News Breakdown: When the System Cracks

By Alexis Trifon

Two years ago, I stood in front of buildings designed to last for centuries.

I had come to Washington, D.C., at a time when the country already felt uncertain. I walked past the Capitol and along the Mall, thinking about how much our society depends on institutions as beacons of hope and progress. At the time, it felt like a personal insight. Now, it feels like a national dilemma.

Institutions are only as strong as their ability to adapt. And with Trump’s return to the presidency, that’s the test we’re watching unfold in real time: not whether America’s systems can hold—but whether they can evolve.

We’re living in the gap between what our systems were built for and what the moment demands. People want security. They still want to believe in the promise of capitalism—that if you work hard, you can get ahead, and that markets will reward you. But that confidence has been easier to shake than we’d like to admit.

We often talk about democracy as if it exists solely in voting booths or government halls. But most people experience it through our economy: whether their paycheck covers rent, whether their savings mean anything, or whether they feel like the system rewards their effort. Capitalism and democracy are incredibly interconnected, and instability in one can threaten both. More recently, trade and tariffs have reemerged not just as economic levers but as political ones.

Traditional tools like taxation, monetary policy, and public investment are meant to smooth volatility and allocate resources. But lately, government involvement has not offered people stability in the markets.

During the Trump administration tariffs, have been symbolic—signaling strength, nationalism, and control. But this comes with a cost. Since the tariffs were first imposed, over $5 trillion has been wiped from the markets. Some volatility is normal; we live in cycles. But economic risk turns into political risk when people start to question whether the economic system still serves them. And that’s what we’re seeing now: an imbalance being amplified by policy decisions that appear more reactive than strategic.

In macroeconomics, a favorable balance of trade suggests strength. But when trade policy drives inflation, triggers retaliation abroad, or hurts your own industries, that balance slips. Power becomes precarious. The very tools meant to stabilize the economy—tariffs, interest rates, and subsidies—can destabilize the whole system.

And that’s the paradox today: government might speak more loudly, but it’s not always holding the stronger hand.

Milton Friedman, famous economist, once warned about this. He believed in the power of markets and the limits on government—that leaders should set the rules, not play the game. It's a warning on unchecked intervention. For Friedman, discipline was key: only act when necessary, and with clarity about why.

If he were analyzing today’s markets and politics—tariffs, stimulus, government intervention—he might argue that we’re seeing an undermining of our economic system, which should promote free trade and efficiency.

If people are going to buy into this system—if they’re going to work, invest, and build—they need to believe the rules won’t change overnight. That their effort matters and that there is some sense of stability or continuity. The next phase of American capitalism won’t be defined by how much power the government can exert—but by how much trust it can earn.

A key conflict emerging in today's economic landscape, as I see it, is the push for minimal regulation alongside heavy government involvement in markets, particularly through tariffs and the media. The goal of balancing free-market capitalism with government intervention is complicated, especially when considering the differing views among Treasury Secretary Scott Bessent, Fed Chair Jerome Powell, and President Trump. Bessent’s call for reintroducing leverage contrasts Powell’s focus on maintaining liquidity and managing debt in the face of rising interest rates. Trump’s vocal support for tariffs further complicates the situation, as these interventions add layers of uncertainty to market dynamics.

With over $6 trillion of debt maturing in the next 12 months, the government faces the challenge of refinancing at interest rates that are now nearly double what they were when the debt was initially issued. The White House has proposed extending the tenure of this debt as a way to save billions in the short term, but this solution may not be enough when considering long-term economic pressures. The volatility in the stock market, driven in part by government policy, is evident in the fluctuating 10-year bond yield and the broader debate over whether to deleverage or continue borrowing at higher rates.

There is a clear tension between Bessent, who is leveraging fiscal policy tools—including private capital markets, spending cuts, and tariff revenues—to help finance U.S. debt and suppress long-term interest rates, and policymakers like Powell, who are maintaining higher short-term rates to control inflation and ensure stable liquidity. While both seek to maintain financing opportunities for the economy, their methods and priorities differ: Bessent favors active fiscal management to lower borrowing costs, while Powell emphasizes an independent monetary policy which cautions against premature rate cuts in the face of inflationary risks.

Meanwhile, the risk of a tariff-induced recession is no longer abstract—with firms and economists now warning there's a 45–60% probability. That looming threat underscores an urgent need for collaboration to stabilize markets without tipping into overregulation or intervention.

A “soft landing” will demand real action on two fronts: first, tariff inflation, which could push prices and taxes up, hitting households and small businesses the hardest. Second, interest rates—where the Fed risks being behind the curve if tariffs persist or worsens stagflation by cutting rates too soon.

If the goal is to ensure markets function, the economy grows, and democracy delivers—we can’t afford to keep drifting. Resilience must mean tariff de-escalation, a transparent and independent Fed, and bipartisan tools to protect those most at risk. Because if we want capitalism to mean something and democracy to last, we have to treat access, opportunity, and stability as non-negotiable. Not just for some—but for everyone!