Trump's plan

Strengthen, then devalue the dollar. Revalue gold. Issue gold-backed bonds. Let inflation run hot and interest rates low. Solidify trade advantages. But its not exactly going according to plan.

Saturday, February 16th, 2025

Dan Denning’s Article and the Accelerated Economic Reset

Dan Denning of Bonner Private Research published an insightful and provocative article titled Degenerates, delinquents, 'soaring demand,' and dollar devaluation,” this past Friday, February 14th, 2025—one that could almost be considered a Valentine’s Day gift to his readers, complete with hugs and smooches. In it, he laid out what appears to be Trump’s economic strategy for the next four years, a plan that could reshape the U.S. economy—and possibly the global financial system—on a scale not seen since the end of the Bretton Woods era.

Some of the concepts in the article were complex, so I turned to ChatGPT and ClaudeAI for help in breaking it all down. Initially, ChatGPT framed Denning’s argument as a five-phase process: first, strengthening the dollar while weakening foreign economies and renegotiating trade deals; second, devaluing the dollar while revaluing gold and issuing gold-backed bonds; third, allowing inflation to run hot while keeping borrowing costs low; fourth, cutting government spending and stabilizing trade advantages to manage debt; and finally, restructuring the financial system into a new monetary order.

At first glance, this sequence seemed logical. However, I pointed out that Trump has already begun cutting government spending—with Elon Musk overseeing deep-state budget slashes—and that tariff wars have already started with Canada and Mexico. Trump imposed tariffs on steel and aluminum, Canada retaliated, and Trump countered again. It became clear that Trump is not following the previous timeline but rather accelerating the economic reset on his own terms. In response, ChatGPT adjusted its projections, recognizing that the strong-dollar phase may have already been skipped—or significantly shortened—and that we are much further along in the reset process than previously assumed.

Under this revised outlook, Phase 1 has become Trade and Political Restructuring, in which Trump is using tariffs and budget cuts as his opening moves. The market has already responded negatively, with increased volatility and growing uncertainty. Phase 2 is Inflation and Commodities Surge, where rising import costs from tariffs will drive inflation higher, forcing the Federal Reserve to delay rate cuts initially but ultimately pivoting in response to economic pressures. Stock market instability will increase, and commodities such as oil, metals, and agricultural goods will skyrocket as investors seek inflation hedges.

If this sequence continues, Phase 3—Dollar Devaluation and Gold Revaluation—will arrive sooner than expected. The Federal Reserve will cut interest rates aggressively, weakening the U.S. dollar and setting the stage for a significant gold revaluation to help absorb national debt. This would mark the beginning of a stealth default, where the U.S. inflates its debt away while maintaining the illusion of stability. Phase 4—the final stage—will be the emergence of a new monetary system, where the global financial order shifts away from fiat-based debt structures, and the U.S. national debt is significantly reduced through a combination of inflation, devaluation, and financial restructuring.

At the core of this strategy is a convergence of factors that allow the U.S. to manage its $36 trillion debt burden without defaulting outright. Inflation will erode the real value of debt, making it easier to repay in weaker dollars. Devaluation will artificially boost GDP and tax revenue, improving the debt-to-GDP ratio without actually reducing nominal debt. Gold revaluation will increase U.S. asset reserves, allowing the government to monetize gold holdings to absorb trillions in liabilities. Meanwhile, the Federal Reserve will use yield curve control to cap interest rates, preventing borrowing costs from spiraling. A weaker dollar will also boost U.S. exports, raising tax revenues while making U.S. debt repayments cheaper in real terms. Finally, foreign creditors—particularly China and Japan, who hold large amounts of U.S. Treasuries—will be repaid in devalued dollars, effectively shifting the financial burden away from the U.S. government and onto bondholders.

The key takeaway? This is not a win-win scenario for everyone. The U.S. wins by inflating away its debt, but bondholders lose as the value of their holdings declines. The question now is whether the world will accept this accelerated transition—or whether global markets will retaliate before Trump’s plan is fully implemented.

In discussing these developments, I asked ChatGPT whether the strong-dollar phase is already off the table. Given Trump’s aggressive tariff moves and spending cuts, ChatGPT reassessed the likelihood of a strong-dollar phase and concluded that it is either being skipped entirely or will be cut short by late 2025. Historically, the U.S. dollar strengthens when global trade is stable. This, however, is the opposite scenario—tariff wars create uncertainty, reduce global dollar demand, and weaken confidence in the USD as a reserve currency. Additionally, with government spending already being slashed, there is less fiscal support for a strong-dollar policy, making devaluation the more immediate path forward.

Tariffs also increase inflation by driving import costs higher. If inflation rises too fast, the Federal Reserve will be forced to cut rates sooner than expected, which would prevent the dollar from strengthening further. In other words, once inflation starts eroding the dollar’s purchasing power, the justification for a strong-dollar phase evaporates.

Given these developments, we may already be at the cusp of Phase 2—Inflation and Asset Repricing, with Phase 3—Dollar Devaluation and Gold Revaluation—soon to follow. Whether this transition unfolds smoothly or turns into an economic crisis depends entirely on how the world reacts to Trump’s and Musk’s aggressive acceleration of this timeline. If global markets adjust quickly, the U.S. may successfully maneuver through this economic restructuring. If not, we could face a severe financial crisis before the plan is fully executed.

One thing is clear: the world will have the final say on whether this works—or whether the ill timing of it all leads to economic turmoil.

Sincerely,
Lucas Kandia

P.S. Both ChatGPT and ClaudAI assisted me in understanding Dan’s article and crafting the final post.