Today’s market environment is rife with uncertainties about the economy. Economists describe it as a “K-shaped” economy— divided prosperity with strong high-end and languishing low end consumer spending. The truth is the current monetary system was built upon continuous 2% inflation and perpetual monetary expansion. Over the years it has bankrolled wealth division by favoring those with assets who can borrow to acquire additional assets and use the tax code to avoid taxes. One result is today’s affordability problem, particularly in the prices of housing, autos, and the general cost of living. Ordinarily a stagnant housing market, expensive auto market, and reduced loss of purchasing power would create Stagflation and Recession, but like the past two administrations, the Trump administration continues deficit spending at the rate of @ $2 Trillion annually. This makes Recession improbable and provides a shield for investors.

We arrive at this conclusion despite low Consumer Confidence by examining the facts, questioning consensus assumptions, and considering the possible outcomes and risks. We expect the growth initiatives put in place by the Trump Administration’s to stimulate as surge in business investment confidence. Reduced regulation, spending cuts, direct foreign investment, and the One Big Beautiful Bill Act (OBBBA) which takes effect next month are compelling business stimuli. The OBBBA provides $125 billion for businesses and $100 billion to low- and middle-class-income tax filers, including this year’s $6,000 for social security recipients whose modified adjusted gross income is less than $175,000 or $250,000 for married couples. These initiatives together with the administration’s shift to a China-like ‘State Craft” industrial policy, are expected to accelerate discovery in Artificial Intelligence and Quantum computing by unifying resources across labs, public science, and private industry. Barring some “Black Swan” event, we expect the financial markets to continue to rise at least into the mid-term elections.

While Affordability will take time to rectify, a growing economy with lower interest rates should unfreeze the housing market in the next few years. Meanwhile, cost of living issues are being addressed on multiple fronts. Regulations for utilities and energy production have been streamlined to improve the grid and lower energy costs which impact prices on all goods and services made or transported. The US has also reached agreements with countries to make direct investments here to increase US manufacturing and create jobs. Grocery prices should also decline with tariff exemptions for Brazil & Ecuador to export bananas, coffee, meat, sea food, and tropical fruits. Grain exports to China under the one-year tariff agreement aids US farm sales. These measures and tariffs on imports of steel and aluminum benefit US industry and should amplify growth making US debt levels less concerning. Additionally, a better economy should also lift consumer sentiment.

Government and consumer debt levels are unsustainable, yet the government needs to borrow as do businesses to win the AI race. A potential Black Swan event for investors could come in the form of an unwinding of the “Carry Trade.” For 25 years Japan has kept their interest rates near zero. This lured global investors to borrow cheap Yen to invest elsewhere to make easy profit spreads. All the money printing has crushed the Yen’s value and caused a huge loss of purchasing power for Japanese citizens. Now Japan faces a “Catch 22” dilemma. If it raises interest rates to help the people and strengthen the Yen, if would force billionaire hedge funds to sell their investments to unwind their trades to cut their losses. If it doesn’t raise rates to help people, their citizens will likely turn violent due to their suffering. Eventually the continued money printing would collapse their economy. Since the US and other Western investors have leveraged their carry trade investments, unwinding them could create a domino effect of selling around the world but certainly in the US. If the markets fall, the assets backing the monetary system fall with them. Governments have no choice but to step in with Swap Lines to prevent Japan’s financial failing. Such an ‘Black Swan’ event would affect China as well, so collaboration and competition is preferable to fuming and fighting over past bad deals the US has made—moving industry and jobs to make more profits with low labor costs. Still the crucial unanswered question is how the US with higher Costs of Goods Sold can make products here and sell them elsewhere without a weak Dollar policy which would only exacerbate de-dollarization. A partial answer may be to make a Gretzky move: “Skate where the puck is going, not where it’s been.” The US could create a digital Dollar for trade on mbridge and join the BRICs countries. The US I-Dollar would only be for international trade settlement and would be backed by our gold held in Fort Knox (?) valued at approximately $1 trillion. Such a monetary policy move would mirror what the BRIC nations (Brazil, Russia, India & China) are doing—building gold vault depositories in each nation to back their trade liabilities while using a digital currency on mbridge to speed settlement. Mbridge, developed with the direct collaboration of the Bank of International Settlements (BIS) and other countries, is fast, secure, auditable, and without excessive operational and currency conversion costs, making it ideal replacement for the BIS’s SWIFT system.

Joining mbridge would not negate the current US plan to offer stable coins as a safe haven for citizens living with unstable currencies (and an outlet for Treasuries), nor would it be the demise of Bitcoin. It would simply remove the risk of holding US currency in trade. Making products here again and selling them abroad without requirements to align with dictates of US foreign policy matches China’s policy although they use a Walmart-like trade policy focused on low prices. It is a mass market strategy mathematically equivalent to assuming that Low Price = Value. Yet Value ≠ Low Price. Developed nations making high end products need a branded strategy to build on the alure of owning the best quality with innovation worth a higher price— aka Apple like.

Transforming the world monetary system takes time to reach consensus. Historically, US think tanks like the Rand Corporation work to devise foreign policy & defense strategies. A recent Rand Corporation report entitled “Stabilizing the US-China Rivalry” reassesses planned preemptive economic and military measures to contain China concluding they may not work. The Rand Corporation’s analysis calls for stabilizing the US-China rivalry through principles like accepting the legitimacy of China’s Communist Party and reestablishing communication with China regarding Taiwan, the South China Sea, and science & technology. Key findings also rethink the maritime sea routes blockade viewing them as an ineffective means of enforcement given the advent of laser satellites and hypersonic missiles, not to forget nuclear weapons capabilities now triangulated among US adversaries. While the Rand report is certainly no guarantee of long-term peace, it does at least give some assurance of time as strategists rethink the consequences of war versus accommodating competition and diversity in political security.

In conclusion, it is clear this administration’s strategy is to prioritize US innovation and generate robust growth to calm concerns about US debt levels. Doing so strengthens the Dollar’s status while curtailing the chance of a Japan-like economic outcome for the US. However, our view is the Trump administration should remember what made America the beacon for the world. It was the values of Liberty, Justice, Freedom and Property Rights for all. We pray the Rand Corporation’s call for competition not containment becomes policy. As US embarks on our 5th Industrial Revolution with AI and Quantum computing there are many known unknowns. What is likely is the geo-political transformation will be to a multi-polar world rather than a US centric one, and that can be mutually inclusive. We are closely watching to assess what potential risks and opportunities arise. For the immediate present we see growth ahead in the markets punctuated with volatility, but do not expect any 2000 or 2008 type of market corrections. Mag-7 valuations so far are supported by earnings, and we see little evidence this will not continue as Agent AI boosts productivity. Yet we are realists and know market cycles are not linear. We expect this one to follow historical patterns where too high prices eventually correct. Meantime the US Treasury’s needs to refinance a great deal of US debt this month and next year. We see patterns in Treasury auctions where they correlate with negative news media likely to assist treasury security purchases and forsee more of the same. Our expectation is for a Santa Clause rally and then roller coaster market that is upward trending through the mid-term elections.