The “Never Tell Me The Odds” Trump 2.0 Administration is attempting to put the country on a new trajectory. It’s a fraught path through an asteroid field, but the alternative could be much worse.
MAR 22, 2025
Recall this scene from one of my favorite movies, “The Empire Strikes Back”:
Han Solo and his friends are being chased by Star Destroyers. In a desperate attempt to evade them, Han attempts the unthinkable and intentionally flies into an asteroid field to ditch his pursuers. C-3PO, the perennial worrywart, reminds Han of the steep odds of success. Han famously quips: “Never tell me the odds!”
Michael Kao’s recent piece on “Navigating the Asteroid Field with Trump 2.0” makes for a fascinating read. He cleverly compares Trump 2.0 to Han Solo steering the US through an asteroid field. It’s a bold metaphor that resonates—and quite frankly, he highlights real structural risks:
🔹 Fiscal deficits during full employment
🔹 Dangerous short-term debt reliance
🔹 Critical supply chain vulnerabilities
🔹 A geopolitical architecture no longer fit for purpose
Michael Kao’s essay is a comprehensive and metaphor-rich critique of current U.S. fiscal and geopolitical policies, with a cautiously optimistic case for the Trump 2.0 administration’s bold, risk-tolerant approach. Here’s a detailed breakdown of his arguments:
1. The “Asteroid Field” Analogy
• Kao compares the current economic and geopolitical turbulence to an asteroid field navigated by Han Solo in Star Wars. He argues Trump 2.0 embodies this same “Never Tell Me the Odds” bravado: bold, unconventional, risky—but potentially effective.
• Trump’s approach is a mix of:
• Cowboy capitalism
• Corporate restructuring tactics
• Aggressive posturing
• Crisis triage mentality
2. Why the Current Trajectory Is Unsustainable
Kao criticizes the status quo with a list of accumulating pressures:
a. Fiscal Mismanagement
• 7% deficit during full employment and peacetime is historically abnormal and reckless.
• Over-reliance on short-term Treasury bills is dangerous. Former Secretary Yellen is blamed for not locking in long-term debt when rates were near zero.
b. Geopolitical Overreach
• The U.S. funds multiple global conflicts while being underprepared for its main threat: China.
• Security frameworks are outdated, still focused on Cold War and War on Terror models.
c. Domestic Problems
• Border crisis strains the entitlement system and national security.
• Sticky inflation is caused by:
• Badly timed fiscal stimulus
• Labor and housing mismatches
• Global supply chain disruptions
d. Strategic Dependencies
• Overreliance on China for critical materials, Taiwan for semiconductors, and Middle East crude.
• Lack of true energy independence and industrial resilience.
3. The “Vodka Red Bull Economy”
• Current U.S. economic policy is likened to mixing stimulants (fiscal excess) with depressants (monetary tightening):
• Fiscal policy drives demand and inflation.
• Monetary policy must then raise rates, increasing interest expense, worsening the deficit.
• Kao argues that this contradictory setup is dangerous and needs to be detoxed—carefully and deliberately.
4. The Alternative Path (Trump 2.0 Playbook)
Key Goals:
• 3% deficit target: Not balanced, but leaves room for true crises.
• Shift to long-term debt: Reduces short-term funding risks.
• Lower interest rates: Not forced by the Fed, but via structural reforms.
• Private over public capital: Shift productivity back to the private sector.
• Re-shore key industries: Regain control over critical manufacturing like rare earths and chips.
• Reform defense alliances: Reduce U.S. burden and modernize strategy for China’s “unrestricted warfare.”
• Sovereign Wealth Fund (SWF): Use national assets (land, resources) as collateral to offset debt.
Despite the chaos, Kao remains bullish on U.S. fundamentals.
5. America’s Strategic Advantages
• Largest consumer market in the world
• Deepest capital markets
• Global reserve currency (USD)
• Innovation and equity dominance
• Military strength
• Geographic and resource endowments
6. Key Risks / “Asteroids”
Kao is not blindly optimistic. He identifies major risks to the Trump 2.0 playbook:
• Tariff retaliation: But believes U.S. consumer leverage can offset blowback.
• Dollar devaluation: Could re-import inflation, especially if U.S. defense spending shifts abroad.
• Long-term debt demand: Could be solved with:
• Bank deregulation
• Deflationary policy mix
• Restoring belief in low rates
7. Sequencing Matters
Kao emphasizes that policy sequencing is critical:
• Cutting inefficiencies + deregulation = deflationary
• Tax cuts and tariffs = inflationary
• Immigration and labor shifts = unclear net impact
If done in the right order, the overall mix can be net deflationary and supportive of lower rates without Fed action.
8. Final Metaphor: “She’s Got It Where It Counts”
Like the Millennium Falcon, the U.S. may look chaotic and clunky but is still highly capable.
Trump 2.0 is a high-risk, high-reward maneuver—but Kao believes it’s a calculated gamble rooted in the understanding that doing nothing is far worse.
Summary Takeaway
Kao is not endorsing Trump per se—but sees his economic and strategic playbook as a necessary disruption. If sequenced correctly, it may be the only way to steer the U.S. away from fiscal collapse and geopolitical irrelevance. It’s a gamble—but possibly the only one worth taking.
Let me know if you want a one-pager or visual breakdown of this—it’s dense but fascinating.
Kao is not endorsing Trump per se—but sees his economic and strategic playbook as a necessary disruption. If sequenced correctly, it may be the only way to steer the U.S. away from fiscal collapse and geopolitical irrelevance. It’s a gamble—but possibly the only one worth taking.
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