Mo' Money, Mo' Problems, Less Value & Higher Asset Values
By Matthew Mousa, Director Strategy & Research
It is remarkable how quickly a narrative can unravel. Eighteen months ago, the animating principle of the incoming administration was fiscal discipline. Today, here in July 2025, the only question being debated with any seriousness in the market is not if the Federal Reserve will cut interest rates, but by how much. The journey from the promise of a balanced budget to the brink of another monetary deluge is a case study in political necessity, geopolitical reality, and the awesome, unmovable power of debt. To understand where we are going, and the profound implications for capital, one must map out precisely how we got here.
Our timeline begins in the spring of 2024. Against a backdrop of stubbornly high inflation and a national debt spiraling past $34 trillion, the Trump campaign found fertile ground in a message of fiscal redemption. The promise was simple and resonant: stop the endless waste, renegotiate bad deals, and bring sanity back to Washington's balance sheet. To signal that this was more than just rhetoric, Trump made a theatrical appointment that captured the market’s imagination. Elon Musk, the embodiment of disruptive efficiency, would be tasked with heading a new Department of Government Efficiency, or DOGE. The political signal was masterful. The man who counts pennies on rocket parts would now audit the federal government. For a moment, it seemed a genuine attempt to tackle the debt problem head-on through aggressive cost-cutting.
The administration took office in January 2025, and the "DOGE" project began in earnest. Musk, never one for subtlety, initiated highly public reviews of departmental spending, and for a few weeks, the narrative held. Then came the first test of principle versus politics: the administration's inaugural budget proposal. Dubbed the “big, beautiful bill,” it contained a fundamental contradiction. While giving lip service to fiscal prudence, its core tenets were extending popular tax cuts and significantly increasing military spending. It was a stimulus bill masquerading as a budget.
This move immediately created a fiscal hole that required a politically toxic solution: raising the debt ceiling. The very act flew in the face of the austerity mandate. The administration was not cutting the credit card; it was asking for a higher limit before the first billing cycle had even ended. It was here, in the early spring of 2025, that the internal logic of the administration’s strategy became clear. The populist appeal of tax cuts and a strong military outweighed the more abstract promise of long-term fiscal health. The pivot from austerity had begun.
The growing disconnect between the administration's promises and its actions led to a public spectacle. Elon Musk, seeing the "efficiency" project being undermined by a new wave of spending, began to voice his dissent. The quiet friction escalated into a public falling-out, culminating in Musk stepping back from his advisory role in May. His departure was symbolic. The technocratic shield for the austerity promise was gone, leaving the policy shift exposed. The administration’s messaging adjusted accordingly. Talk of "cutting waste" was quietly replaced by a renewed focus on supercharging economic growth through stimulus.
Just as the new narrative was taking hold, a geopolitical crisis provided the perfect accelerant. The escalating conflict between Iran and Israel created an urgent, non-negotiable demand for increased military readiness and funding. Any lingering arguments for spending cuts were swept aside by the imperatives of national security. War, as it always does, became the ultimate justification for deficit spending.
With the fiscal path now set, the administration turned its full attention to the monetary authority. A government committed to massive deficit spending cannot tolerate high interest rates. The cost of servicing the ever-increasing debt would become unbearable. And so began the public pressure campaign on the Federal Reserve and its chairman, Jerome Powell. In a reprise of his first-term tactics, President Trump began openly questioning the Fed's competence, demanding rate cuts. He was joined by his influential economic advisor, Scott Bessent, who made the more sophisticated case that the central bank was keeping the dollar too strong, hurting American exports and industry. It was a coordinated assault on the central bank's independence, designed to force its hand.
Today, the market has received the message loud and clear. On the prediction market Polymarket, the odds of 2 interest rate cuts in 2025 have doubled since the beginning of the year. Traders understand that the Fed has been backed into a corner. Its dual mandate of price stability and maximum employment has been unofficially replaced by a third, more urgent one: ensuring the functional solvency of the U.S. Treasury.
The final scene in Congress is being played out this week. Representative Thomas Massie, a long-time fiscal hawk vocally backed by Elon Musk, continues to lead a rebellion against the massive spending bill from within the President's own party. While this defiance highlights internal dissent, a clear policy pivot is visible. The bill's passage appears likely, paving the way for what critics, including Massie, have dubbed a "ticking debt bomb" that will lead to more money printing.
For investors, the conclusion is inescapable. The political decisions of the last 18 months have created a powerful and predictable macro tailwind for specific asset classes. The fiscal trajectory requires lower rates, and lower rates require the Federal Reserve to expand its balance sheet. This means more dollars will be printed to purchase the bonds that the Treasury is issuing.
This environment provides two powerful catalysts for crypto assets. First, as interest rates fall, the opportunity cost of holding non-yielding assets like Bitcoin diminishes, making them more attractive relative to bonds. Second, and far more importantly, the deliberate policy of financing deficits through money creation is a direct debasement of the currency. As the denominator (the dollar) is devalued, investors are forced to seek refuge in assets with demonstrable scarcity. The argument for digital assets has therefore shifted from a speculative bet on technology to a fundamental hedge against currency depreciation. The great pivot from austerity has, perhaps unintentionally, laid the groundwork for the next great wave of asset inflation.
Resources:
https://www.cbsnews.com/boston/news/trump-elizabeth-warren-debt-ceiling/
https://apnews.com/article/big-beautiful-bill-trump-tax-cuts-3b525482be43fdf956366cebd84dcaac
https://polymarket.com/event/how-many-fed-rate-cuts-in-2025?/tid=1751484676485
Matthew Mousa is Director of Strategy and Research at Alpha Transform Holdings, where he drives insights at the intersection of blockchain, crypto, and AI. He’s also the host of the Alpha Liquid Podcast, spotlighting innovators and trends shaping the digital asset landscape. With a background in investment banking and portfolio valuation, Mousa brings a sharp, strategic lens to emerging technologies and market dynamics. Follow Mousa on X and LinkedIn.
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