I. The Core Logic of Trump’s Policy: De-globalization and Reindustrialization
Trump’s presidential campaign platform is not merely a vague “America First” slogan, but rather a concrete and actionable blueprint for economic reversal. His support base consists of inland workers who were left behind by manufacturing outsourcing—a group with no college degrees, minimal assets, and long marginalized by political and financial elites. Hillary Clinton once referred to them as “deplorables,” while Vice President JD Vance proudly described them and himself as “hillbillies.”
Trump’s policy goals are threefold:
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Bringing manufacturing back and creating blue-collar jobs;
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Rebuilding military industrial capacity to enhance national defense;
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Stimulating economic growth to narrow the fiscal deficit and restore real GDP growth to over 3%.
The rationale is straightforward: if the U.S. regains its industrial might, it will raise its potential growth rate and use nominal GDP growth to manage debt burdens.
II. Capital Account and the Fiscal Illusion: Who’s Paying for America?
This begins with the "capital account and the trade surplus paradox."
As shown in the chart, the U.S. financial account has been in a persistent surplus, essentially mirroring its current account deficit. In simple terms, countries like China and other export-driven economies continuously sell goods to the U.S. and earn dollars. Instead of converting these dollars back into their own currencies (which would cause currency appreciation and harm exports), they use those dollars to buy U.S. Treasury bonds and stocks. This is the mechanism of global savings recycling back into the U.S.
The result is a mirage of mutual benefit:
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Exporting countries sustain large trade surpluses;
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The U.S. can run massive deficits, maintain a strong stock market and enjoy low interest rates.
However, Trump’s plan—to reduce reliance on global supply chains and promote domestic manufacturing—directly threatens the other side of this equation: the willingness of foreign capital to continue financing U.S. debt. This poses a fundamental risk to his economic vision.
III. The Limits of the Debt Machine: Math Doesn’t Lie
According to the U.S. Treasury, total outstanding debt has surpassed $36 trillion, with an average interest rate of 3.282%. Meanwhile, the federal deficit remains about 7% of GDP annually.
Even if Trump successfully reduces the deficit to 3%, as long as the government continues to borrow, debt will keep rising and interest costs will grow exponentially.
Even under the most optimistic scenario (nominal GDP growth of 5% vs. debt growth of 3%), it only slows down the leverage ratio—it does not solve the underlying debt issue. If bond yields rise above 5%, this fragile balance will collapse.
IV. Who Will Pay? From Global Capital to Domestic Institutions
So who will buy U.S. debt if China, Japan, and Germany no longer do?
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Private investors: Unwilling due to low returns.
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Foreign central banks: Less willing due to geopolitical risks.
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Only two major buyers remain:
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The Federal Reserve: Through Quantitative Easing (QE);
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U.S. commercial banks: Through leverage—but only if SLR (Supplementary Leverage Ratio) restrictions are removed.
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In short, Trump’s fiscal agenda depends on the cooperation of the Fed and the banking system. The question is: will the Fed cooperate?
V. The Death of Monetary Independence: The Return of Fiscal Dominance
In 2024, the Fed cut rates before the election to support Biden. But after Trump’s potential victory, it may resist further rate cuts.
This raises a key issue: Will the Powell-led Fed submit to the reality of fiscal dominance?
This is not unprecedented. Back in 1979, former Fed Chair Arthur Burns warned that the “anguish of central banking” comes from deep government interference in monetary policy. Today, with massive deficits, towering debt, and inflexible spending on defense and entitlements, fiscal dominance is once again the prevailing force.
Ultimately, if financial markets cannot finance the government, the Fed will be forced to monetize debt—printing money to buy bonds. That is not a forecast, but the default trajectory of history—and the underlying truth of Trump’s economic plan.
VI. Conclusion: Can a De-financialized Web3 Provide an Exit?
Against this macro backdrop, can Web3's decentralized vision offer an escape route? It’s worth exploring.
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As traditional capital mechanisms break down and interest rates remain rigid, Web3 offers a new way to distribute capital and consensus;
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Web3’s trustless infrastructure could reduce friction in cross-border transactions and provide tools for a new financial architecture in a de-globalized world.