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

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

Last year, when the U.S. Department of Government Efficiency (Department of Government Efficiency, DOGE) was rolled out, it was touted as the ultimate solution to the problem of government bloat. However, the initiative soon declared itself a failure, leaving behind only the dubious so-called “savings results” and a fiscal deficit that remained entirely unchanged. One year later, these four letters are back again, defining the reality we face today. This time, though, DOGE stands for Debt, Oil, Growth, and Employment. These four dimensions form the Fed’s structural predicament**—and in the process of confronting this situation, the rise of AI Agents is very likely to make Bitcoin the most decisive core narrative in this new crisis.**

The irony here is obvious. Washington once tried to package DOGE as an efficiency-boosting reform, but what the market faces now is a far larger—and far harder-to-fix—problem. As Iran-related conflicts disrupt energy shipments through the Strait of Hormuz, oil prices have surged sharply. Investors originally hoped the situation would calm down 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 has been widely disrupted, and inflation will inevitably rise again in the coming months. Meanwhile, even before this round of oil-price spike, import-price pressures had already begun to show; and the demand surge brought by artificial intelligence has further driven up the price of storage chips, putting pressure on supply chains for personal computers, smartphones, cars, and other electronic products.

This is exactly where the danger of the current situation lies. Inflation may return, but its root causes are things the Fed can’t easily fix; at the same time, the strain of living costs on everyday people remains a major political issue. Raising rates cannot reopen the Strait of Hormuz, cannot magically increase DRAM (dynamic random-access memory) capacity, and cannot suddenly reduce the costs of semiconductors, storage chips, and other hardware—those costs then flow into areas like cars and computers. These supply-side and geopolitical shocks arrive on top of an economy whose growth momentum was already weakening.

And that is precisely what gives the real D.O.G.E. analytical framework its meaning.

• 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 Fed may soon have to tilt toward the employment goal in its dual mandate.

First, let’s look at debt—it is debt that makes this cycle’s inflation driven by oil in the 1970s completely different. In 1970, the U.S. total federal debt was about 35.5% of GDP, dropping to 31.6% in 1979. Today, comparable data from the St. Louis Fed (FRED) show 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 the possibility of a second wave of inflation, and its debt burden is about four times what it was at the end of the 1970s. Just that fact alone completely changes the pain threshold the entire financial system can withstand.

This point is crucial, because investors always like to draw parallels to the 1970s. On the surface, the two do look similar: an oil shock, inflationary pressure, and the central bank facing renewed tests after it believes it has achieved results. But today the U.S. balance sheet situation is entirely different. In the 1970s, the Fed could fight inflation under a much lighter debt burden in the fiscal structure; today, every additional percentage point of rate pressure will hit more directly an economy, the Treasury market, and the federal budget that are more sensitive to borrowing costs. In other words, this is not a simple replay of the 1970s, but the 1970s-style predicament inside a highly leveraged system.

This constraint also shows up in asset prices. The Fed faces today is not the kind of financial system from the 1970s with cheap valuations and dispersed holdings. Now the ratio of the U.S. stock market’s total market capitalization to GDP is above 200%, while near the end of the 1970s that number was extremely low: around 42% in 1975, and only 38% in 1979. The U.S. economy has become highly financialized. That means that if the Fed were to decide to suppress inflation through rate hikes, it wouldn’t only be tightening policy in the backdrop of a weakening jobs market and a fiscally overburdened system—it would also be implementing tightening in a market where the asset base is far larger relative to the size of the economy than it was in the 1970s. The higher the stock market capitalization-to-GDP ratio, the less able the Fed is to tolerate real asset deflation that would actually be needed to fight inflation.

The labor market is another key difference. In 2022, when the Fed suppressed post-pandemic inflation, U.S. employment growth was strong and wage growth surged, giving policymakers ample room to prioritize addressing inflation. Today’s employment conditions are completely different. The February 2026 jobs report shows nonfarm payrolls fell by 92k, unemployment rose to 4.4%, and the overall net change in employment in 2025 was barely noticeable. Unemployment hit a bottom of 3.4% in 2023. Beyond noncyclical industries like healthcare, the labor picture is weaker. This is absolutely not a flourishing jobs market—it’s a market that keeps weakening. Wage growth has continued to fall since its 2023 peak, dropping from 6.4% to 4%. This kind of wage trend is simply not enough to support the idea of deliberately damaging the jobs market as a way to deal with an oil shock.

Jerome Powell has nearly spelled out this predicament. At the March 18 press conference, he said the Fed would still focus on the dual mandate, pointing out that employment growth has remained sluggish and acknowledging that rising energy prices may push up inflation in the short term. He also reiterated the central bank’s long-standing position: As long as inflation expectations remain stable, policymakers typically choose to “ignore” energy-price shocks. The meaning of this statement is significant: it shows that the Fed has been signaling to the market that not all inflation is of the same nature, and not all inflation requires the same policy response.

Other Fed officials have also been laying out the same predicament. Vice Chair Philip Jefferson said sustained high energy prices could both worsen inflation and suppress spending, making the Fed’s dual mandate even more difficult. Reuters commented that the Fed is trapped in a dilemma of weak employment and high inflation. And all of this is happening amid a leadership transition: Powell’s chair term ends on May 15, 2026, Kevin Wacht has been nominated to take over, and President Trump continues to openly call for immediate rate cuts. That can only intensify the predicament further. The new chair may soon face—at the same time—public political pressure from a weakening jobs market, rising inflation pressure, and demands for easier monetary policy.

So what happens next?

The Fed is unlikely to fight this round of inflation as aggressively as it did last time. This doesn’t mean it will allow inflation to run wild. Rather, it will distinguish between inflation driven by domestic demand excess and inflation caused by oil, war, tariffs, and hardware bottlenecks. If the unemployment rate rises and hiring remains persistently weak, the Fed will be forced to tilt toward the employment goal in its mandate. It may issue hawkish remarks to maintain credibility, but the core logic is clear: as long as the economy is weak enough, the Fed is willing to at least partially ignore a spike in inflation. Higher debt will further reinforce this tendency. The higher the country’s leverage ratio, the lower its tolerance for truly tightening monetary conditions over the long term.

When a central bank becomes unable to bear the pain caused by real economic discipline due to an excessive debt burden, the market will instinctively search for an asset whose supply cannot be freely expanded—in order to address the next round of bailout-style liquidity flooding.

And that is exactly where Bitcoin’s value lies.

Satoshi Nakamoto published the Bitcoin white paper on October 31, 2008, only weeks before the global financial system was on the verge of collapse. Bitcoin was born against the backdrop of massive bailouts, emergency rescues, and a market trust crisis in financial institutions—this is no coincidence. The creation of Bitcoin is, in itself, a response to the existing system—in that system, when structures become too fragile to withstand discipline, governments and central banks can always print more money, expand guarantees, and socialize losses.

The symbolic meaning of Bitcoin’s birth makes this even clearer. On January 3, 2009, the genesis block of the Bitcoin network 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 under the shadow of a monetary order that relies on intervention and rescue.

Now let’s shift the lens back to today. The U.S. faces not only inflation panic, but also the credit-cycle problem layered on top. 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 that the Fed cannot directly repair. This is precisely the limits exposed by the fiat-currency management system that relies on choice-by-the-moment. A central bank can speak tough, but in an economy where debt-to-GDP is 122%, if it must choose between protecting employment and suppressing supply-side-driven inflation, the market should reasonably conclude that the threshold for easing this time will be lower than in previous cycles.

Bitcoin’s logic does not require恶性通胀 (malignant/“malignant” inflation) to hold. It only needs a world like this: the market becomes increasingly convinced that each anti-inflation action will be shorter, that each easing cycle will come earlier, and that every high-debt recession will force policymakers back toward easing. Ultimately, Bitcoin is the final product of a century’s worth of efforts by humanity to avoid the Great Depression and suppress Schumpeterian innovation-driven deflation. We traded creative destruction for a highly financialized predicament: the stock market can’t fall, debt constrains monetary policy, and exponential tech growth erodes employment from within; and 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 financial system makes it hard for hard currency to be maintained through pain.

Most importantly, as this macroeconomic predicament arrives, replacement infrastructure is just reaching maturity. Financial regulatory frameworks are already in place, and Wall Street ETFs have also provided ordinary investors with a zero-threshold entry channel. Traditional markets are facing an increasingly severe liquidity crisis—evidence is abundant: private credit funds have rolled out redemption limits one after another; yet digital replacement solutions are accelerating. Stablecoin trading-volume surges are reshaping the global clearing system, and asset tokenization fundamentally upgrades traditional financial infrastructure. Add to that the rapidly expanding digital economy—AI Agents will increasingly autonomously execute financial decisions, 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 this system is fully ready.

The reason the DOGE plan originally rolled out by the government failed is that it only theatrically 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, and employment. This is the Fed’s next predicament. But this time, the entire system’s debt is too high to withstand meaningful tightening; asset bubbles are too severe to tolerate real clearing; the jobs market is too weak to support a new, comprehensive anti-inflation war; and political pressure is too great for the Fed to make independent decisions again. That is where Bitcoin’s value lies. Its original design intention is to deal with a moment like this: when the market finally realizes that the country can no longer fight every inflation shock in a way that is credible, consistent, and able to endure 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.