Economists (mostly Keynesians) believe that the economic plans put forward by Donald J. Trump's economic team will lead to massive government deficits, totaling more than $14 billion over 10 years, and higher inflation, as his tariff proposals would increase the cost of nearly all imported goods and services.

Others, such as Christopher Whalen, believe that if Trump and Elon Musk make progress on the deficit by cutting wasteful spending, interest rates will collapse.

While random pondering of various economists is probably worth a cup of coffee and a brief chat, most are probably missing the larger picture.

Tariffs, if applied correctly would encourage more domestic investment, a boon to private debt issuers who would benefit from loaning out money at lower rates.

The cycle that presents itself may look something like this:

As the Fed continues to sell off the balance sheet and the Treasury increases debt issuance, it becomes difficult to see who buys all those bonds. It's not likely to be foreign central banks, as in the recent past.

There is a self-reinforcing loop that has not yet taken effect. If Treasury issues more bonds and finds there are not enough buyers, the yields will head higher. As that happens, money managers need to purchase more bonds to rebalance their sinking bond portfolios, which will provide some liquidity to bonds, but it sucks money out of equities. Very shortly after Trump is elected, likely between November 5 and whenever the two sides get over the in-fighting about who won, that cycle will proceed as stagflation tightens its grip on the U.S. economy.

Once ensconced in the White House, the Tump administration is going to propose massive cuts to various parts of the government under the auspices of Elon Musk, who Trump has personally endorsed to be the hatchet man, i.e., efficiency expert. Because so much of healthcare spending and military spending is considerable extra waste, there could be massive cuts to the Departments of Defense and Health and Human Services. Trump's solution to budget imbalances and the out-of-control deficit will eventually lead to plummeting yields, but not until higher yields manifest themselves first inciting a stock market (and real estate) crash, or at least a correction back to some level of sanity.

A Trump presidency is about clearing out the current speculative boom (financial assets) and replacing it with a productivity boom (actual production and business activity). For example, increased domestic oil production will cause oil prices to collapse with the antecedent effect of lowering prices at the pump. The extra production isn't good for oil company stock prices. Oil company stocks will generally be under pressure in a trump presidency due to lower prices and lower valuation for their proven reserve assets.