Zinger Key Points
- Musk responded to a 'DOGE Dividend' tweet before Trump floats the idea.
- Can redistributing wealth directly to public increase inflation?
- Get two weeks of free access to pro-level trading tools, including news alerts, scanners, and real-time market insights.
As President Donald Trump floated the idea of using part of his cost-cutting efforts to reward the taxpayers, this economist argues that all the savings from the Department Of Government Efficiency (DOGE) must be dedicated to reducing the deficit, debt reduction, and inflation control.
What Happened: At a Saudi-backed investment summit in Miami, Trump floated a plan to distribute 20% of potential DOGE savings to Americans and use another 20% to reduce the national debt, citing “incredible numbers.”
Reacting to this Craig Shapiro, a macro strategist at the Bear Traps Report said, “All savings should go to reduce deficits and the debt and to control inflation. Full stop”
Shapiro warned that the proposal could undermine efforts to curb inflation and lower borrowing costs. “In case it’s not obvious,” he said, “this is NOT a good idea if you are trying to control inflation and bring down overall borrowing costs by driving down term premiums which bring down 10 yr yields.”
According to Keynesian economics, developed by John Maynard Keynes, implementing both expansionary fiscal policy (like increased spending) and contractionary monetary policy (like higher interest rates) can still lead to inflation. This occurs because the fiscal stimulus boosts demand, which can outpace the dampening effect of tighter monetary policy, resulting in inflationary pressures.
According to the CME Group's FedWatch tool, there is an 85.5% chance that the Federal Reserve will ease the interest rates in its December meeting. The chances for an ease is below 80% for all the FOMC meetings before December.
Why It Matters: Replying to an X post that was describing a case for “DOGE Dividend” by the CEO of Azoria, James Fishback, Elon Musk had said, “will check with the President.’
On the same day after this exchange between the two on the social media platform, Trump suggested the idea of giving away 20% of DOGE savings to “American citizens”.
In the detailed pitch, shared by Fishback he argued that the “DOGE Dividend,” won’t be inflationary.
He argued that dividends would differ from deficit-financed COVID stimulus checks and would be funded solely by DOGE-driven savings. He added that it targets tax-paying households, who are more likely to save, invest, or pay down debt rather than spend.
According to Fishback, taxpayers will show a strong propensity to save unexpected income, making the dividend non-inflationary, and potentially deflationary through debt reduction.
Price Action: The SPDR S&P 500 ETF Trust SPY and Invesco QQQ Trust ETF QQQ, which track the S&P 500 index and Nasdaq 100 index, respectively, rose on Wednesday. SPY advanced 0.24% to $612.93, and QQQ was up 0.028% to $539.52, according to Benzinga Pro data.
Read Next:
Photo courtesy: Shutterstock
© 2025 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.
