Trump’s AI Depression Economy as MAGA Implodes
- CUBNSC
- Oct 12
- 13 min read
By Javar Juarez| CUBNSC | October 12, 2025 | Sunday Paper Special
The illusion of prosperity in America has become the defining hallmark of Trump's Economy.
At first glance, the headlines look dazzling: corporate profits are booming, Wall Street indices are at record highs, and media narratives tout “economic strength.” But dig a little deeper — and the picture fractures. Behind the glitz, millions of working Americans are being squeezed: wages are barely keeping pace with inflation, jobs are increasingly precarious, and many families are one emergency away from collapse. This includes plenty of MAGA voters, who believed in the dream being sold.
The contradictions are stark. We now see trillion-dollar valuations for AI companies that, in reality, lose billions in day-to-day operations. Meanwhile, real (inflation-adjusted) wages stagnate even as costs for housing, healthcare, and energy climb. The federal budget, far from being directed toward infrastructure or social investment, is ballooning with military spending and tax giveaways to the rich.
At the heart of it, this isn’t an economy built for production or for creating value. It’s built on speculation — betting on future gains, not on present output. That’s precisely the same unstable logic that precipitated the Great Depression of 1929. But while the forms are different — derivatives, private credit schemes, SPACs (Special Purpose Acquisition Companies), and the speculative darling of today, artificial intelligence — the danger is the same: an overinflated market collapsing under its own weight.
In plain terms, America’s economy looks rich on paper but hollow underneath. The stock market is soaring, but that growth doesn’t come from new factories, better wages, or stronger communities — it comes from investors gambling on what they hope the future will bring. Companies are valued not for what they make, but for what they might make someday. It’s like building castles in the air — impressive until the wind shifts. The problem is that real people’s retirements, homes, and jobs are now tied to those castles. When the bets go bad, Wall Street gets rescued — and Main Street pays the price.
Trump's AI Depression Economy: Wealth on Paper, Poverty in Waiting, Boomer Crisis
Eighty percent of America’s stock market wealth is now held by people at or near retirement age, and those aged 70 and older control almost 30 percent of all equities in the country. That means older Americans are not just participants in the financial system — they are the financial system. Their retirements, health care, and quality of life are directly tethered to the same speculative machine that created the 1929 crash. The moment that machine hiccups, millions of retirees and soon-to-be retirees could find their savings vanish overnight.
This is what makes today’s economy so fragile. Boomers — who worked hard, invested faithfully, and were told the market would always rise — are more exposed than any generation before them. Their retirement accounts, IRAs, and 401(k)s live or die by the Dow Jones. Their homes, once a symbol of stability, now double as volatile investment vehicles whose value depends on interest rates, foreign capital, and immigration policy.
When Trump’s economic advisor, Stephen Miran, openly stated that mass deportations would “alleviate the housing market” by driving down rents, he was acknowledging that policy itself has become a weapon against homeowners. If demand falls because tenants are deported, home prices — the main source of middle-class wealth — will sink with them. It’s a slow-motion implosion of the American dream.
History Echoes: When Volatility Broke the Elderly
We’ve seen this before. During the Great Depression, older Americans were among the hardest hit, not because they were irresponsible, but because they were the most financially exposed. In 1933, nearly one in three seniors had lost everything. Retirement savings didn’t exist yet, Social Security wasn’t signed into law until 1935, and older workers who lost their jobs were rarely rehired. Many were forced to move in with children or rely on local charities that were themselves collapsing. The trauma of that era permanently changed how Americans thought about aging — it gave birth to Social Security, pensions, and the idea that a lifetime of work should guarantee security in old age.
But today, that security is again an illusion. Pension systems have been replaced by private accounts that rise and fall with the market, while corporate America quietly discontinues benefits. We’re standing on the edge of a modern Depression-era repeat, only this time, there’s no Roosevelt waiting in the wings — and no new social safety net being written.
Social Isolation and the Politics of Bitterness
There’s also a human cost that goes beyond balance sheets. Older generations are often portrayed today as angry, bitter, or resistant to change — locked in ideological battles with the young. But behind that hostility lies something deeper: fear. Fear of irrelevance, fear of dependence, fear of losing the wealth that was supposed to protect them in their final years. When an economy is built on speculation, it doesn’t just rob people of money — it robs them of dignity.
And if this house of cards falls, the consequences will be personal. Imagine millions of aging Americans suddenly underwater on their mortgages, watching their 401(k)s collapse, their fixed incomes buying less and less. A generation that has often turned inward — politically and emotionally — will need care, community, and compassion from the very people they’ve spent years dismissing. The question is: who will take care of them when the system they defended turns on them?
A Moral Crossroad
This isn’t just an economic crisis in waiting — it’s a test of empathy. America’s elders helped build the nation’s prosperity, but many also embraced the politics that now threaten to undo it. If the market collapses again, the youngest generations — burdened by debt and disillusionment — will have to decide whether to turn away in resentment or to extend the same care that older Americans once received through the social safety nets born of 1930s catastrophe.
Because history tells us one simple truth: when an economy built on speculation collapses, it’s always the old and the poor who fall first.
The Repo Market: When the Fed Becomes Wall Street’s Lifeline
Most Americans have never heard of the repo market, but it’s one of the most important — and most fragile — parts of the financial system. It’s like the hidden plumbing of Wall Street, where banks and big investors lend money to each other overnight using U.S. Treasury bonds as collateral. Think of it as a pawn shop for billionaires: a bank gives up a bond for a night, gets cash in exchange, and then “buys” it back the next day for a small fee.
That small, overnight loan system keeps the gears of global finance turning. When it works, no one notices. But when it seizes up — when cash dries up and lenders stop trusting each other — everything from credit cards to mortgages to car loans becomes more expensive. And that’s exactly what’s starting to happen.
What’s Happening Right Now
During the third quarter of 2025, the Federal Reserve had to jump in and inject billions of dollars into the repo market for several days straight — basically lending emergency cash to keep the system from freezing. That’s a major warning sign. It means the world’s biggest banks and trading firms were short on cash — and short on trust.
Economist Darrell Duffie, a professor at Stanford University’s Graduate School of Business, has warned that repo market stress is one of the most overlooked threats to financial stability. In his 2021 paper “Still the World’s Safe Haven? Redesigning the U.S. Treasury Market After the COVID-19 Crisis,” published by the Brookings Institution, Duffie explained that the repo market is “highly efficient in good times but vulnerable to sudden breakdowns when confidence evaporates.” In plain English: it works perfectly — until it doesn’t.
That’s exactly what we saw in 2019, when repo rates suddenly spiked from around 2% to over 10% in a single night. The Fed had to rush in with $75 billion to keep the system from locking up. Economists at the Bank for International Settlements (BIS) later described that moment as a “liquidity accident” — proof that the entire global economy now depends on the Fed to act as a 24-hour emergency lender whenever markets panic.
Why It Matters to Everyday Americans
Here’s the problem: every time the Fed steps in to “save” the financial system, the help stops at the top. The bailout money doesn’t go to families facing eviction or small businesses trying to make payroll — it goes to the institutions that created the instability in the first place.
So, when repo stress hits:
Banks get their cash flow restored.
Investors get reassured.
But regular people get higher interest rates, tighter credit, and more expensive debt.
In other words, the Fed rescues Wall Street while Main Street foots the bill.
Economist Claudio Borio of the BIS put it bluntly in a 2022 analysis: “The greater the dependence on central bank liquidity, the more the financial system amplifies rather than absorbs shocks.” When the Fed constantly props up markets, it rewards speculation instead of discipline. That means the same banks that caused the problem get stronger, while workers, renters, and small business owners get squeezed.
History Repeats: The 1920s Parallel
This pattern isn’t new. In the late 1920s, banks and investment trusts borrowed heavily to buy stocks, pushing prices higher and higher — until the money stopped flowing. When liquidity dried up, the market crashed and millions lost everything. The repo market is the modern version of that same mechanism: a delicate, over-leveraged system that feels stable right up until the moment it isn’t.
When that system cracks, it won’t just shake investors — it will hit every American whose paycheck, pension, or home loan depends on credit staying cheap and plentiful.
In Plain Terms
The repo market is Wall Street’s bloodstream.
When the Fed has to perform a transfusion, it means the patient’s in trouble.
Each time they pump in money, they’re saving the system — but only for now.
The deeper disease remains: an economy addicted to cheap money and speculation, while ordinary Americans bear the inflation, the layoffs, and the rising costs that follow.
Offshore Wealth and the Great Hoarding: How the Rich Hide Money While America Burns
While millions of Americans scramble to pay rent or dodge eviction notices, the richest people and corporations in the world are sitting on a mountain of cash — over $10 trillion, quietly tucked away in accounts you’ll never see. This isn’t conspiracy; it’s accounting.
Here’s where the money is hiding:
Roughly $4 trillion in offshore tax havens, revealed through investigations like the Panama Papers and Paradise Papers, which exposed how billionaires and global corporations secretly move profits through shell companies in the Cayman Islands, Luxembourg, and Bermuda to avoid paying U.S. taxes.
Another $3–5 trillion in corporate liquid assets — money sitting in the bank or short-term investments instead of being used to create jobs or raise wages.
Around $3.5 trillion held by U.S. banks in cash and marketable securities, according to the Federal Reserve’s Flow of Funds data.
Put together, this “idle wealth” equals nearly half of America’s entire annual GDP. It’s money that could rebuild the nation — but instead, it just sits, growing interest for those who already have more than they could ever spend.
The Hidden Architecture of Greed
The economist Gabriel Zucman at the University of California, Berkeley, one of the world’s leading experts on tax evasion, estimates that about 8% of all global household financial wealth is held in offshore tax havens — and roughly half of that belongs to the wealthiest 0.01%. His research shows that the U.S. loses over $200 billion per year in tax revenue due to these hidden funds.
Zucman and his co-authors in The Hidden Wealth of Nations (2015) explain how multinational corporations use “profit shifting” — a polite term for legal tax dodging — to route their earnings through places where taxes are almost nonexistent. For example, Apple’s European profits once flowed through Ireland, where its effective tax rate was less than 1%.
This is how the ultra-rich keep their fortunes intact while the rest of the country fights over crumbs. It’s not genius; it’s a policy choice. Congress built the loopholes. Lobbyists wrote the fine print. And every administration that promises to “drain the swamp” ends up protecting the same pipes that carry money offshore.
The Trump-Era Jackpot
Under the Tax Cuts and Jobs Act of 2017, Trump and his allies claimed to be “bringing money home” by lowering corporate tax rates and offering a one-time “repatriation holiday.” But what really happened?
Corporations did bring some money back — only to buy back their own stock, boost CEO bonuses, and inflate share prices. Worker wages barely budged. The U.S. Treasury’s own data shows that stock buybacks hit a record $1.3 trillion in the two years following the tax cuts. Meanwhile, corporate tax receipts as a share of GDP fell to their lowest level since the 1930s.
Instead of paying down national debt or funding infrastructure, the tax cuts helped balloon the federal deficit by $76 billion in a single year . That’s the Trump model: enrich the elite, then cry “fiscal responsibility” when the bills come due.
What This Means for Everyday Americans
If you ever wonder why your city can’t fix potholes, why schools are underfunded, or why hospitals close in rural areas — this is why. The money exists. It’s just not working for you.
Every dollar hidden offshore is a dollar not paying into Social Security, not rebuilding a bridge, not helping a veteran, not funding a teacher’s salary. And the kicker? When the government runs out of revenue, it borrows more — from the very same banks and corporations hoarding the cash. The rich lend the money back to the government and get paid interest on the wealth they never taxed in the first place.
That’s not a free market — that’s a feudal system wearing a suit.
The Historical Parallel: The Hoarding That Preceded Collapse
Before the Great Depression, America’s wealth was also concentrated in a few hands. In 1929, just 0.1% of the population controlled more than one-third of all wealth. As wages stagnated and the wealthy hoarded profits, consumer demand collapsed — and the entire system imploded.
Today, the top 1% control nearly 33% of all U.S. wealth (Federal Reserve, 2024). The pattern is the same: too much money at the top, too little in circulation below. When workers can’t spend and governments can’t invest, the economy becomes a hollow shell, propped up by speculation — until it breaks.
Funding Our Replacement: AI, Energy, and Exploitation
Perhaps the most perverse irony of Trump’s economic order is that we are paying for our own obsolescence. Every utility bill, every data center expansion, and every increase in energy consumption powers the AI systems designed to replace human labor.
The rapid expansion of GPU-driven computing infrastructure is energy-intensive, with global AI training consuming more electricity per model than many small nations use in a year. These costs are externalized to consumers — the same citizens facing higher power bills and stagnant wages.
It is a perfect feedback loop: rising utility rates fund energy-hungry AI; AI reduces human employment; unemployment suppresses wages; and the wealthy consolidate power.
The Federal Budget: What’s Really Inside
Despite the endless talk of “fiscal discipline” from Republicans in Congress, the federal budget tells a very different story. Under Trump, spending has ballooned — just not in ways that help ordinary Americans.
The numbers don’t lie. Funding increased for agriculture, defense, Homeland Security, transportation, the Treasury, Veterans Affairs, and even corporate health programs within HHS. But when it came to people — their education, housing, and jobs — the cuts were surgical and cruel:
$111 billion slashed from education,
$1 billion from housing, and
$8 billion from the Department of Labor.
These are not accidental cuts. They are choices. Choices that prioritize bombs over books, prisons over paychecks, and profits over people.
It’s a shell game wrapped in patriotic language. “Fiscal restraint” is a myth — a political smokescreen for a spending spree that feeds defense contractors, pharmaceutical giants, and the speculative class that lives off Wall Street’s bubbles. While politicians rail against “socialism” for helping working families, they quietly socialize corporate risk through military contracts, subsidies, and bailout-ready safety nets for the elite.
The Coming Reckoning
We are watching the birth of what can only be called an AI Depression Economy — a system inflated not by genuine innovation or productivity, but by synthetic intelligence, privatized debt, and publicly funded corporate survival.
The parallels to 1929 are impossible to ignore. Then, it was the overvaluation of stocks and real estate. Now, it’s the overvaluation of algorithms, crypto, and automation. Then, the collapse was triggered by overleveraged speculation; today, it’s fueled by trillion-dollar fantasies of artificial intelligence that can’t turn a profit.
The façade of strength — the roaring market, the flashy tech headlines, the GDP growth — hides a deeper rot: a hollowed-out economy where wealth is concentrated, labor is devalued, and public trust is evaporating.
The question is no longer if collapse comes, but who will bear its weight. The ultra-rich have their moat of liquidity, their tax shelters, and a Federal Reserve ready to rescue them at the first sign of panic. The rest of America — renters, workers, small business owners, and retirees — will be left to face the consequences of a government that funds its own failure while subsidizing its replacement: automation.
The Cure for America’s Economic Illness
The cure for America’s economic illness isn’t another app promising convenience, another slogan about “freedom,” or another tax gimmick dressed up as reform — it’s fairness. Fairness in how wealth is earned, taxed, and shared. Fairness in who gets opportunity and who carries the burden.
We don’t need a miracle; we need a new deal for a new century — one that taxes the hoarders, funds the builders, employs the willing, and replaces cruelty with cooperation at our borders. That means rewarding real work instead of speculation, investing in schools instead of stock buybacks, and treating workers and immigrants as partners in progress, not problems to be managed.
Because these steps aren’t radical — they’re rational. They’re the same kind of big-picture thinking that pulled America out of the Great Depression and built the modern middle class. The difference now is urgency. We’re no longer waiting for the storm to pass; we’re standing in it. And just as Roosevelt’s generation rebuilt a broken nation with courage and compassion, ours must do the same — not with fear or finger-pointing, but with the moral clarity to say enough is enough.
America doesn’t need another boom. It needs a rebirth — one rooted in fairness, shared responsibility, and the simple belief that prosperity only matters when everyone has a stake in it.
Works Cited:
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Borio, Claudio. “When the Financial System Fails to Absorb Shocks.” BIS Working Papers, no. 987, 2022.
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