Tariffs, DOGE, Bitcoin reserves, checking vaults, immigration gold cards, U.S. sovereign wealth funds, the Mar-a-Lago Agreement…
Since taking office on January 20 this year, the Trump administration has made a dizzying array of moves. Interestingly, in the eyes of some market participants, whether it’s the policies already implemented or those still under discussion, the ultimate goal seems to be “debt reduction.”
The most obvious explanation of “debt reduction” is to resolve debt risks—reducing the government’s debt burden and optimizing its structure to minimize default risks and fiscal pressure. Typically, debt reduction strategies include:
- Reducing fiscal expenditures
- Debt replacement
- Asset revitalization
- Debt extension or restructuring
It’s easy to see these strategies reflected in Trump’s various initiatives. In fact, we can even compare them to the “Law, Techniques, and Momentum” approach used by the Legalists of the Warring States period in China over 2,000 years ago.
- Law (Policy & Executive Orders): Tariffs (increasing fiscal revenue), DOGE spending cuts (reducing government costs).
- Techniques (Unconventional Strategies): Building Bitcoin reserves (activating assets), checking the treasury (evaluating reserves), issuing immigration “gold cards” (financial open-source strategy), creating a U.S. sovereign wealth fund (activating assets).
- Momentum (Strategic Leverage): The rumored “Mar-a-Lago Agreement”—potentially a debt swap or restructuring deal, using strong-arm tactics to intimidate markets.
Many officials and economists argue that U.S. debt has become unsustainable. As a result, investors in bonds, currency, and stocks are increasingly paying attention to Trump’s “debt reduction” goals. Some analysts, including former Lehman Brothers trader Larry McDonald, even speculate that Trump may be deliberately creating an economic recession to lower Treasury yields and ease the national debt burden.
U.S. Debt Hits $36 Trillion and Rising
Currently, U.S. government debt has reached $36 trillion, exceeding 120% of annual GDP. With government spending outpacing tax revenue and interest rates remaining high, this figure continues to climb rapidly. Last year, the U.S. budget deficit was 6% of GDP. Treasury Secretary Benson has made it clear that he hopes to cut this ratio in half.
Since taking office, Benson has emphasized the importance of U.S. Treasury yields. Unlike previous administrations that focused on the Federal Reserve’s short-term benchmark rate, Benson has prioritized the 10-year U.S. Treasury yield as a key metric for reducing borrowing costs.
From Tariffs to the Mysterious “Mar-a-Lago Agreement”
A White House National Economic Council official recently stated, “Thinking outside the box is exactly what is needed right now.” He also accused the previous Democratic administration of worsening the deficit and inflation, adding that Trump has taken quick action to restore fiscal sanity.
One of the Trump administration’s most aggressive moves has been federal spending cuts through Elon Musk’s Department of Government Efficiency (DOGE). Additionally, the administration has announced plans to raise revenue by imposing steep tariffs on imports from countries like Canada, Mexico, and China.
However, some of Trump’s more unconventional ideas have caught even more attention.
One notable proposal is the $5 million immigration “golden card” plan. On March 25, Trump announced a “gold card” visa program allowing foreign investors who invest at least $5 million in U.S. projects to fast-track residency and citizenship.
Commerce Secretary Howard Lutnick and Trump claim this plan could raise trillions of dollars to help pay off U.S. debt. The program has a built-in debt monetization feature—a 30% cashback reward must be invested in U.S. government bonds, essentially a disguised way of selling U.S. debt.
If the U.S. attracts 200,000 wealthy investors, this could generate $1 trillion in short-term financing.
Another major financial maneuver involves reassessing U.S. gold reserves. According to TD Securities, U.S. gold reserves stored in places like Fort Knox, Kentucky, are currently worth $758 billion at market prices. However, due to an outdated 1973 law that values gold at just $42.22 per ounce, these reserves are only valued at $11 billion on the Federal Reserve’s balance sheet.
If Trump adjusts these statistics, the book value of U.S. gold reserves could increase 70-fold, creating a massive new funding source for the government.
The “Mar-a-Lago Agreement”: A Global Financial Disruptor?
Perhaps the most mysterious and controversial topic circulating on Wall Street is the so-called “Mar-a-Lago Agreement.”
The “Mar-a-Lago Agreement” is an informal term for a rumored plan by the Trump administration to restructure the international economic order. Its core goal is to reassert U.S. financial dominance while reducing debt pressure through strategies like:
- Dollar devaluation
- Debt restructuring
- Trade policy adjustments
While this agreement has yet to be formally documented, discussions about it have gained widespread attention.
Some of the ideas stem from a November 2024 paper by Stephen Milan, Trump’s nominee for chairman of the White House Council of Economic Advisers. The most shocking idea involves indirectly defaulting on U.S. debt through restructuring:
One proposed method is to replace existing Treasury bonds with 100-year, non-tradable, zero-interest “Century Bonds.” If creditor nations urgently need liquidity, the Federal Reserve could temporarily lend funds against these bonds.
Can Trump Pull It Off?
Financial analyst Ed Mills believes Trump may apply his real estate experience to restructuring U.S. debt.
“Trump has spent his entire life restructuring and refinancing debt for the Trump Organization,” Mills noted.
Trump himself has bragged about avoiding bankruptcy in 1990 by renegotiating loans with banks—a testament to his deal-making skills.
From a financial market perspective, if Trump’s goal is truly to lower U.S. bond yields and reduce debt, he has already seen some success.
Since mid-January (just before Trump’s inauguration), the 10-year U.S. bond yield has dropped by 50 basis points. Additionally, the term premium, which reflects investor concerns over debt size, has also declined.
However, not everyone is optimistic.
Some analysts believe the fall in bond yields isn’t due to confidence in Trump’s policies, but rather fears of economic uncertainty.
Since Trump returned to the White House on January 20, the S&P 500 has dropped more than 4%, while the MSCI index (tracking 40+ global markets) has fallen just 1.3%.
Many economists remain skeptical about whether Trump’s debt reduction strategies will work. Some fear that forcing a debt swap on foreign governments could damage U.S. creditworthiness and disrupt global markets.
Ultimately, for Trump’s economic vision to succeed, his administration must convince investors that its debt-control measures are effective.
Otherwise, disappointment could trigger a renewed bond sell-off, rising borrowing costs, and further market instability.
As former U.S. Treasury Secretary Summers put it:
“In the long run, bond prices—like any financial asset—are determined by fundamentals. And the budget deficit is the most important fundamental of all.”
