Peter1469
05-07-2016, 08:12 AM
Why Trump's U.S. Debt 'Default' Isn’t as Insane as It Sounds (http://www.thefiscaltimes.com/Columns/2016/05/06/Why-Trumps-US-Debt-Default-Isn-t-Idiotic-It-Sounds)
I have been advocating this for years. Selective "defaults" to lower our debt burden. Our economy is strong enough to recover the negative effects of hurting selective creditors. Heck, quantitative easing is selective default- by devaluing the dollar.
On Thursday, the presumptive GOP presidential nominee told CNBC that his solution to dealing with the $19 trillion-plus national debt — and the risk of a budget blowout should interest rates rise and balloon the interest expense owed by taxpayers — involves a form of default such as repurchasing existing bondsat a discount (http://www.cnbc.com/2016/05/06/donald-trumps-idea-to-cut-national-debt-get-creditors-to-accept-less.html). "I am the king of debt," he said, alluding to his corporate bankruptcies and use of leverage to build his real estate empire. "I love debt. I love playing with it."
His many detractors, freshly outraged over his "taco bowl" tweet (http://www.theverge.com/2016/5/5/11603760/donald-trump-taco-bowl-tweet), let loose again, calling Trump’s idea “insane” (http://www.businessinsider.com/donald-trump-treasury-haircut-idea-insane-2016-5) and warning that it would tank the economy or set off an “unprecedented financial crisis.” (http://www.cnbc.com/2016/05/06/donald-trump-on-us-debt.html) The general consensus: Trump is an idiot who doesn't know much about the way the financial system works.
The irony is: His critics are the ones who don't understand.
Trump's comments get at the heart of the one big problem in the global economy: The ongoing accumulation of government debt that's hamstringing growth and economic vitality. Just look at Japan's multi-decade debt-deflation malaise. It's time to at least consider how we could hit the reset button.
The solution of those on the left, to paraphrase: Borrow and spend even more, funding government largesse in the hopes we can grow out of our debt hole. The politically unlikely solution of moderates such as the Committee for a Responsible Federal Budget (https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&sqi=2&ved=0ahUKEwjy_Kj-mMbMAhUK8WMKHcG7CtkQFggcMAA&url=http%3A%2F%2Fcrfb.org%2F&usg=AFQjCNFCo6ydLju5S3_D473QABbvbj-lTQ&sig2=Wqjsts4aqf4D6Cb5JZmy5g&bvm=bv.121421273,d.cGc): Cut spending, including entitlement programs like Medicare and Social Security, while raising taxes.
Read more at the link.
I have been advocating this for years. Selective "defaults" to lower our debt burden. Our economy is strong enough to recover the negative effects of hurting selective creditors. Heck, quantitative easing is selective default- by devaluing the dollar.
On Thursday, the presumptive GOP presidential nominee told CNBC that his solution to dealing with the $19 trillion-plus national debt — and the risk of a budget blowout should interest rates rise and balloon the interest expense owed by taxpayers — involves a form of default such as repurchasing existing bondsat a discount (http://www.cnbc.com/2016/05/06/donald-trumps-idea-to-cut-national-debt-get-creditors-to-accept-less.html). "I am the king of debt," he said, alluding to his corporate bankruptcies and use of leverage to build his real estate empire. "I love debt. I love playing with it."
His many detractors, freshly outraged over his "taco bowl" tweet (http://www.theverge.com/2016/5/5/11603760/donald-trump-taco-bowl-tweet), let loose again, calling Trump’s idea “insane” (http://www.businessinsider.com/donald-trump-treasury-haircut-idea-insane-2016-5) and warning that it would tank the economy or set off an “unprecedented financial crisis.” (http://www.cnbc.com/2016/05/06/donald-trump-on-us-debt.html) The general consensus: Trump is an idiot who doesn't know much about the way the financial system works.
The irony is: His critics are the ones who don't understand.
Trump's comments get at the heart of the one big problem in the global economy: The ongoing accumulation of government debt that's hamstringing growth and economic vitality. Just look at Japan's multi-decade debt-deflation malaise. It's time to at least consider how we could hit the reset button.
The solution of those on the left, to paraphrase: Borrow and spend even more, funding government largesse in the hopes we can grow out of our debt hole. The politically unlikely solution of moderates such as the Committee for a Responsible Federal Budget (https://www.google.com/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&uact=8&sqi=2&ved=0ahUKEwjy_Kj-mMbMAhUK8WMKHcG7CtkQFggcMAA&url=http%3A%2F%2Fcrfb.org%2F&usg=AFQjCNFCo6ydLju5S3_D473QABbvbj-lTQ&sig2=Wqjsts4aqf4D6Cb5JZmy5g&bvm=bv.121421273,d.cGc): Cut spending, including entitlement programs like Medicare and Social Security, while raising taxes.
Read more at the link.