The Trump, Fed Put Dilemma: Intervention Could Blow Deficits Out Beyond Repair

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There’s something that keeps me up at night, and it’s not this terrible market action. What really concerns me is the dangerous combination of what I call the Trump and Fed put — and how that dynamic could push us into economic territory we’re not ready for.

We’re in a moment where political pressure to support markets is intense, and the temptation to deploy populist stimulus is rising fast. Potential rebate checks and affordability programs sound helpful on paper, but they would blow out U.S. deficits so aggressively that stopping the fallout would be incredibly difficult.

We’ve seen this movie before. When broad stimulus checks rolled out in 2020 and 2021, markets initially welcomed the support. But that same wave helped push inflation to 8% or 9%.

Markets reacted violently, the Fed scrambled, and households felt the consequences. Repeating that pattern in an already stretched environment would come with even bigger risks.

The K-Shaped Economy Dilemma

We’re living in a K-shaped economy, where the top and bottom income brackets move in completely different directions. And any new intervention makes that divide even sharper.

Helping the bottom of the K with stimulus might temporarily provide relief, but it risks cratering earnings and pressuring markets at the top of the K.

That’s the uncomfortable reality. Stimulus can lift households that are struggling, but it can also hit corporate margins, weaken risk sentiment, and widen the divide between those who actually feel the economy — like in the form of grocery prices — and those who only see the markets.

And the wider that divide gets, the more politically charged and unstable the environment becomes.

We’re already seeing that tension build. Wall Street is near highs yet many people feel worse off. Those who aren’t invested are missing out entirely, and that emotional gap carries real political weight.

It’s part of why the push for aggressive interventions becomes so strong even when the long-term risks are obvious.

Why Gold Looks Like the Clear Trade

When I stack all this together — the intervention risk, soaring deficits, the K-shaped split, the political pressure — gold stands out as one of the safest trades of the next few years. If stimulus ramps up while markets correct, if deficits climb and the dollar weakens, gold becomes the natural safe haven.

Bitcoin may still benefit from deficit spending, but it’s tied to risk appetite in a way gold isn’t. That makes it less dependable in a scenario shaped by intervention, inflation pressure and fiscal deterioration.

The deeper risk isn’t the current correction. It’s the structural shift underneath it — political incentives, widening wealth gaps, and the growing likelihood of policies that feel good in the moment but cause damage later.

In that kind of environment, protecting a portfolio becomes less about timing and more about holding assets that can withstand policy mistakes.

Gold fits that role better than anything else on my screen.

I’ll see you in the markets.

Chris Pulver
Chris Pulver Trading 

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*This is for informational and educational purposes only. There is inherent risk in trading, so trade at your own risk. 

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