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

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

Last year, when the U.S. Department of Government Efficiency (Department of Government Efficiency, DOGE) was introduced, it was touted as the ultimate solution to fix government bloat. However, the move quickly proved to be a failure, leaving behind only questionable so-called “savings results” and a fiscal deficit that changed nothing. A year later, today these four letters are back—defining our current reality. Only this time, DOGE stands for Debt, Oil, Growth, and Employment. These four key dimensions form the structural predicament faced by the Federal Reserve, and in the process of dealing with this predicament, the rise of intelligent agents (AI Agents) makes Bitcoin very likely the most decisive core narrative in this new crisis.

The irony here is obvious. Washington once tried to package DOGE as a government efficiency reform—but what the market faces now is a far larger, and far harder to repair, problem. As Iran-related conflicts disrupt energy transportation through the Strait of Hormuz, oil prices have surged dramatically. Investors had 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 impact. Global energy supply is broadly disrupted, and inflation will inevitably rise again in the coming months. At the same time, even before this round of oil price surge, import price pressure had already appeared; and demand spikes driven by artificial intelligence have also pushed up prices for storage chips significantly, putting pressure on the supply chains for personal computers, smartphones, cars, and other electronics.

This is where the danger lies in the current situation. Inflation may return, but its causes are ones the Federal Reserve can’t easily address. Meanwhile, the pressure on the public’s cost of living remains a major political issue. Raising rates cannot reopen the Strait of Hormuz, cannot magically increase DRAM (dynamic random-access memory) production capacity, and cannot suddenly lower the costs of semiconductors, storage chips, and other hardware—costs that are being passed through to sectors like automobiles and computers. These supply-side and geopolitical shocks are landing on an economy whose growth momentum was already weakening.

And that is precisely the significance of the real D.O.G.E analytical framework.

• Debt is a structural constraint;

• Oil is a 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 tilt toward its employment goal in its dual mandate.

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

This point is crucial because investors always like to draw analogies to the 1970s. On the surface, the two do look similar: an oil shock, inflation pressure, and the central bank facing another test after believing it has achieved results. But today the U.S. balance sheet is fundamentally different. In the 1970s, the Federal Reserve could fight inflation within a fiscal structure where the debt burden was far lighter; today, every additional percentage point of interest-rate pressure hits an economy, a Treasury market, and a federal budget that are more sensitive to borrowing costs. In other words, this isn’t a simple replay of the 1970s—it’s a 1970s-style predicament in a high-leverage system.

This constraint also shows up in asset prices. The Federal Reserve today is no longer dealing with a financial system from the 1970s that had cheap valuations and widely dispersed holdings. The current ratio of total U.S. stock market capitalization to GDP is already above 200%, while the figure was very low at the end of the 1970s: around 42% in 1975 and just 38% in 1979. The U.S. economy has become highly financialized. This means that if the Federal Reserve were determined to suppress inflation through rate hikes, it wouldn’t just be tightening policy against the backdrop of a weakening labor market and a heavily indebted fiscal system—it would be tightening in a market where the asset base is much larger relative to economic size than it was in the 1970s. The higher the stock market capitalization-to-GDP ratio, the harder it is for the Federal Reserve to tolerate the kind of asset deflation needed to truly 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 surged, giving policymakers ample room to prioritize tackling inflation. Now the employment environment is completely different. The February 2026 employment report shows nonfarm payrolls fell by 92,000, the unemployment rate rose to 4.4%, and the net overall change in employment in 2025 was barely noticeable. The unemployment rate bottomed in 2023 at 3.4%. Apart from non-cyclical industries such as healthcare, employment conditions are even weaker. This is absolutely not a robust job market; it’s a market that keeps weakening. Wage growth has been declining since its 2023 peak, dropping from 6.4% to 4%. This wage trend is simply not enough to support the approach of deliberately damaging the job market in order to respond to an oil shock.

Jerome Powell has essentially laid out this predicament. In the March 18 press conference, he said the Federal Reserve will still focus on its dual mandate, pointed out that employment growth has continued to be sluggish, and acknowledged that higher energy prices may boost inflation in the short term. He also reiterated the central bank’s long-standing stance: as long as inflation expectations remain stable, policymakers typically choose to “ignore” energy price shocks. This statement is significant; it shows that the Federal Reserve is 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 persistent increases in energy prices may simultaneously worsen inflation and suppress spending, making the Federal Reserve’s dual mandate even more challenging. Reuters commented that the Federal Reserve is stuck in a bind of weak employment and high inflation. And it comes at a time of leadership transition: Powell’s chair term ends on May 15, 2026, and Kevin Woush has been nominated to succeed him, while President Trump continues to publicly call for immediate rate cuts. This can only make the predicament worse. The new chair may soon face intense political pressure to support monetary easing—while also dealing with a weakening job market and rising inflation pressure.

So what happens next?

The Federal Reserve is unlikely to fight this round of inflation as aggressively as it did in the last one. This doesn’t mean it will let inflation run wild; rather, it will distinguish between inflation caused by domestic demand overheating 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 its employment goal in 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 ignore at least partly the surge in inflation. And high debt will further reinforce this tendency. The higher the country’s leverage ratio, the less tolerance there is for genuine and long-term tightening.

When a central bank can’t bear the pain caused by real economic discipline anymore due to an excessive debt burden, the market will instinctively look for an asset whose supply cannot be expanded freely—something to deal with the next round of rescue-style liquidity injections.

And that is precisely what gives Bitcoin its value.

Satoshi Nakamoto published the Bitcoin white paper on October 31, 2008, when there were only a few weeks left before the global financial system teetered on collapse. Bitcoin was born against the backdrop of large-scale bailouts, emergency rescues, and a crisis of trust in financial institutions—this is absolutely not a coincidence. Bitcoin’s creation was, by its nature, a response to the existing system—in which when the structure becomes fragile and can’t withstand discipline, governments and central banks always find a way to print more money, expand guarantees, and socialize losses.

The symbolic meaning of Bitcoin’s birth makes this even clearer. On January 3, 2009, the Bitcoin genesis block was mined, and embedded in it was a newspaper headline about the United Kingdom’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 let’s shift the perspective back to the present. The United States faces not only inflation panic, but also—on top of that—the problem of the credit cycle. Growth is more fragile, employment growth has stalled, the fiscal situation is far worse than in the 1970s, and the inflation impulse is coming from areas the Federal Reserve cannot directly fix. This exposes the limits of the fiat money management system that relies on tactical choice. A central bank can be tough in its rhetoric, but in an economy where debt is 122% of GDP, if it must choose between safeguarding employment and suppressing supply-side driven inflation, the market should reasonably conclude: the threshold for this round of easing will be lower than in previous cycles.

Bitcoin doesn’t need runaway inflation for this logic to hold. It only needs a world like this: markets increasingly believe that each anti-inflation response will be shorter, each easing cycle will arrive sooner, and each recession driven by high leverage will force policymakers back toward easing. At bottom, Bitcoin is the final product of humanity’s efforts over the past century to avoid the Great Depression and suppress the deflationary, Schumpeter-style innovation that comes with it. With creative destruction, we’ve ended up in a highly financialized predicament—stock prices can’t fall, debt binds monetary policy, and exponential technological growth erodes employment from within; and the rise of intelligent agents will permanently reshape the labor structure. This is why Bitcoin was created. Not because inflation is always right around the corner, but because the structure of modern government finance makes it difficult for hard money to be maintained through pain.

Most importantly, at the moment this macroeconomic predicament arrives, the alternative infrastructure is just maturing. Financial regulatory frameworks are already in place, and Wall Street ETFs have provided ordinary investors with a zero-entry barrier route. Traditional markets are facing an increasingly severe liquidity crisis—private credit funds starting redemption limitation measures is proof enough; meanwhile, digital alternatives are accelerating. Steadycoin transaction volumes surging is reshaping the global settlement system, and asset tokenization fundamentally upgrading traditional financial infrastructure. Add to that the rapidly expanding digital economy—intelligent agents will increasingly execute financial decisions autonomously—and the contrast becomes especially stark. Bitcoin was designed because we need a better system, and now, for the first time, the underlying infrastructure for that system is fully ready.

The original DOGE plan the government introduced failed because it only theatrically addressed symptoms on the surface, never touching the root of the problem. And the real D.O.G.E. problem is even more severe: debt, oil, growth, and employment. This is the Federal Reserve’s next predicament. But this time, the whole system’s high debt cannot withstand meaningful tightening; asset bubbles are serious and cannot tolerate true clearing; the labor market is weak and can’t support a new, comprehensive anti-inflation war; and political pressure is enormous, meaning the Federal Reserve can no longer make independent decisions. That is Bitcoin’s value. Its original design purpose is to deal with a moment like this: when the market finally realizes that the state can no longer counter every inflation shock in a credible, consistent, and pain-tolerant way. 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.