When you inflate a ballon with the funny stuff like fake money expect it to leak out or it will burst.
Yeah - this in a nutshell.
American technocrats - around 2008-2009 - figured out a way to forever avoid recessions.
In the past, recessions were a cyclical and routine thing. But Ben Bernanke and Co. (Bernanke spent much of his time at Princeton studying the Great Depression) - came up with some novel magic that makes a recession go away anytime there is a threat of one.
One tool was TARP - the Troubled Asset Relief Program. This was run by Treasury. It involved buying literal sh*t from banks - to keep them afloat. I mean sh*t like toxic mortgage related assets. The other part of TARP was Treasury simple injecting money into banks directly.
The other and much more powerful tool was QE, or Quantitative Easing. This was run by the Fed, rather than Treasury. If TARP involved "only" $700B, then QE ran into the trillions. Under QE, the Fed bought long term securities like Treasuries, mortgage-backed securities, and other stuff that helps lower interest rates and pump more money into the economy.
On top of stuff like QE and TARP - Biden and Trump did another thing to keep the gravy train running. Gov spending. COVID was of course the main excuse.
Pre-COVID, in 2019, the Federal Budget was $4.4 trillion. Last year, in 2024, the Federal Budget was $6.75 trillion. That's an increase of 54% within 5 years.
When Uncle Sam spends an extra $2.4T every year, of course everything is gonna be hunky dory - and employment, and GDP growth, and stock market performance...
So that's the more nuanced position Trump, Musk etc are getting after when they begin to talk about "necessary pain". If Musk succeeds in his goal to cut $1T from the US budget - that will almost certainly trigger a recession.
Is it worth it? Will it help maintain American productivity and competitiveness over the long run? Nobody knows. After almost twenty years of sitting on the needle of cheap money, it's very hard to imagine a world where things go back to the way they were pre-2008.
An entire generation of bankers has grown up that has never seen a recession except for in textbooks.