He is really, really, really wrong. Any hint of a partial default on US Tsys will obliterate financial markets worldwide. Vaporize. Detonate. Ours as bad or worse than any others.
what an idiot....
Trump early on talked about a Default and indicated he would default on external debt first.
The fact of the matter, and Trump understands this perfectly, is that if we don’t get deficit spending under control, the debt under control then at some point just paying the interest on the debt, along with health care cost, are going to eat the budget up and then we will have to Default.
We can’t continue to print money to solve the problem, QE 3 or 4 is coming and it is going to be ugly.
As long as we’re accepted as a reserve currency, Trump’s right... But if that goes away we’re not different than Haiti... or some African hellhole. Everyone would ‘print money’ if they could.
It’s like Doritos, “Spend all you want, we’ll make more.”
Quantitative easing is incremental devaluation. Trump is 100% correct.
Another problem is INTEREST RATES CANNOT BE ALLOWED TO RISE! Sound familiar? If we owe $500 billion a year in interest on the debt, and owe $600 billion for national defense, we cannot allow interest rate payments to soar past the amount we pay for other necessary government services, such as Social Security and Medicare, and defense. Just imagine rates go from 2% to 5-6 %. Interest would be our top cost of government. This artificially keeps interest rates low and stocks high, and cheats retirees out of safer returns. Eventually someone will call the bluff and there will be a run on selling bonds and the interest rates cannot be controlled by the FED. At some point we MUST raise taxes, or cut spending or fail in a spectacular flaming revolution. This is the way of Argentina for decades now. Raising taxes crushes growth and the economy, and cutting spending will result in riots and revolution as in Greece. Trump is showing his Democrat thinking by saying he can print his way out of this mess. Printing money has always been a disaster, but it works for awhile as you borrow money and pay it back with money that is worth less than what you took in. At some point, the lenders bow up and say no more. We have been printing money to buy our own debt now since QE1. China, the Middle East, Japan, the EU have slowed and almost stopped buying our debt because they now know we aren't serious about ever stopping the presses. It's always up to the workers to produce more GDP to help cut the amount debt the government makes, but at $20 trillion, with McDonalds jobs, it ain't happening.
We are playing musical chairs and they have removed 3-4 chairs, not just one, and the music is about to stop.
One more thing, we have been printing money and taking it on our own balance sheet, not for fixing bridges, buying planes and tanks, not for protecting the homeland, but for paying bureaucrats and their retirements and healthcare, paying for illegal aliens to take their place at the gubmint teat, rewarding unions for their support, and just flushing money down toilets like Solyndra and global warming.
I keep praying that Trump will hire some advisers, but it doesn't look promising. If he thinks he's smarter than the average bear, the fall will be quick and violent.
Sell all of our debt to China and then nuke them into oblivion. Problem solved.
However, money has value in part because of its relative scarcity. If governments just keep printing money it becomes worthless. Does anyone remember Germany after WW-I when baskets full of money were needed to buy bread and it was cheaper to burn bank notes for heat than use them to buy coal? Ditto for Zimbabwe where trillion dollar bank notes were printed to make it easier to buy bread.
bkmk
The one thing we cannot fix is if the world rejects the US dollar as the reserve currency of the globe.
That is what keeps us afloat.
Steps are already in place to ease the dollar out as the preferred reserve currency.
If the Saudis no longer demand dollars for oil from the world, it is pretty much over for the dollar in its present form.
A reset would be necessary.