Donald Trump has generated a lot of headlines in the past several days over his remarks about the national debt. Although he didn’t say it was going to be public policy if he should enter the White House, Trump noted that the United States could buy back the debt at discounts.
Now, this garnered a lot of criticism from newspapers and talking heads. For instance, the New York Times editorial page observed about Trump’s potential negotiation of debts:
“Such remarks by a major presidential candidate have no modern precedent. The United States government is able to borrow money at very low interest rates because Treasury securities are regarded as a safe investment, and any cracks in investor confidence have a long history of costing American taxpayers a lot of money.”
As an aside, paying back the national debt with discounts is already public policy, writes David Stockman, former Reagan Budget director and bestselling author of “The Great Deformation.” He writes:
“Well, now. These ‘very low rates’ could not have anything to do with the fact that the Fed has vacuumed-up $3.5 trillion of Treasury debt and its close substitute in GSE securities since September 2008. Apparently, the law of supply and demand has been suspended until further notice—-except for the fact that when Bernanke even hinted that the Fed might sell-down some of its grossly bloated balance sheet in April 2013 treasury yields erupted in a taper tantrum.”
With that out of the way, Trump attempted to clarify his remarks in an interview on CNN on Monday. He defended himself by noting that he was just having a conversation and had no plans to implement such a policy.
One part of the interview should turn some heads, though. It was a comment about avoiding a default on the debt by printing money, which, if he says is on the table, could be disastrous for the average American.
“People said I want to go and buy debt and default on debt, and I mean, these people are crazy. This is the United States government. First of all, you never have to default because you print the money, I hate to tell you, OK?”
Yikes. That’s a comment that should garner a lot of vitriol from the mainstream media pundits. He’s chastized the Federal Reserve over low interest rates and money printing, but now it seems as if he’s an advocate for printing money when the going gets tough.
It’s true that the U.S. will never pay down the $20 trillion national debt – Trump is now against aggressively tackling the national debt – but when foreign governments no longer want to hold American debt, Washington will only have two options: admit that it can’t pay back the debt and default or print the money to debase the greenback ($20 trillion becomes $10 trillion).
What has happened to Trump in recent weeks? Since he has started to sniff the White House, he has become such an establishment crony, who now favors raising the minimum wage, printing money to avoid default and bringing in big government cronyists into his campaign.
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