TRUMP ADMINISTRATION’S MONEY PRINTING AND THE FINANCIAL WEAPONIZATION OF TECH COMPANIES
The Trump administration is expected to continue monetary expansion to prevent a decline in real income ahead of the midterm elections. This approach is likely to evolve beyond traditional commercial banking, leading to the “financial weaponization of tech companies” by positioning IT firms as financial actors. This is an unhealthy strategy that inflates asset bubbles and increases debt levels.1. The Trump Administration’s Liquidity Strategy and Structural Changes in the Financial System
The Trump administration is continuing to inject liquidity in order to prevent a decline in real income ahead of the midterm elections. This strategy is expanding beyond commercial banks and is evolving into the “financial weaponization of tech companies,” where IT firms are utilized as financial entities. This approach contributes to asset bubbles and rising debt, making it structurally unsustainable.
1.1. Real Income Decline Amid Inflation and Government Response
Divergence Between Inflation Indicators and Consumer Perception
Although the March PPI came in lower than expected, easing market concerns, this was largely due to declining demand from manufacturers and goods distributors despite rising energy prices.
A 3% inflation rate may appear manageable, but over the past 4–5 years, consumers have effectively had little disposable income, resulting in significantly higher perceived inflation.
Consumers are already fatigued, and even a 2% inflation rate can impose a substantial burden, especially for large expenditures.
Background and Objectives of the Trump Administration’s Monetary Expansion
Due to geopolitical conflicts and external pressures, the administration has effectively created its own economic trap. To prevent a decline in real income, it will continue monetary expansion.
The United States already operates with a tightly integrated structure between commercial banks and policy institutions, allowing coordinated action when needed.
Recently, through the ESLR policy in April, there have been efforts to lower capital requirements, making it easier for banks to expand lending and invest in Treasury bonds. This signals regulatory easing to allow banks to deploy capital without constraint.
As recession risks emerged, commercial banks were effectively encouraged to lend aggressively, resulting in a surge of approximately $2.9 trillion in domestic lending.
This reflects an effort to sustain consumption by injecting liquidity to offset declining real income.
Fiscal Pressure and the Inevitability of Bond Issuance
Monetary expansion is critical not only to prevent real income decline but also to stabilize the Treasury market and secure fiscal capacity.
For fiscal year 2025, defense spending reached $1.3 trillion, exceeding the previous year by $300 billion. At the same time, although 51% of tax revenue comes from personal income tax, its share is expected to decline due to TCJA tax cuts.
As a result, increased bond issuance is inevitable, given higher government spending and reduced tax revenue.
With consumption at risk due to declining real income, liquidity must be provided directly to individuals, while bond issuance becomes necessary due to insufficient fiscal revenue—placing both the government and consumers in a position where liquidity is essential.
1.2. Changing Role of Commercial Banks and the Financial Weaponization of Tech Companies
Transformation of Commercial Banks into Government-Linked Financial Entities
The government is increasingly relying on commercial banks to stabilize the bond market, indicating their transformation into quasi-policy or industrial banks.
While the Federal Reserve’s holdings of U.S. Treasuries are declining, commercial banks’ holdings have grown to levels approaching those of the Fed.
Given the excess spending in 2025 and projected expenditures for 2026, temporary budget measures and debt ceiling renegotiations are likely to be required in the second half of the year.
Expansion of Monetary Policy and Emergence of Tech Firms as Financial Actors
To account for midterm election pressures, monetary expansion will likely intensify, with increased spending on unemployment benefits and Medicare to sustain consumer purchasing power, while deficits are supplemented through credit expansion.
In the past, President Trump has pushed for lower interest rates to support unemployed individuals, reflecting a pattern of liquidity-driven policy support.
However, continued monetary expansion is an unsound approach that inflates asset bubbles and increases debt. If oil prices average $90 per barrel, the administration may respond by injecting additional liquidity proportional to inflation in order to sustain consumption.
Major tech firms (M7) are expected to see significant growth, and within the next 2–3 years or even over a decade, IT companies may surpass commercial banks in terms of cash flow generation.
By granting banking licenses to tech firms and encouraging them to purchase U.S. Treasuries, the government may utilize them as new financial actors—marking the progression of “financial weaponization of tech companies.”
1.3. Global Implications and Individual Investment Strategy
Countries outside the United States face limitations in implementing similar levels of monetary expansion. As seen during the subprime crisis, the U.S. tends to rebound after crises, while other countries experience downturns.
In this cycle of asymmetric recovery, individuals must adopt a global investment perspective, with a strong emphasis on U.S. markets, in order to preserve and grow their wealth.
