Donald Trump on handling the national debt:
“This is the United States government. First of all, you never have to default because you print the money. I hate to tell you. So there’s never a default. But the point is it was reported in the New York Times incorrectly,” he said, referring to a critical Times article that ran on Friday.
And before you Democrat commenters start giggling too hard? Bernie Sanders says the same thing – and Hillary doesn’t say it, but practices it anyway.
First thing: Trump technically is correct that the government can print money to prevent default, as the Treasury Department controls the printing presses. But as a practical matter, it’d be nearly impossible to churn out enough $100 bills to make the annual debt service payment of $220 billion. That doesn’t make Trump an idiot, it highlights the idiotic policies that have led to such massive debt that the interest payment alone is comfortably larger than most national GDPs.
The Federal Reserve controls credit so it must agree to increase the money supply. But that’s precisely what Quantitative Easing was all about. Or the Fed can purchase US Government debt – as it has been doing – if that’s what’s needed to give it the money to avoid default.
Trump is right that default is not an economic problem, it’s a political ploy used by Liberals to hold the nation hostage.
And Trump’s buy-back-debt-at-a-discount scheme isn’t even new, it’s standard business practice including this very administration.
Steve Rattner. Come on, you remember Steve Rattner. He was President Obama’s Car Czar who stage-managed the GM and Chrysler bailouts, bankruptcies, dealership closings. He forced the bond-holders to settle their debts for cents-on-the-dollar (which freed up money to pay union pensions).
Everybody cheered when President Obama’s guy used that tactic to save union automaker pensions; why is nobody cheering President Trump’s idea to use the same tactic to save everybody’s pensions aka Social Security?
What difference at this point does it make? (To quote a Presidential contender.) There’s no way the debt will ever be paid off in its current form. It will have to be inflated away, or investors will be made to take a haircut, but in any case it’s funny money that will be either extracted from the public (inflation, since the requisite taxes would foment revolution) or from the investors.
All Trump is doing is telling the truth without sugar coating it as Hillary does.
Here is a nice supporting article.
http://davidstockmanscontracorner.com/trumps-right-paying-back-the-national-debt-with-discounts-is-already-public-policy/
When the actual debt is calculated–north of $100 trillion when GAAP methods are used–the question is not whether someone will be screwed in exactly the way Mr. Combover says. It is who will be screwed to what extent. I’m no fan, but he’s at least telling the truth here.