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

Author: Jordi Visser, a veteran Wall Street analyst; Compiled by: Shaw Golden Finance

Last year, when the U.S. Department of Government Efficiency (Department of Government Efficiency, DOGE) was unveiled, it was touted as the ultimate solution to fix government bloat. However, the move quickly declared itself a failure, leaving behind only questionable so-called “savings results” and a fiscal deficit that has changed not a whit. A year later, these four letters are back today—defining the reality we face right now. Only this time, DOGE stands for Debt, Oil, Growth, and Employment. These four major dimensions form the structural predicament that the Federal Reserve is facing**, and in the process of confronting this predicament, the rise of AI Agents may very well become the most decisive core narrative in this brand-new crisis.**

The irony here is obvious. Washington once tried to package DOGE as an efficiency-boosting reform, but what the market is facing now is a far 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 dramatically. Investors had hoped the situation would quickly de-escalate, but it is now clear that no matter when the strait reopens, this will be a major issue with far-reaching impact. Global energy supply has been widely disrupted, and inflation is bound to pick up again in the coming months. Meanwhile, even before this round of oil-price blowouts, import-price pressure had already begun to show; and the demand surge brought by artificial intelligence has also significantly pushed up the prices of storage chips, putting pressure on the supply chains for personal computers, smartphones, cars, and other electronic products.

This is precisely where the danger in the current situation lies. The inflation problem may return again, but its causes are ones the Federal Reserve cannot easily solve; at the same time, the pressure of everyday living costs remains a major political issue. Rate hikes cannot reopen the Strait of Hormuz, cannot conjure up additional capacity for dynamic random-access memory (DRAM) out of thin air, and cannot suddenly lower the costs of semiconductors, storage chips, and other hardware—costs that are then transmitted to sectors such as automobiles and computers. These supply-side shocks and geopolitical shocks land on top of an economy whose growth momentum is 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 deteriorate;

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

First, let’s look at debt—because it is debt that makes this cycle fundamentally different from the oil-driven inflation of the 1970s. In 1970, U.S. federal total debt was about 35.5% of GDP; by 1979, it fell to 31.6%. And today, comparable data from the St. Louis Fed (FRED) shows that this ratio has reached 122.5%. Even before the global financial crisis, this ratio was far below current levels. This means the U.S. is facing the risk of a second wave of inflation, and its debt burden is about four times that of the late 1970s. Just that alone completely changes the pain threshold the entire financial system can endure.

This is crucial, because investors always love to use the 1970s as a reference. On the surface, the two periods do look similar: oil shocks, inflation pressure, and the central bank facing renewed tests after it believed it had achieved results. But today the U.S. balance sheet situation is completely different. In the 1970s, the Federal Reserve could fight inflation within a fiscal structure with a much lighter debt burden; today, every additional percentage point of interest-rate pressure will hit an economy, the Treasury market, and the federal budget that are more sensitive to borrowing costs. In other words, this is not a simple repeat of the 1970s, but a 1970s-style predicament within a high-leverage system.

This constraint also shows up in asset prices. What the Federal Reserve faces today is no longer a financial system like in the 1970s, with low valuations and diversified holdings. At present, the ratio of the total market capitalization of U.S. equities to GDP is already above 200%, whereas at the end of the 1970s this figure was very low: about 42% in 1975 and only 38% in 1979. The U.S. economy has become highly financialized. This means that if the Federal Reserve were to decide to suppress inflation through rate hikes, it would not only be tightening policy against the backdrop of a weakening jobs market and a heavily indebted fiscal system, but also implementing tightening in a market where the scale of assets is far larger relative to the economy than it was in the 1970s. The higher the ratio of stock market capitalization to GDP, the harder it is for the Federal Reserve to tolerate the asset deflation that is truly necessary to fight inflation.

The labor market is another key difference. When the Federal Reserve suppressed post-pandemic inflation in 2022, U.S. employment growth was strong and wage growth was accelerating, giving policymakers plenty of room to prioritize addressing inflation. Today’s employment environment is completely different. The February 2026 employment report shows that the number of nonfarm payrolls decreased by 92k, the unemployment rate rose to 4.4%, and the overall net change in employment in 2025 was barely meaningful. The unemployment rate reached a low of 3.4% in 2023. Aside from non-cyclical industries such as healthcare, employment conditions are weaker. This is absolutely not a flourishing jobs market, but a market that keeps weakening. Wage growth has continued to fall since its peak in 2023, dropping from 6.4% to 4%. This wage trajectory is fundamentally not enough to support a deliberate approach of deliberately damaging the jobs market to counter an oil shock.

Jerome Powell has nearly laid out this predicament himself. At the March 18 press conference, he said the Federal Reserve will still focus on the dual mandate, pointed out that employment growth has continued to lag, and acknowledged that rising energy prices may temporarily push inflation higher. He also reiterated the central bank’s consistent stance: As long as inflation expectations remain stable, policymakers typically choose to “ignore” energy price shocks. This phrasing is significant—it shows that the Federal Reserve has been sending a signal to the market: not all inflation is the same, and not all inflation requires the same policy response.

Other Federal Reserve officials have also been describing the same predicament. Vice Chair Philip Jefferson said that sustained high 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 trapped in a dilemma 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 Wacht has been nominated to succeed him, and President Trump continues to publicly call for immediate rate cuts. This can only intensify the predicament further. The new chair may soon face mounting political pressure all at once: pressure to ease monetary policy, pressure as the jobs market weakens, and pressure as inflation concerns rise.

So what happens next?

The Federal Reserve is unlikely to confront this round of inflation as aggressively as it did the previous one. This does not mean it will let inflation run wild; rather, 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 continues to stay weak, the Federal Reserve will be forced to tilt toward the employment goal within its mandate. It may issue hawkish remarks to maintain credibility, but the core logic indicates: as long as the economy is weak enough, the Federal Reserve is willing to at least partially ignore a surge in inflation. And high debt will further reinforce this tendency. The higher the national leverage ratio, the lower the tolerance for sustained meaningful tightening over the long term.

When a central bank, due to an excessive debt burden, can no longer bear the pain caused by real economic discipline—and can no longer tolerate it—then the market will instinctively look for an asset whose supply cannot be freely expanded, in order to deal with the next round of rescue-style liquidity flooding.

And that is precisely where Bitcoin’s value lies.

On October 31, 2008, Satoshi Nakamoto published the Bitcoin white paper, just weeks before the global financial system was on the brink of collapse. Bitcoin was born against a backdrop of large-scale bailouts, emergency rescues, and a market trust crisis in financial institutions—this was absolutely not a coincidence. The creation of Bitcoin was, in itself, a response to the existing system—in which when the structure becomes so fragile that it cannot withstand discipline constraints, governments and central banks always manage to print more money, expand guarantees, and socialize losses.

The symbolic significance of Bitcoin’s birth makes this even clearer. On January 3, 2009, the Bitcoin genesis block was mined, embedding a newspaper headline about the UK’s second round of bank bailouts. Whether you view it as a protest, a timestamp, or both, the message is unmistakable: Bitcoin was born in the shadow of a monetary order that relies on intervention and rescue.

Now shift the lens back to the present. The U.S. is not only facing inflation panic, but also the credit-cycle problem layered on top of it. Growth is more fragile, employment growth has stalled, fiscal conditions are far worse than in the 1970s, and the inflation impulse is coming from areas the Federal Reserve cannot directly repair. This precisely exposes the limits of the legal-typical fiat money management system that requires judgment calls. A central bank can use tough rhetoric, but in an economy where debt is 122% of GDP, if it must choose between protecting employment and suppressing supply-side-driven inflation, the market should reasonably conclude that the easing threshold this time will be lower than in previous cycles.

Bitcoin does not require runaway inflation for this logic to hold. It only requires a world like this: the market grows increasingly convinced that each round of anti-inflation actions will be shorter, each easing cycle will arrive earlier, and each recession brought on by high debt will force policymakers back toward easing. In the end, Bitcoin is the final product of humanity’s efforts over the past century to avoid the Great Depression and suppress the deflationary kind of innovation associated with Schumpeter. With creative destruction, we’ve ended up with a highly financialized predicament—where the stock market can’t fall, debt shackles monetary policy, and exponential technological growth erodes employment from within—and the rise of AI agents will permanently reshape the labor structure. That is why Bitcoin was created. Not because inflation is always right around the corner, but because the structure of the modern government financial system makes it difficult for hard currency to be maintained through suffering.

Most importantly, as this macroeconomic predicament arrives, alternative infrastructure happens to be maturing. Financial regulatory frameworks are already in place, and Wall Street ETFs are giving ordinary investors zero-threshold entry channels. Traditional markets are facing an increasingly severe liquidity crisis—private credit funds imposing redemption limits are proof of that—while digital alternatives are accelerating. Stablecoin trading volume is surging and reshaping the global clearing system, and asset tokenization is fundamentally upgrading traditional financial infrastructure. Add to that a rapidly expanding digital economy—AI agents will increasingly execute financial decisions autonomously, making the contrast even more stark. Bitcoin was designed precisely because we need a better system, and now the underlying infrastructure for it is finally fully ready.

The reason the DOGE plan initially rolled out by the government failed is that it only dramatically addressed symptoms on the surface, never touching the root cause. And the real D.O.G.E. problem is even more severe: debt, oil, growth, employment. This is the Federal Reserve’s next predicament. But this time, the entire system’s debt is high and cannot withstand meaningful tightening; asset bubbles are severe and cannot tolerate real clearing; the jobs market is weak and cannot support a new comprehensive anti-inflation war; political pressure is immense and the Federal Reserve can no longer make decisions independently. That is where Bitcoin’s value lies. Its original design purpose is to deal with exactly such a moment: when the market finally realizes that the country can no longer respond to every inflation shock in a credible, consistent, and bearable way. In the world of D.O.G.E., Bitcoin is no longer a speculative supporting character—it becomes the inevitable choice for the monetary system.