Shocking Theory: Is Trump Deliberately Crashing the Stock Market to Slash Interest Rates?

Is the recent market turmoil just a coincidence, or is there a bigger game at play? A bold theory from Anthony Pompliano, a well-known Bitcoin commentator, suggests that former US President Donald Trump might be intentionally orchestrating a market crash to pressure the Federal Reserve into lowering interest rates. Let’s dive into this intriguing speculation and see what it could mean for the economy and the crypto world.

Is Trump Masterminding a Market Crash for Lower Interest Rates?

Pompliano’s explosive theory, shared in a recent X post, posits that Trump and his allies, particularly Secretary of the Treasury Scott Bessent, are actively “crashing asset prices” to corner Federal Reserve Chair Jerome Powell. Why? To force the Fed to cut interest rates. This move, according to Pomp, is driven by the looming need for the US to refinance trillions of dollars in debt in the coming months. Lower interest rates would significantly ease this burden.

Think of it as a high-stakes game of chicken between the White House and the Federal Reserve. Trump, vocal about his desire for lower interest rates for months, hasn’t been shy about criticizing Powell’s stance. Recall that back in January, Powell resisted calls to lower rates from the current 4.25% to 4.5% range. Pompliano argues that the current stock market volatility, partly fueled by Trump’s tariff policies, is a deliberate tactic to create a bond market environment conducive to rate cuts. The drop in the 10-year Treasury yield from nearly 4.8% in January to around 4.21% is cited as evidence that this strategy, if intentional, might be working.

How is the Stock Market Reacting?

Whether or not Pomp’s theory holds water, the reality is that the stock market is indeed experiencing significant turbulence. On March 10th alone, the S&P 500 index fund (SPY) plunged by 2.66%, while the Nasdaq-100 took an even bigger hit, falling by 3.8%. Over the past month, these key indexes have tumbled by 7.32% and 10.7% respectively. The cryptocurrency market hasn’t been spared either, with Bitcoin experiencing a sharp correction.

Here’s a quick look at the recent market performance:

The situation is undeniably tense. If the stock market slide continues, we could be heading towards a showdown – a “who blinks first” scenario between Donald Trump and Jerome Powell, as Pompliano puts it.

Trump’s Words Fuel the Speculation

While Trump hasn’t explicitly confirmed such a strategy, his public statements are adding fuel to Pompliano’s theory. In a Fox News interview just days prior, Donald Trump stated, “Nobody ever gets rich when the interest rates are high because people can’t borrow money.” This sentiment aligns perfectly with the idea that he desires lower interest rates to stimulate economic activity.

Pompliano further elaborates on the potential benefits of lower interest rates, emphasizing the positive impact on American consumers. “Give the people cheap capital and they’ll go and do things with it,” he argues, highlighting the potential for economic growth spurred by easier access to borrowing.

Will the Federal Reserve Budge on Interest Rates?

Currently, the CME FedWatch tool indicates a high probability (96%) that the Federal Reserve will maintain the target interest rate range of 4.25% to 4.50% at their upcoming March 19th meeting. However, the odds for a rate cut at the subsequent May 7th meeting are almost evenly split, suggesting growing uncertainty and potential pressure on the Fed.

Historically, the Federal Reserve is hesitant to lower interest rates when inflation remains elevated. Price stability is a core mandate for the Fed. However, a significant economic downturn, a “Trumpcession” as some analysts are calling it, could force their hand. A recessionary environment might compel the Federal Reserve to prioritize economic stimulus over inflation control, leading to the very interest rate cuts Trump seemingly desires.

What’s the Takeaway?

Pompliano’s theory, while speculative, raises important questions about the interplay between political pressure, monetary policy, and stock market performance. Whether Trump is deliberately crashing markets or not, the current economic climate is undeniably complex and volatile. Keep a close eye on upcoming Federal Reserve announcements and market movements to see how this intriguing narrative unfolds. The coming weeks could be pivotal in determining the direction of interest rates and the overall economic landscape.