Interview: Macro/Geopolitical Regime Change Under Trump 2.0 on "For The Record" with Maggie Lake/The Market House.
I am pleased to rejoin Maggie in the debut episode of "For The Record" on her new "The Market House" Substack. We discuss the potential for Macro & Geopolitical Regime Change under Trump 2.0.
I am pleased to rejoin Maggie in the debut episode of "For The Record" on her new “The Market House” Substack. We discuss the potential for Macro & Geopolitical Regime Change under Trump 2.0.
Although a lot has happened since we recorded on 9/3/25, our big picture discussion involves longer-term Macro/Geopolitical ramifications of the Trump 2.0 Playbook.
As always, I include a detailed Show Notes thread, which includes backup as well as additional information not covered in the interview. Please enjoy.
Show Notes
The Administration of Regime Change
Do not underestimate the ability of Trump 2.0 to herald Regime Change in both the Macro and Geopolitical setups.
Let’s set the stage first.
With respect to Macro Regime Change, we’ve been on an untenable Fiscal Trajectory, and I wrote a piece in March to detail the “Method to the Madness” that I saw in the Trump 2.0 Playbook:
A couple months later, as real-world evidence began to trickle in on the efficacy of the Trump 2.0 Playbook, I wrote this update which graded the Administration’s various Policy Initiatives:
With respect to Geopolitical Regime Change, “beware the Peace Black Swans” of Geopolitical Safe Havens like Oil and Gold.
I recall the Trump Rug-Pull in Oil from Q4’18, which I wrote about at length here:
I view Trump 2.0 as a necessary “high-vol” catalyst out of an untenable “low-vol” death spiral:
Gold notably did not begin its parabolic ascent until after Russia invaded Ukraine and its UST reserves were seized — not even with CPI over 9% in 2021:
DO NOT UNDERESTIMATE THE ABILITY FOR TRUMP 2.0 TO UPSET THE STATUS QUO IN BOTH MACRO AND GEOPOLITICAL REGIMES.
“Trump Derangement Syndrome” (TDS) seems worse this time around with reflexive naysaying of all of Trump’s policies despite objectively good policy outcomes for America, in my opinion.
Victor Davis Hanson puts it well in this piece:
Trump 2.0 Playbook is Net Deflationary
I recall my own interview with Maggie back in February, where I first postulated that the Trump 2.0 Playbook would be NET DEFLATIONARY:
The Holy Grail of DISINFLATIONARY GROWTH (like we had in the mid-90’s) is possible when the Trump 2.0 DEFLATIONARY PLAYBOOK nullifies the pre-existing INFLATIONARY BACKDROP.
Reverse Marshall Plan
In my opinion, perhaps the biggest element of Macro Regime Change comes from Trump’s Economic Tradecraft replacing traditional Multilateral Trade Treaties with Bespoke Bilateral Trade Deals that bundle Tariffs with Foreign Investment back into the US — what I coined the “Reverse Marshall Plan.”
The Reverse Marshall Plan is the most significant attempt at undoing the Vodka Red Bull Economy we have ever seen in this country.
Reverse Marshall Plan + Peace Dividend = MAJOR MACRO REGIME CHANGE
This Reverse Marshall Plan is already beginning to manifest in Relative Global Sovereign Yield Divergence, with US Yields compressing and European Yields simultaneously expanding:
Truss vs. Trump
This Liz Truss interview is worth listening to.
Having the right intentions is not enough, because without the leverage of the US Consumer Market and without the support of her government, Truss (unlike Trump) was unable to address the UK’s own attempt at undoing its Vodka Red Bull Economy:
The recent Shanghai Cooperation Organization (SCO) meeting between China, Russia, and India is really just a “Scramble For Scraps” — against because no one has a Consumer Market that comes close to the US Consumer Market, which accounts for 35% of Global Consumption and 25% of Global GDP.
The Problem With Supply Inelastic Reserve Assets
On the recent headlines about Gold rivaling USTs as Central Bank Reserve Assets, remember that the Sword of Inelastic Supply Cuts BOTH ways:
Here is an in-depth piece I wrote a while back discussing the difficulty for Central Banks that have grown up in a Fiat world to switch back to Supply Inelastic Reserve Assets like Gold:
FX: Talking De-Dollarization (again)
I boldly predict that this discussion will last another 50 years — just like the last 50 years!
Supply Inelastic Mediums of Exchange aren’t great — why don’t we arbitrarily denominate assets in Birkin Bags?
People make the FX Strength vs. FX Adoption Conflation all the time, when the two have little to do with one another:
This excerpt was taken from my West Point Paper from 2023 which delves deeply into the sources of Strength and Adoption for the USD:
Faux Globalization
We are not living in a true world of Globalization based on Comparative Advantage:
The Brave New World is based on AUTARKY.
It’s just a matter of time before the Rest of the World (RoW) also erects Trade Barriers against China:
Peace Through Strength
Peace Through Strength will require countries to take up their own Defense Spending.
Europe taking on the yoke of its own Defense Red Bull is just one component of the total Fiscal Red Bull Redirection under the Trump 2.0 Playbook:
Disinflationary Growth Is The Holy Grail of Macro Regime Change
I am optimistic that the Macro Regime Change under the Reverse Marshall Plan + AI Productivity-Driven DISINFLATIONARY GROWTH will be LOWER DEBT/GDP:
Unwinding the Vodka Red Bull Economy
If we get Disinflationary Growth + a Peace Dividend, TWO OF THE BIGGEST LINE ITEMS OF THE US BUDGET GO DOWN:
Defense Spending
Interest Expense
Peace Black Swans
Peace Through Strength + Reverse Marshall Plan may force the EU to buy Defense from the US, so US Defense Stocks may do well even with a Peace Dividend.
Peace would also benefit the economies of the sanctioned countries like Russia and Iran.
The Big Kahuna of Peace Black Swans in the Middle East could be from the Saudis joining the Abraham Accords.
For a healthy discussion of Middle East politics and a counterpoint to my sanguine view, listen to KAOS THEORY 10 with Kim Ghattas:
Isolating vs. Appeasing China
I don’t buy any of the “Trump caving to China” takes. I believe the Trump 2.0 Grand Strategy is to do the opposite and isolate China.
Trump’s actions thus far on closing Transshipment Loopholes alone is evidence of the Grand Strategy around isolating China.
Finally, Trump’s recent pivot against India is also about achieving solidarity in isolating China and Russia.
