The Current State and Future of the U.S. Economy: Overcoming the Deep State and Trump's Shift Toward "Inward Economics"

The U.S. economy has maintained growth but now faces significant challenges stemming from the Federal Reserve's interest rate hikes, which have led to a sharp increase in national debt servicing costs and the expansion of fiscal deficits. Additionally, the Deep State—a term representing entrenched bureaucratic systems, corporate interests, and military-industrial complex—has obstructed effective policy implementation. If Donald Trump regains the presidency in 2025, a shift toward "inward economics" (strengthening domestic economic circulation) and a return to low-interest policies could be anticipated, alongside structural reforms to streamline policy execution. Below is an in-depth examination of these dynamics.

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Impact of Interest Rate Hikes on Economic Growth

The Reality of Economic Growth and Rate Hikes

Post-pandemic, the Federal Reserve (Fed) aggressively raised interest rates to curb inflation. However, this policy has produced mixed results:

Temporary Inflation Suppression: 

While inflation rates moderated, the root causes—supply chain constraints and resource price surges—remain unresolved.

Negative Side Effects:

Higher interest rates have led to a slowdown in corporate investments and a stagnation of the housing market.

Ballooning National Debt and Fiscal Deficits

The rate hikes have exacerbated America's fiscal pressures. Specifically:

Rising Debt Servicing Costs: 

As interest rates climb, the costs of servicing the U.S. national debt, which exceeded $33 trillion in 2023, have skyrocketed.

Increased Fiscal Deficits:

Refinancing national debt at higher interest rates has further expanded fiscal deficits, making sustainable fiscal management increasingly difficult.

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The Deep State's Role in Policy Stagnation

The term Deep State refers to entrenched bureaucratic systems, corporate powerhouses, and the military-industrial complex that exert significant influence over U.S. policy. This has resulted in:

Preservation of Inefficient Systems:

Reform efforts are often obstructed to protect vested interests.

Policy Inflexibility:

Discussions on curbing fiscal deficits or eliminating excessive expenditures have largely stagnated.

During his previous term, Trump sought to "drain the swamp" and reduce the Deep State's influence. While he achieved partial success, entrenched opposition limited progress. If Trump returns to power, a renewed push for structural and administrative reform will likely be central to his economic agenda.

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Trump's Economic Vision: "Inward Economics" and Low-Interest Policies

Shifting Toward Inward Economics

Trump's economic vision aligns with the "America First" philosophy, prioritizing domestic economic circulation and reduced dependence on external factors. This could include:

1. Return to Low-Interest Policies

Lower interest rates to reduce national debt servicing costs and stimulate corporate investment.

Increase domestic dollar circulation to revitalize economic activity.

2. Repatriation of Manufacturing

Encourage corporations to shift production back to the U.S. to create jobs and strengthen domestic supply chains.

Promote domestic investments to foster growth from within.

3. Structural and Institutional Reform

Overhaul bureaucratic inefficiencies and dismantle vested interests to enable flexible and effective policy execution.

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The Road to Rebuilding the U.S. Economy

If Trump resumes office, his policies could aim to address America's economic imbalances by:

Implementing Low-Interest Policies:

Reducing debt costs and promoting business investments.

Strengthening Domestic Demand:

Rebuilding manufacturing and focusing on domestic consumption to drive sustainable growth.

Pursuing Structural Reforms: 

Removing the Deep State's influence and enabling a more agile and responsive economic policy framework.

These measures, if executed effectively, could strike a balance between fiscal responsibility and economic growth, creating a more sustainable and resilient economy.

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Summary

The U.S. successfully achieved temporary inflation suppression, but interest rate hikes have worsened national debt servicing costs and expanded fiscal deficits.

The Deep State, comprising entrenched bureaucracies and corporate interests, continues to obstruct essential structural reforms and policy flexibility.

If Trump returns to power, a shift toward low-interest policies and inward economics—strengthening domestic economic circulation and manufacturing—can be expected.

Structural reforms will be key to eliminating inefficiencies and ensuring that effective policies can be implemented swiftly.

The future of the U.S. economy hinges on bold reforms and flexible policy execution. Overcoming entrenched interests and fostering domestic growth will determine whether America can achieve fiscal stability and economic resilience in the coming years.