Market Discipline and Technology: Trump's Bad Temper! On April 2, 2025, I pointed out that market discipline would force Trump to back down—from a "Tax Cuts to All" (TALO) to a "Tax Cuts to All" (TACO)—and abandon high tariffs (the previously announced effective rate was 30%). Sure enough, two weeks later, the S&P 500 fell 15%, the Nasdaq fell 20%, bond yields rose 80 basis points, high-yield bond spreads widened by 150 basis points, and the dollar began a freefall. Subsequently, Trump backed down, and now the average tariff is 14%, and it's still decreasing. Now, he's attempting to take a hard line on Greenland, causing bond yields to rise (while ordinary Americans are already suffering from high mortgage rates), the dollar to depreciate (which will lead to increased inflation in the long run), and the stock market to become volatile. Why didn't the astute Bessant tell him all this beforehand, instead threatening Europeans, triggering a global bond sell-off, and pushing US Treasury yields to levels sufficient to trigger more ATI (which Milan and I criticized Yellen's aggressive bond issuance in 2024)? Bessant has doubled or even tripled his bets on ATI, expanded the scope of the policy, and even threatened to directly buy back bonds. They ridiculed Mamdani's foolish "rent freeze" proposal, but government-backed corporate purchases of $200 billion in mortgage-backed securities, ATI, freezing credit card rates at 10%, and manipulating the mortgage market—these are four times the amount of Mamdani-style price controls! That's twice the amount of state capitalism! We are becoming like China, not the other way around! Fortunately for the US, market discipline and technology… are also crucial… as is Trump's! Trump controls Congress, his party, the Supreme Court, and even social media (through EM to control Twitter), but he cannot control the markets. Just as Clinton experienced when I was in the White House (as chief economic advisor), Jim Carwell also confirmed that the "vigilante" of bonds (and markets) is the most powerful person in the world, even more powerful than the president!