DOGE 2.0: Debt, Oil, Growth, Employment, and the Origins of Bitcoin

Author: Jordi Visser, veteran Wall Street analyst; Compilation: Shaw Golden Finance

Last year, when the U.S. Department of Government Efficiency (Department of Government Efficiency, DOGE) was rolled out, it was marketed as the ultimate solution to fix government bloat. However, the initiative quickly declared itself a failure, leaving behind only the questionable so-called “savings results” and a fiscal deficit that changed in nothing. Today, one year later, these four letters are back again—defining the reality we face right now. Only this time, DOGE stands for Debt, Oil, Growth, and Employment. These four pillars form the structural dilemma the Federal Reserve is facing**, and in tackling this dilemma, the rise of AI agents is very likely to become the most decisive core narrative in this new crisis.**

The irony is obvious. Washington tried to package DOGE as a reform to improve efficiency, but what the market is dealing with now is a bigger problem—and one that is far harder to repair. As Iran-related conflicts disrupt energy transport through the Strait of Hormuz, oil prices have surged significantly. Investors initially hoped the situation would ease quickly, but it is now clear that no matter when the strait reopens, this will remain a major issue with far-reaching effects. Global energy supply is broadly disrupted, and inflation is bound to rebound over the coming months. Meanwhile, even before this surge in oil prices, pressure on import prices had already emerged; and the demand spike brought by artificial intelligence has also sharply driven up the prices of storage chips, straining the supply chains for personal computers, smartphones, cars, and other electronics.

This is precisely what makes the current situation so dangerous. Inflation could return, but its causes are things the Federal Reserve cannot easily resolve. At the same time, the burden of living costs on ordinary people remains a major political issue. Raising rates cannot reopen the Strait of Hormuz, cannot magically increase dynamic random-access memory (DRAM) capacity, and cannot suddenly lower the costs of semiconductors, memory chips, and other hardware—costs that are being passed through to cars, computers, and other sectors. These supply-side and geopolitical shocks land on an economy whose growth momentum was already weakening.

And that is exactly what the real D.O.G.E analytical framework is for.

• Debt is a structural constraint;

• Oil is the source of inflation shocks;

• Growth will slow as inflation and the credit cycle worsen;

• Employment is already weak, and the Federal Reserve may soon have to lean toward the employment goal within its dual mandate.

First, let’s look at debt—it is debt that makes this cycle’s inflation driven by the oil shock dramatically different from the 1970s. In 1970, U.S. total federal debt was about 35.5% of GDP, falling to 31.6% by 1979. Today, comparable data from the Federal Reserve Bank of St. Louis (FRED) shows that this ratio has reached 122.5%. Even before the global financial crisis, this figure was far below current levels. This means the U.S. is facing a potential second wave of inflation, with a debt burden roughly four times that of the late 1970s. Just that alone fundamentally changes the pain threshold the entire financial system can endure.

This is crucial, because investors always love to draw analogies to the 1970s. On the surface, the two periods are indeed similar: oil shocks, inflation pressure, and the central bank facing another test after it believes it has achieved results. But the U.S. balance sheet situation is entirely different now. In the 1970s, the Federal Reserve could fight inflation under a fiscal structure with a much lighter debt burden. Today, every additional percentage point of interest-rate pressure hits economies and bond markets—and the federal budget—more sensitive to borrowing costs. In other words, this is not a simple replay of the 1970s; it is a 1970s-style predicament under a high-leverage system.

This constraint also shows up in asset prices. The Federal Reserve is no longer facing the kind of financial system from the 1970s with low valuations and diversified holdings. Today, the ratio of the total market capitalization of U.S. stocks to GDP has exceeded 200%, while at the end of the 1970s that number was very low: about 42% in 1975 and only 38% in 1979. The U.S. economy has become highly financialized. That means that if the Federal Reserve were to decide to suppress inflation by tightening rates, it would not only be tightening policy in a context of weakening employment and high-debt fiscal burdens, but also tightening within a market whose asset size is far larger relative to economic scale than in the 1970s. The higher the stock market’s market-cap-to-GDP ratio, the harder it is for the Federal Reserve to tolerate real asset deflation that would be necessary to truly counter inflation.

The labor market is another key difference. In 2022, when the Federal Reserve suppressed inflation after the pandemic, the U.S. had strong job growth and rising wage growth, giving policymakers ample room to prioritize fighting inflation. Today’s employment environment is completely different. The February 2026 jobs report shows nonfarm payroll employment decreased by 92,000, the unemployment rate rose to 4.4%, and the net change in total employment in 2025 was almost negligible. The unemployment rate bottomed out at 3.4% in 2023. Outside of non-cyclical industries such as healthcare, employment conditions are even weaker. This is not a prosperous job market—it is a market that keeps weakening. Wage growth has continued to decline since its 2023 peak, falling from 6.4% to 4%. Such wage dynamics are fundamentally insufficient to support the approach of deliberately damaging employment markets in order to respond to an oil shock.

Jerome Powell has practically spelled out this predicament. At a press conference on March 18, he said the Federal Reserve will continue to focus on its dual mandate, pointing out that employment growth has remained sluggish and acknowledging that rising energy prices may push inflation higher in the short term. He also reiterated the central bank’s consistent stance: As long as inflation expectations remain stable, policymakers typically choose to “ignore” energy price shocks. That statement is significant because it shows the Federal Reserve is signaling the market: not all inflation is the same, and not all inflation requires the same policy response.

Other Federal Reserve officials have been describing the same predicament. Vice Chair Philip Jefferson said that sustained increases in energy prices could simultaneously worsen inflation and suppress spending, making the Fed’s dual mandate even more challenging. Reuters commented that the Federal Reserve is stuck in a bind of weak employment and high inflation. And all of this coincides with a leadership transition: Powell’s term as chair ends on May 15, 2026, Kevin Waech is nominated to take over, and President Trump continues to publicly call for immediate rate cuts. That can only intensify the predicament. The new chair may soon face public political pressure for easier monetary policy, alongside weakening job markets and rising inflation pressures.

So what happens next?

The Federal Reserve is unlikely to be as tough as it was in the prior round in fighting this round’s inflation. This doesn’t mean it will allow inflation to run wild, but it will distinguish between inflation caused by excess domestic demand and inflation caused by oil, war, tariffs, and hardware bottlenecks. If the unemployment rate rises and hiring remains persistently weak, the Federal Reserve will be forced to tilt toward the employment goal in its mandate. It may issue hawkish remarks to maintain credibility, but the core logic suggests: As long as the economy is weak enough, the Federal Reserve is willing to ignore at least part of the spike in inflation. High debt will further reinforce this tendency. The higher the national leverage ratio, the lower the tolerance for meaningful long-term tightening.

When a central bank becomes unable to bear the pain caused by real economic discipline because the debt burden is too heavy, markets will instinctively look for an asset whose supply cannot be expanded at will, to address the next round of rescue-style liquidity flooding.

And that is exactly where Bitcoin’s value lies.

On October 31, 2008, Satoshi Nakamoto published the Bitcoin whitepaper, just weeks before the global financial system was on the verge of collapse. Bitcoin was born in the context of large-scale bailouts, emergency rescues, and a market trust crisis in financial institutions—this is absolutely not a coincidence. The birth of Bitcoin is a response to the existing system—in which when the structure becomes fragile enough that it can’t withstand discipline, governments and central banks can always print more money, expand guarantees, and socialize losses.

The symbolic meaning of Bitcoin’s birth tells the story even more clearly. On January 3, 2009, the Bitcoin genesis block was mined, embedding a newspaper headline about the United Kingdom’s second round of bank rescues. Whether you view it as protest, a timestamp, or both, the message is clear and unambiguous: Bitcoin was born in the shadow of a monetary order that depends on intervention and rescue.

Now let’s shift our perspective back to today. The U.S. faces not only inflation panic, but also the credit-cycle problem layered on top of it. Growth is more fragile, job growth has stalled, the fiscal situation is far worse than in the 1970s, and the inflation thrust is coming from areas the Federal Reserve cannot directly fix. This is precisely what exposes the limits of the fiat money management system that relies on making tactical choices. The central bank can speak tough, but in an economy where debt as a share of GDP is 122%, if it must choose between safeguarding employment and suppressing supply-side-driven inflation, the market should reasonably conclude that the threshold for this round’s easing will be lower than in prior cycles.

This logic of Bitcoin doesn’t require runaway, malicious inflation to be valid. It only needs a world like this: markets increasingly believe that each anti-inflation action will be shorter, each easing cycle will arrive sooner, and each downturn with high debt will force policymakers back toward easing. Ultimately, Bitcoin is the final product of humanity’s effort over the past century to avoid a Great Depression and curb the deflationary, Schumpeterian innovation it represents. We got high financialization in return for creative destruction—where the stock market can’t fall, debt constrains monetary policy, and exponential technological growth erodes employment from within, while the rise of AI agents will permanently change the structure of the workforce. That is why Bitcoin was created. Not because inflation is always right around the corner, but because the structure of the modern government-finance system makes it difficult for hard money to be maintained through pain.

Most importantly, at the moment this macroeconomic predicament arrives, alternative infrastructure is just maturing. Financial regulatory frameworks are already in place, and Wall Street’s ETFs have also provided ordinary investors with a zero-entry-cost channel. Traditional markets are facing an increasingly serious liquidity crisis—private credit funds rolling out redemption restrictions is proof enough—while digital alternatives are accelerating. Stablecoin trading volume surge is reshaping the global settlement system, and asset tokenization is fundamentally upgrading traditional financial infrastructure. Add rapid expansion in the digital economy—AI agents will increasingly autonomously execute financial decisions—making the contrast even sharper. Bitcoin was designed precisely because we need a better system, and now, for the first time, the underlying infrastructure for this system is fully in place.

The reason the government’s initially proposed DOGE plan failed is that it only theatrically addressed symptoms on the surface, never touching the root cause. And the truly serious D.O.G.E problem is more severe: debt, oil, growth, employment. This is the Federal Reserve’s next predicament. But this time, the entire system has debt levels that cannot withstand meaningful tightening; asset bubbles are so severe they cannot tolerate real clearing; the employment market is too weak to sustain a new comprehensive anti-inflation war; and political pressure is too high for the Federal Reserve to make independent decisions anymore. That is where Bitcoin’s value lies. Its original design purpose is to deal with precisely this moment: when the market finally realizes the country can no longer fight every inflation shock in a way that is credible, consistent, and capable of enduring pain. In the world of D.O.G.E., Bitcoin is no longer a speculative side character—it becomes the inevitable choice for the monetary system.