Are you yippy yet?

Trump believes it can work. But we can't avoid the consequences.

I don’t get all yippy about many of President Donald Trump’s end goals. I mean, some think his goal is to plunge the world into permanent darkness, as he broods over a throne built from the skulls of his enemies. But honestly, this guy from Queens just wants what he sees as a better world. But there’s a catch. If Trump has lived nearly eight decades drinking Diet Coke and eating McDonalds hamburgers and burned steaks with ketchup, then the rest of the world has to live with his burned-in ideals of an ideal culinary world. Same same with economics, diplomacy, war, and politics.

I like how Helen Rosner described this in Eater, regarding Trump’s steak preference. “Do whatever you want, but you can’t avoid the consequences.” So the consequences of eating badly cooked steak with ketchup don’t hurt anyone else, and for some reason have not yet resulted in Donald Trump’s colon getting yippy. But his economic preferences have had that effect on the rest of us.

“Yippy” is a word I like. I minored in economics at the Whittemore School of Business and Economics, University of New Hampshire, and I would have been pleased if they taught that term as a technical concept. It’s possible my brother jay, who majored in economics there, had a better education that included “yippy.” We will have to discuss it on a podcast soon. But let me define what “yippy” means, as told to Trump by Secretary of the Treasury Scott Bessent.

The stock market goes up and down, and market mechanics—a microeconomic concept—drives those prices. When the market objects to a government policy, say, massive tariffs on everything everywhere for instance, then the shorts chase the bottom until a price floor is found. Then the liquidity pours back in and profits are made. Then, at some point, value recovers based on the new pricing reality. Trump understands this, and it’s good that he does.

But the liquidity is the problem. This is a macroeconomic concept, dealing with money supply, debt, and the funding sources of that debt, namely government bonds. “Yippy” means when the structural supports for liquidity, the macroeconomic issues, that fund the stock market mechanics, a microeconomic process, begin to collapse. Or even threaten to collapse. It was not the stock market drop that got Trump to back off his tariffs. It was the bond market.

That’s what Bessent, along with Howard Lutnick, Trump’s secretary of commerce, and Kevin Hassett, director of the National Economic Council, told Trump in the Oval Office on Wednesday. Investors with money were fleeing the dollar, and the “safe haven” of U.S. Treasuries. On Wednesday, former NEC Director under Barack Obama and Harvard economist Lawrence H. Summers posted on X:

Developments in the last 24 hours suggest we may be headed for serious financial crisis wholly induced by US government tariff policy. Long-term interest rates are gapping up, even as the stock market moves sharply downwards. This highly unusual pattern suggests a generalized aversion to US assets in global financial markets. We are being treated by global financial markets like a problematic emerging market. This could set off all kinds of vicious spirals, given government debts and deficits and dependence on foreign purchasers. The only way to mitigate these risks is for the President @realDonaldTrump to back off his current path. This is the first US bout of US financial instability caused by the US government.

In other words, Trump’s worldwide tariffs, along with his trade war with China, was actually handing China the Sword of Damocles and a pair of scissors. Like light dawning over Marblehead, the president understood the problem, and did the right thing—the only thing he could do.

So the markets recovered, sort of. Market mechanics dictate that when there’s profit to be made, it will be made. Another microeconomic concept there. It’s like electricity and potential charge—voltage. The money is going to jump the gap and spark. However, the market did not recover to its original state. That in itself is not concerning, because the market is always “seeking alpha.” What’s concerning is that Trump only did a 90-day delay on the tariffs. So in 90 days, if things don’t change, we get to do this again. And next time, the macroeconomic picture might not be the same. The “vicious spirals” might occur worse than they threatened to this time.

We don’t know. It’s uncertain.

In microeconomics, uncertainty is priced in. It’s why “hedge funds” are named “hedge funds,” meaning a hedge against uncertainty. In macroeconomics, uncertainty causes capital to repel and causes currencies, and the debt they fund—in the case of fiat money like the U.S. dollar, that means the U.S. debt and half the nations of the world—to become more risky. That in turn means liquidity dries up and the only way to get it back is to print money—increase the money supply. The Fed and Treasury called it “quantitative easing” and it’s of the policies I believe was responsible for the horrendous inflation we just began to emerge from. (Obviously, it’s not the only reason, but it was a macroeconomic driver.)

I’m not really so worried about the chest-thumping contest with China right now. Neither country is going to give in, short term, and that’s fine. Chinese firms will find ways to export to other nations with more favorable tariffs, and those countries will export finished goods to America. U.S. companies will offshore more, and take those U.S. jobs with them to sell to China without the tariffs. In the long term, it will have the opposite effect of what Trump desires.

But like burned steak and Diet Coke and McDonalds hamburgers, these are things he truly believes are better for America, that Americans will make goods for Americans, to be bought by Americans. In Trump’s ideal, the U.S. is self-sufficient in everything, and exports out of our excess to the world. Of course, this is not true, but it’s what Trump believes. I don’t hold it against him for believing it.

But it does make me yippy.

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