raise the Intrerest Rate and lower asset prices. In terms of US debt interest, if the Intrerest Rate remains at the current level, next year's debt interest will reach $1.2 to $1.3 trillion, exceeding defense spending by a large margin. So Trump needs to drop the Intrerest Rate urgently, even in a slightly panicked state. If they can drop the Intrerest Rate by 1%, they could save nearly $400 billion in interest next year. The US Treasury has not yet begun to extend the debt term, converting short-term bonds into 10 or 20-year bonds, because they want to drop the Intrerest Rate first. They need to drop the Intrerest Rate by 100 basis points so they can extend the debt term and save approximately $400 billion in interest. No inflation cycle with a rate of over 6% can end without an unemployment rate reaching 5%, 6%, or even 8%. You cannot suppress inflation through massive fiscal spending, and the Trump team knows this. They need to trigger an economic recession to drop the Intrerest Rate and extend the debt term. After Trump's election, the US bond market has priced in many rise expectations, making the yield curve steep. The market is currently trying to digest (recession expectations), transitioning from a steep yield curve to a sharp flattening of the yield curve. When Bill Ackman comes out saying the US economy may only rise by 1%, it indicates he is shorting, essentially betting on an economic recession. The US stock market is also sending recession signals, with consumer staples stocks (which are recession-resistant) outperforming non-essential consumer stocks in the past 3-4 weeks. Copper is currently experiencing 'capitulation-style dumping.' Whenever there is an economic slowdown, copper prices tend to plummet. However, the current situation is that copper is facing serious supply issues, and demand from data centers and post-war reconstruction could lead to a significant supply-demand gap. Investing in copper stocks may be very cost-effective at the moment. Post-war reconstruction in Russia and Ukraine will lead to inflation, and global supply chain restructuring will also push up inflation. Therefore, the US is currently in a period where even in an economic recession, the Intrerest Rate will remain high, a very typical stagflation period. This is similar to the situation from 1968 to 1981 when the market was essentially flat. However, commodities, hard assets, and companies with underground assets are the things that can withstand inflation. The true reason for the strength of the US economy and the American exceptionalism is the US's 7% fiscal deficit spending, while other developed countries have only 3%. In the past two weeks, the information released by Musk and Trump is essentially about cutting $1 trillion in spending. However, to avoid triggering a severe economic recession, they are trying to gradually accomplish this over 5 to 10 years. Unfortunately, when US fiscal spending is at such high levels and Musk rapidly reverses this trend, it will trigger a very vicious cyclical change, which could be very unfavorable for the market. From an investment portfolio perspective, referencing the high Intrerest Rate and high inflation period from 1968 to 1981, the 60/40 stock-bond strategy may no longer be suitable, and investors may need a higher proportion of commodity allocation. The Trump administration is currently implementing 'financial repression,' pushing the Intrerest Rate below the Inflation rate. He will negotiate with US allies to allow them to purchase more US bonds at lower Intrerest Rates. They will also require banking regulatory agencies to force US banks to buy more US Treasury bonds. This is the only way to escape the $36 to $37 trillion debt dilemma, as there are no other options apart from debt defaults. The full interview is as follows: Host: Larry McDonald, founder of 'Bear Market Traps Report' and author of your latest work 'Listening to the Voices of the Market: Fluctuation Reshapes Risks and Investment Opportunities.' Of course, you have been a long-time friend of our show, and it's been too long since we last had a conversation. Since the publication of your new book last year, we haven't had the chance to invite you. But, oh my, Larry, I think now is the perfect time. It's great to see you. Considering everything happening in the current economy and market, I can't think of a more suitable guest than you. It's great to have you, really awesome. Larry McDonald: Thank you for inviting me. It's been an incredible year. Some of the views in the book are starting to show, such as persistent high inflation, the shift towards value investing and hard assets, and gold outperforming the Nasdaq index. It's reassuring to see these views validated. Host: Yes, the timing is just right. Like I mentioned earlier, I can't think of a more suitable guest than you. Since it's been a while since we last invited you, and our show has developed significantly since then. Some viewers may be hearing you speak for the first time, and I'm really looking forward to them getting to know you. But let's take a step back, look at the big picture, and talk about the overall framework. What's the current situation we are in? Perhaps you can discuss your outlook. Larry, you know, you can take your time to elaborate, lay the groundwork for us, and then we can delve into some of the topics and clues that have emerged...