Small discounts on bonds is a great idea. The world would still flood to hold US Debt due to it's security. We could do a lot a good things even if it was a penny per dollar held.
1
If rates go up, then bonds become cheaper. Even the Chinese would want to dump a note paying 1% if other instruments are paying 5%. The question is where do you get the funds to buy them back? Remember, you now have to pay 5% to borrow. This is just shell game talk.
4
There is an unfair statement in the article. If you issue a 2% p.a 30 year bond and the interest rate goes to say, 4% , you will be able to rebuy this bond at a discount. This discount makes for the gap between the yield and the market rate and has nothing to see with defaulting on the bond.
It is a shame to use a technically flawed argument just because one needs to say something negative on Mr. Trump. There probably are better options for this...
It is a shame to use a technically flawed argument just because one needs to say something negative on Mr. Trump. There probably are better options for this...
1
So the "king of debt" wants to play fast and loose with our money while making sure that our creditors lose faith in the value of our word and the American dollar?
Sounds like a great idea...if you want for the international money markets to falter or even fail, plunging us into chaos and possibly world war.
No thank you.
Sounds like a great idea...if you want for the international money markets to falter or even fail, plunging us into chaos and possibly world war.
No thank you.
20
When Trunp becomes president I would like him to pick Simon Johnson, brilliant economist from MIT.
Condo Rice for VP
Robert Gates for State
Condo Rice for VP
Robert Gates for State
2
Trump is getting Schlonged bad by Hillary in every poll, even Faux News.
1
Most U.S. Gov't debt is owned by U.S. citizens... we're supposed to accept less than what is owed? Will Trump take less when he's trying to rent or sell?
11
I believe Trump is a liberal who has purposely destroyed the Republican party and for this I am forever grateful.
10
Most of the Chinese investors will go along if they can come to the USA and play golf at one of Trumpy McTrumpface's golf courses. Yes, seriously...
2
Another brilliant proposal by Trump. I wonder if it would work any better for the US than it did for Argentina.
http://www.newyorker.com/business/currency/a-good-week-for-vulture-funds
http://www.newyorker.com/business/currency/a-good-week-for-vulture-funds
8
This is not someone to be trusted with the presidency. Does he know who he'd appoint to replace Ms. Yellin, whose ideas he technically agrees with? Is he capable of using exacting, polysyllabic terms to describe economic factors?
Just consider this, he said "If inflation starts coming in, and we don’t see any signs of that, inflation starts coming in, that’s a different story. You have to go up and you have to slow things down." What on earth does this mean? You have to go up where? You have to slow what things down? Can he be nailed down on any details on any of his incoherent policy positions?
This fool cannot be given power. If we elect him, we deserve the economic destruction which will follow, as American bonds drop to a D credit rating.
Just consider this, he said "If inflation starts coming in, and we don’t see any signs of that, inflation starts coming in, that’s a different story. You have to go up and you have to slow things down." What on earth does this mean? You have to go up where? You have to slow what things down? Can he be nailed down on any details on any of his incoherent policy positions?
This fool cannot be given power. If we elect him, we deserve the economic destruction which will follow, as American bonds drop to a D credit rating.
19
Chauncey Gardner said it best.
9
That was actually one of the more coherent policy statements I've ever heard from him. Let me make it a little easier for those not necessarily used to these subjects. {} = delete [] = added
"If inflation starts coming in, and we don’t see any signs of that, {inflation starts coming in,} that’s a different story. [In a situation like that] you have to {go up} [raise interest rates] and you have to slow {things} down [inflation]."
"If inflation starts coming in, and we don’t see any signs of that, {inflation starts coming in,} that’s a different story. [In a situation like that] you have to {go up} [raise interest rates] and you have to slow {things} down [inflation]."
1
When rates go up, prices of outstanding treasuries go down. Trump is merely advocating buying bonds trading at discount and financing purchases with long term debt. Has nothing to do with creditworthiness. Treasury does this from time to time. Author of this article is either deliberately misleading or unqualified to write about subject matter.
9
No, he isn't. He's talking about buying back our issued debt for less than it's worth from people with a contract stipulating otherwise.
To strip away the complications of interest rates and discounts and whatnot, that transaction goes something like this:
"Hey, China. I know I owe you $100, but times are tough. How about I pay you $90 instead and we call it square?"
"Ha ha ha! Oh, wait, you're serious? No, that's not happening."
The reason people bring up "creditworthiness" is because the only reason a creditor would consider something like that is if they were afraid their creditor might default. Otherwise there is zero incentive to make a deal.
Perhaps Trump thinks - as he is wont to do - that he will magically be able to violate the principles of math and logic and charm our creditors into submission.
Or maybe this is part of a whole new policy pitch: We're going to borrow from China and make China pay for it!
To strip away the complications of interest rates and discounts and whatnot, that transaction goes something like this:
"Hey, China. I know I owe you $100, but times are tough. How about I pay you $90 instead and we call it square?"
"Ha ha ha! Oh, wait, you're serious? No, that's not happening."
The reason people bring up "creditworthiness" is because the only reason a creditor would consider something like that is if they were afraid their creditor might default. Otherwise there is zero incentive to make a deal.
Perhaps Trump thinks - as he is wont to do - that he will magically be able to violate the principles of math and logic and charm our creditors into submission.
Or maybe this is part of a whole new policy pitch: We're going to borrow from China and make China pay for it!
11
This is how I understood it too. There is no reason I can imagine why our creditors would take this offer. Unless, Trump is suggesting we devalue our currency such that you're better off taking 90% today than 100% later due to devaluation.
2
I'm the polar opposite of a Trump supporter, but are you sure you're an accountant? We're talking about present values of future income streams. They are always discounted and as interest rates change the market price of outstanding debt always changes. No one pays par value when coupon payments of the bond are below prevailing interest rates.
3
I can't wait to hear what the Chinese have to say about Trump's expectation that they settle for less than they bargained for.
7
How does President Trump decide on policies that would have an adverse affect on his businesses? His children will run his companies and he will have input--contrary to what he might promise. He has promised many things and changes at the drop of a hat. This column is treating Trump as though he is a serious person and he is not.
5
I assume Trump is speaking here of debt held by foreigners. What would we repay them in? More dollars? Am I missing something here?
2
Mr. Trump's unsound ideas about debt management should be page one, not blurbs about whether Lindsay Graham or Paul Ryan support him. The horse race issue is of no real merit. The capabilities of a person who sees the world from the perspective of how to game the system, not how to strengthen it is what the public needs to know. Journalists who have professional gravitas need to focus on the real issues.
24
In all fairness, discussions of bond management and debt servicing are positively arcane to most of his supporters. Meanwhile, most of his opponents are motivated by policies that violate international law and WTO rules, not the ones that are technically infeasible.
The schism between the establishment Republicans and the lunatic that's been thrust upon them is much more dramatic and easier to understand.
The schism between the establishment Republicans and the lunatic that's been thrust upon them is much more dramatic and easier to understand.
1
This is in the setting of the Tea Party stating that Obama's major sins are spending this country into oblivion, and not competing adequately. Ignoring the reality of economic positions is what allows Paul Ryan and the House Republicans to block the budget process and starve "the beast".
Giving the public WWF when they need to learn civics seems like Nero's score.
Giving the public WWF when they need to learn civics seems like Nero's score.
Der Fuehrer Drumpf is a moron if he thinks that the US government can ask investors to take a haircut on debt that they purchased as being the safest in the world.
If he wants people to accept LESS THAN 100% of their prinicipal IN THE FUTURE, that can be arranged as a high yield (read HIGH RISK, otherwise known as "JUNK") bond next go round.
But if he expects to reduce existing US sovereign debt by "cutting a deal" he can just go jump in the nearest lake, with or without is swimsuit.
He must think US bonds are no better than the bad paper he has written in the past.
If he wants people to accept LESS THAN 100% of their prinicipal IN THE FUTURE, that can be arranged as a high yield (read HIGH RISK, otherwise known as "JUNK") bond next go round.
But if he expects to reduce existing US sovereign debt by "cutting a deal" he can just go jump in the nearest lake, with or without is swimsuit.
He must think US bonds are no better than the bad paper he has written in the past.
13
As a business person, I for one, find it encouraging to hear someone offer creative and outside the box ideas in Brainstorming Sessions. Many ingenious solutions have been created through the collaboration of professionals who provide their expertise and encourage innovative approaches by others. With that said, I agree Trump needs to be more circumspect before putting forth what seems to be his answer to solving the US debt crisis. Yet his ideas may contribute to a new way of looking at and mitigating the debt.
2
Mr Irwin, please elaborate on how a person can be credited as "coherent on monetary policy" while favoring a gold standard for US currency. Since virtually no practicing economists support the gold standard, I really have no clue how US monetary policy could be conducted in a recognizable fashion if we returned to it.
5
I can't tell how much of Trumps expertise is from his business experience versus his practical experience. If the latter, which I strongly suspect, well then we've got a problem. It's one thing if he stiffs his small time investors and creditors but that won't fly on a national basis where US earnings affect national SS payouts and/ or the US taxpayer could be left holding the bag not because of reckless bankers but because a reckless banker.
The US isn't a casino or overly leveraged real estate holdings. And should not be treated as such.
The US isn't a casino or overly leveraged real estate holdings. And should not be treated as such.
7
Whoops: typos. "His business EDUCATION or his practical experience." "Bankers versus a US president"
3
Please abandon the blinkers that are allowing you to dismiss the only possible resolution to the US debt issue.
Negative interest rates are a direct consequence of the policy establishment's refusal to allow debt write downs in return to a more normal interest rate policy environment, and the return of a well balanced economy and sustainable growth.
Writing down debt is the one essential strategy that established interests have most strenuously resisted, preferring instead the never never land of low interest rates, while ransacking the asset markets for easy returns.
There is an economic crisis emerging in the developed world, which will force acceptance of ideas that are anathema to existing interests.
The only route to a healthy US and global economy is a combination of fiscal stimulus combined with higher interest rates combined with debt write downs in corporate, national and shadow banking spheres.
This is what Trump offers. If you want more of the same - established interests looting public coffers under the cloak of unjustiably low interest rates - go ahead and vote for the one percent. Vote Clinton.
Negative interest rates are a direct consequence of the policy establishment's refusal to allow debt write downs in return to a more normal interest rate policy environment, and the return of a well balanced economy and sustainable growth.
Writing down debt is the one essential strategy that established interests have most strenuously resisted, preferring instead the never never land of low interest rates, while ransacking the asset markets for easy returns.
There is an economic crisis emerging in the developed world, which will force acceptance of ideas that are anathema to existing interests.
The only route to a healthy US and global economy is a combination of fiscal stimulus combined with higher interest rates combined with debt write downs in corporate, national and shadow banking spheres.
This is what Trump offers. If you want more of the same - established interests looting public coffers under the cloak of unjustiably low interest rates - go ahead and vote for the one percent. Vote Clinton.
3
What Trump offers today may be different tomorrow. Why would anyone listen to the reincarnation of P.T. Barnum?
4
Debt write downs are critically resisted by all legs of the political establishment because they would be incredibly destructive to our financial standing a legitimacy across the world. The United States is not anywhere near default. Our deficit is unsustainable, yes, and most people (I hope) realize this. But we are nowhere near default, and those are the only circumstances in which people start cutting deals on their debt.
I hope you realize that you're literally advocating: "Vote Trump! He'll drive the country into bankruptcy!"
If you think that wouldn't affect you because you're not part of "the one percent", you're quite mistaken. The effects will be far-reaching and severe. I will gladly take more of the same over that.
I hope you realize that you're literally advocating: "Vote Trump! He'll drive the country into bankruptcy!"
If you think that wouldn't affect you because you're not part of "the one percent", you're quite mistaken. The effects will be far-reaching and severe. I will gladly take more of the same over that.
1
“I am the king of debt,” Mr. Trump said. “I love debt, I love playing with it.
Why in the world would we let a real estate developer who loves going in and out of bankruptcy run a country, our country? Bankruptcy means creditors receive less and Trump's intention to renegotiate the National debt through such an instrument is as deplorable as it is dangerous.
Why in the world would we let a real estate developer who loves going in and out of bankruptcy run a country, our country? Bankruptcy means creditors receive less and Trump's intention to renegotiate the National debt through such an instrument is as deplorable as it is dangerous.
17
Neil, otherwise intelligent people persist in ascribing coherence and intelligence to the ramblings of this thoroughly unqualified dimwit. Think about it: listening to him speak for as few as ten seconds, would you consider hiring drumpf for even the most menial of commercial tasks? I wouldn't hire him to mow my lawn. He's an almost inconceivably unintelligent adult.
Coherent? Only if one adopts your contorted posture. Demonstrate some integrity: call this fool out for what he is.
Coherent? Only if one adopts your contorted posture. Demonstrate some integrity: call this fool out for what he is.
7
I am not surprised by the incoherent macro economics coming from the GOP nominee. The entire GOP has had an incoherent macro economic policy since I have paid attention. It was the GOP that threatened US Gov't default over the debt ceiling. It was the GOP (and some fiscally conservative Democrats) who believed the US gov't shouldn't have stimulated the economy during the great recession and in fact wanted to cut taxes and the budget in order to stimulate a recovery. For years the GOP pushed for higher interest rates because "inflation was around the corner". All of this is fantasy land. Why are we surprised that the GOP nominee believes these things?
This is an example of what happens when one of our political parties festers in bad economic policy as a political strategy. Their voters actually believe this mess. Shameful.
This is an example of what happens when one of our political parties festers in bad economic policy as a political strategy. Their voters actually believe this mess. Shameful.
3
Did anyone else notice that the so-called "anti-establishment" DJT offered the singular criticism of Janet Yellen, "but she's not a Republican," as grounds for removing her from a non-partisan office?
7
If we rely on inflation to pay back our debt, we are not actually paying it back, correct? And theoretically, the NYT would have no problem with that.
(Because we actually can't pay it back, I assume? I'm not sure)
So what is Trump doing besides stating the same thing in a different way?
Sometimes Trump states things that follow logic and are true, but aren't the insider or accepted educated way of saying it. You might say he is a buffoon, or you might say he has the massive ego (or massive confidence) to shrug and keep doing it. He is getting conversation started on many issues.
(Because we actually can't pay it back, I assume? I'm not sure)
So what is Trump doing besides stating the same thing in a different way?
Sometimes Trump states things that follow logic and are true, but aren't the insider or accepted educated way of saying it. You might say he is a buffoon, or you might say he has the massive ego (or massive confidence) to shrug and keep doing it. He is getting conversation started on many issues.
2
Karen, Inflation is one of the risk creditors must assess when buying debt. Inflation makes investments in debt worth less - just as deflation would make them worth more. Debt is paid back in nominal terms - If I borrow $10,000 today, I promise to pay you back $10,000 in, say, ten years, regardless of what that $10,000 is worth in today's dollars ten years from now. That is not what Trump is suggesting - he's suggesting maybe we'll pay $7,000 in ten years. Inflation makes it easy to pay back debt. Consumers rely on this a lot - if you buy a home with a 30-year mortgage, that mortgage payment shrinks in real terms over the course of the 30 years.
7
Spot on. The NYT commenters clearly mistake Trump's view of "repurchase at a discount" as default/bankrupt the gov't. It's not.
Agreed that he has a strange way of explaining his policies (and yes, some policies are ridiculous no matter how they're explained), but people are just starting to dismiss everything he says because its him who says it.
Agreed that he has a strange way of explaining his policies (and yes, some policies are ridiculous no matter how they're explained), but people are just starting to dismiss everything he says because its him who says it.
2
Karen
You seen to forget that interest is the payment for the time value of money. It should ideally be at least the same as inflation, which you'll put you back where you were financially when you made the loan.
He is not saying cut the interest rate.
He IS saying pay less than 100 cents as payment in full for each dollar of debt.
That is how JUNK bonds work when they fail.
You seen to forget that interest is the payment for the time value of money. It should ideally be at least the same as inflation, which you'll put you back where you were financially when you made the loan.
He is not saying cut the interest rate.
He IS saying pay less than 100 cents as payment in full for each dollar of debt.
That is how JUNK bonds work when they fail.
2
Trump is revealing that his economic experience comes from being a "whale" a naive player with lots of money who can extract some concessions from those he does business with because they know what they get from him will profit them more than him. He's still the chump in the deals he makes, he just doesn't know it because he's not losing his big money pile fast enough to realize that he's the sucker. He's really as uneducated about the things he does know as he is about the things he doesn't...
5
Slowly but steadily Trump is beginning to show his cards now that he is the winner. And unfortunately for the Establishment he is getting it almost right as Janet Yellen declared the other day. Now that his Nomination is inevitable, hopefully he will give up all the antics and hateful rhetoric and concentrate on real issues rather than the size of his penis. With Trump anything is possible.
3
Trump supporters should be getting very nervous. Every pension fund and mutual fund owns government bonds. Is the Trump supporter going to be thrilled to find that the $1000 they invested in United States bonds will only be worth $800 after Trump performs his reverse alchemy.
12
Do you really think the blue-collar personality cult angry at the lack of unskilled labor is concerned about their investment portfolio? Even if they understood the national bond market, this isn't THEIR money... at least, not until the national treasury breaks down.
3
Well now he's just toying with us. His plan is to be a "real life" SNL skit and see just how far he can string us all along before we figure it out. He's the guy the DID NOT want to be president, was only running as a stunt and ended up being his party's nomination. Unfortunately for the entire country this is not a Hollywood screenplay - or even a reality TV series.
2
Trump fails to realize that the US Treasury is not some subsidiary business that can claim bankruptcy in order to escape it's debt. The reputation and the creditworthiness of the government is of critical importance for the future of the nation. But then, Trump is an idiot. Why am I even wasting my time discussing his ridiculous concept of national economics? His simplistic analysis, if you can even call it that, is beyond incoherent.
6
Is Trump strong?
No, Trump is weak.
Is Trump strong?
No, Trump is weak, very weak.
Is Trump strong?
Weak, he is very very weak.
Is Trump strong?
Sigh. Trump is strongly, dangerously weak. His supporters are good people who have been duped so many times in their lives it has become their reality. Trump Nation is strong, and Trump Nation is weak.
No, Trump is weak.
Is Trump strong?
No, Trump is weak, very weak.
Is Trump strong?
Weak, he is very very weak.
Is Trump strong?
Sigh. Trump is strongly, dangerously weak. His supporters are good people who have been duped so many times in their lives it has become their reality. Trump Nation is strong, and Trump Nation is weak.
1
His supporters are not good people. They are dangerous fools, societal pathogens who will destroy our country.
3
The telling point in the quotes from Mr Trump is the following:
“I’ve borrowed knowing that you can pay back with discounts,”
That is to say, he planned on ripping off his lenders as part of his business strategy. He talks them into lending him money KNOWING that he will short-change them on the repayment. He did this by declaring 'bankruptcy' on each of those four corporations of his. We remember that earlier he said, essentially, 'I simply took advantage of the laws as they are written'.
Leaving aside that this sort of morality has crept further and further into our business community over the years, do we want a person with this view of the meaning of financial contracts to lead our country?
This shows him to be a liar and a thief. Where are the business men and women who believed in the pro-capitalist book "The Promises Men Live By"?
“I’ve borrowed knowing that you can pay back with discounts,”
That is to say, he planned on ripping off his lenders as part of his business strategy. He talks them into lending him money KNOWING that he will short-change them on the repayment. He did this by declaring 'bankruptcy' on each of those four corporations of his. We remember that earlier he said, essentially, 'I simply took advantage of the laws as they are written'.
Leaving aside that this sort of morality has crept further and further into our business community over the years, do we want a person with this view of the meaning of financial contracts to lead our country?
This shows him to be a liar and a thief. Where are the business men and women who believed in the pro-capitalist book "The Promises Men Live By"?
8
Yes, the value of a fixed rate debt obligation declines as interest rates rise, offering an opportunity to buy back that obligation at a discount. Problem is you need to fund that buy back by borrowing at the current higher rates, effectively negating the benefit from the discount. Maybe his missed bond math class at Wharton?
6
GCaporicci
He did not miss bond math class.
He just wasn't smart enough to UNDERSTAND it. He understands very little.
His position is "I believe X, which means X must be true. After all, I am The DONALD!"
He did not miss bond math class.
He just wasn't smart enough to UNDERSTAND it. He understands very little.
His position is "I believe X, which means X must be true. After all, I am The DONALD!"
1
If you announce beforehand that you are entering a deal with the plan to renegotiate deals and repayments eventually, don't your partners in the deal take that into account and factor discounts, rate adjustments, buybacks, defaults, etc., into the initial deal, preventing or diminishing such, or worse, including clauses in the deal to impose penalties for doing so?
2
Of course, he loves debt. Four - count 'em - four bankruptcies! Each time, his lenders were the losers. Do you think lenders want to invest with him now? Of course not. How does that work for the US as the most trusted place for investment? It doesn't. Trump would be a disaster for the US' debt management. It's as obvious as the bald pate glistening under his pathetic comb-over.
5
Spoken like a guy who's quite familiar with being in bankruptcy.
7
Dear Lord ....
The man suffers from delusions of adequacy.
The man suffers from delusions of adequacy.
6
#TheDonald is the king of Bankruptcy so his understanding of debt is to have his forgiven. Voters should send a big message to him: Trump your fired.
3
Section 4 of the 14th Amendment prevents the President from doing this.
I read months ago that Trump wanted to repeal "part" of the 14th Amendment (regarding birthright citizenship, I assumed). Is this a new part that also must go?
This idea ranks up there with deporting 11 million people and closing ports-of-entry to Moslems.
I read months ago that Trump wanted to repeal "part" of the 14th Amendment (regarding birthright citizenship, I assumed). Is this a new part that also must go?
This idea ranks up there with deporting 11 million people and closing ports-of-entry to Moslems.
2
Actually this article makes me more concerned about the NYT's understanding of fixed income math than Trump's.
When interest rates rise, Treasury debt with lower coupons can trade below par (does not have anything to do with risk of default). Trump is completely right that Treasury could refinance low-coupon debt with high-coupon debt to attain a lower headline "national debt" number. Economic cost would be equivalent in the long run, as there is no free lunch in markets, but to the extent headline debt number matters to people it would be effective.
When interest rates rise, Treasury debt with lower coupons can trade below par (does not have anything to do with risk of default). Trump is completely right that Treasury could refinance low-coupon debt with high-coupon debt to attain a lower headline "national debt" number. Economic cost would be equivalent in the long run, as there is no free lunch in markets, but to the extent headline debt number matters to people it would be effective.
3
I generally agree with you but someone should run the math (and I find bond math too difficult and boring to get into myself). If rates increase, the discount would show up only with long-term bonds, and I'm not sure whether those long-term rates are currently so much lower that there would be an appreciable downward refinancing of the headline number.
I do not believe you understand what Mr. Trump meant, he wanted to have creditors forgive portions of debt in negotiation, a maneuver that he presumably uses in his personal business dealings. This was not a proposal to buy discounted bonds on the open market, which the Treasury does routinely in managing debt.
3
I understand later he clarified his response that he did not mean to negotiate rates, but the ineffectiveness of the maneuver is addressed by Irwin's article.
I never understood why Paul Ryan is crowned some monetary or fiscal policy boy genius. The guy has a BA from Miami of Ohio, has never had a real job, and tells everyone his favorite book is something we were assigned in 11th grade english, Atlas Shrugged. To pluck from Trump's branding arsenal, Ryan in an intellectual lightweight. He has no depth, he's an empty suit who says things he doesn't actually understand.
7
Well at least nobody should accuse Drumpf of being an empty suit. His suit is filled with 250 lbs of blubber.
I would argue that many countries have negotiated their way out of debt. I can think of two or three South American countries that have done so successfully more than a few times each.. One European country, Germany,stands out for simply saying in so many words "If you ask for any more money (from our WW1 reparations) then we will declare war on you..."and then did anyway. They lost the war, but they also lost the debt and then got the winners to help pay to rebuild Germany. Sounds a bit like GM.
Corporations negotiate out of debt daily. What else is new.
Corporations negotiate out of debt daily. What else is new.
3
I can't believe you actually think the grass is greener on the other side of this fence, but I sure don't want to live through the next half century with the kind of economy of those 2 or 3 South American countries or that of Germany 1920-1960.
4
What other countries can do we can't, because the world financial system depends on our not doing it. Go back and re-read the article.
5
And Germany's citizens lived through astounding inflation and loss of capital and social structure. This is the solution that you feel we should adopt for the U.S.?
When countries negotiate their way out of debt, their currency, their credit, and their citizens' capital is devalued. Fiscal balance sheets are not the standard here, it is the real lives of citizens.
When countries negotiate their way out of debt, their currency, their credit, and their citizens' capital is devalued. Fiscal balance sheets are not the standard here, it is the real lives of citizens.
2
A lesson to Trump supporters that the government isn't a business and can't be run like one. Also, that being President isn't being 'CEO of the country'. We're a representative democracy, not a Mom & Pop corner store. We have 3 equal branches of government for a reason.
5
We are not a democracy. We are ruled by the corporations.
1
The Ny TImes giving props to Donald Trump on his monetary policy chops! Stop the presses!!
1
This should be a *much* bigger headline.
It very clearly shows that Donald Trump is dangerously unqualified to lead this country.
Now he is the candidate of not just hatred and bigotry, but economic catastrophe too. Very scary stuff.
It very clearly shows that Donald Trump is dangerously unqualified to lead this country.
Now he is the candidate of not just hatred and bigotry, but economic catastrophe too. Very scary stuff.
4
I really don't think that the particulars of fiscal management are going to dissuade anybody who didn't understand that already.
A man that proposes the forced deportation of millions, religion-based discrimination, geopolitical extortion (build our wall or we'll steal your money, Mexico!), torture, and war crimes is obviously unqualified to hold any position of power. The fact that he wants to drive the US to bankruptcy at the same time is honestly barely worth fretting over.
A man that proposes the forced deportation of millions, religion-based discrimination, geopolitical extortion (build our wall or we'll steal your money, Mexico!), torture, and war crimes is obviously unqualified to hold any position of power. The fact that he wants to drive the US to bankruptcy at the same time is honestly barely worth fretting over.
1
TRUMP Dumps Debt with Discounts? I heard somewhere that Trump is allegedly known for paying only 90% of the fees he agrees to pay routinely. That's how he handles his own debt obligations, by dumping them on the lenders. I agree that it would violate the Constitution's 14th Amendment which requires that the national debt be honored and obligations fulfilled. I think Trump is both stupid and crazy. To me he's only presidential material if you want the country to go down the toilet fast.
5
I'm pretty confident that his "consistency and clarity" on monetary policy was little more than a happy accident. I doubt he could have answered a follow up question as well as a college freshman studying econ 101.
1
Let the false balance begin! Trump makes a statement that an average high-school economics student would know. He then makes a statement that if pursued would wreck the international bond market (which you know, might hurt his ability to bring back "all" the jobs. But hey, its 50/50, yes. No, its not. At all rather an apples to bubblegum comparison. Headline should have been "Despite acknowledging basic economic truth, Trump badly confused on world's largest market -- Bonds."
2
“I am the king of debt,” Mr. Trump said. “I love debt, I love playing with it."
I assume the Hillary people have that piece of the tape already cued up and ready to roll.
I assume the Hillary people have that piece of the tape already cued up and ready to roll.
1
They have so much material by now I'm sure their main problem is finding enough air time for all of it.
1
Does Trump (or anyone) realize that nearly two-thirds of the national debt is held by American investors and federal government entities, including Social Security?
9
mford -- thanks for pointing out that the debt is not something held by outsiders. I can't believe that the NYTimes article didn't say that. Voters... Mr. Trump wants to "discount" your investment and social security promises.
6
DJT avoided personal bankruptcy and certain financial ruin by using his army of lawyers to threaten a costly, long and tortuous court battle that would further cripple the dozens of investors who were already losing billions while also devaluing all those investments that had "TRUMP" stamped across the top of them.
1
Even a stopped clock is right twice a day.
Trump could only manage one instance, though.
Trump is a One Level Simplistic Thinker.
He gives solutions that solve one immediate problem without thinking or admitting to the unintended consequences.
Examples: Build a Wall, even though over 40% of illegal immigrants come by air and overstay their visa; Forcibly eject 11 million illegal aliens. What about the tremendous police/military costs, court challenges.US citizens (the children forced out of the US), devastated communities who lose all that economic activity let alone the farms that no longer have workers; Trump's secret plan to destroy ISIS in 6 months, what about the power vacuum you create? After all, Trump said he was NOT into Nation Building; Trump's plan to tack a 45% tariff on all goods from China, what about the high inflationary impact of products sold in places such as Walmart (where many of his supporters shop) let alone the trade wars he would start (think Smoot–Hawley Tariff and it's exacerbation of the Great Depression).
The list goes on and on.
If you fault President Obama for being too cautious because he takes actions based on thoughtful analysis, just wait to you see the consequences of a rash "President" Trump who does nothing to think through the consequences of his short-sighted plans. Please note that Trump never admits mistakes and claims he is never wrong.
Remember, you get the temperament of the President you elect, warts and all.
He gives solutions that solve one immediate problem without thinking or admitting to the unintended consequences.
Examples: Build a Wall, even though over 40% of illegal immigrants come by air and overstay their visa; Forcibly eject 11 million illegal aliens. What about the tremendous police/military costs, court challenges.US citizens (the children forced out of the US), devastated communities who lose all that economic activity let alone the farms that no longer have workers; Trump's secret plan to destroy ISIS in 6 months, what about the power vacuum you create? After all, Trump said he was NOT into Nation Building; Trump's plan to tack a 45% tariff on all goods from China, what about the high inflationary impact of products sold in places such as Walmart (where many of his supporters shop) let alone the trade wars he would start (think Smoot–Hawley Tariff and it's exacerbation of the Great Depression).
The list goes on and on.
If you fault President Obama for being too cautious because he takes actions based on thoughtful analysis, just wait to you see the consequences of a rash "President" Trump who does nothing to think through the consequences of his short-sighted plans. Please note that Trump never admits mistakes and claims he is never wrong.
Remember, you get the temperament of the President you elect, warts and all.
15
Worse, really. He not only doesn't think through the consequences of his stupid ideas, he willfully ignores the protests of those who know better.
1
Irwin neglects to mention the two most absurd things about Trump's suggestion: (1) for the President to even suggest that the US might have a hard time paying back its debt in full can increase rates substantially; and
(2) in order to fund purchasing outstanding debt at a discount, the US would have to borrow at the higher rates.
(2) in order to fund purchasing outstanding debt at a discount, the US would have to borrow at the higher rates.
5
The Republican Party owns the national debt. When Ronald Reagan was elected in 1980, the total debt was under $1 trillion and down to about 30% of GDP from its WWII level. Today, the debt is around $19 trillion and over or approaching 100% of GDP. Virtually all of the run up is due to tax giveaways engineered by Republican, most of which went to the richest people in America, and had no measurable stimulative effect on the economy. Liberal spending that Republicans love to talk about had little to do with it. Beside threatening to discount the national debt and destroy the world's economy that is new, Trump like all the Republican candidates he has defeated, is calling for more massive tax cuts for the rich: more tax giveaways, more debt. I do not believe anything I have written here is a matter of opinion: it is simply a statement of objective facts. Why don't the American people know what I have written? I think it's because the press and other median outlets won't tell them. It's not balanced reporting to say that one political party has made a total mess of things, even if it's true.
6
Well, one major thing that separates government from business is the ability to raise taxes to pay debts. No one ever wants to do it, but there's no denying it actually *can* be done. And it would be ludicrous to try to strong-arm a U.S. creditor into taking less than 100 cents on the dollar as an alternative to raising taxes to pay that debt in full. What about this does Donald not understand?
3
The one major thing that separates government from business is that the government can print its own money. If we wanted to have $0 debt tomorrow, we could do it, just print $15 trillion (electronically of course).
I am not advocating that at all, but that is the difference between business and government.
I am not advocating that at all, but that is the difference between business and government.
4
I realize the government can also print money. I said *one* major thing, not the only thing. And besides, if we printed enough money to pay off all our debt in one fell swoop, we would have bigger problems on our hands than our debt.
1
He clearly doesn't understand any of it.
I mean, his main objection when discussing the leader of the Fed was that she's "not a Republican". It's actually a pretty big deal that the Fed remain politically independent, and he's openly discussing how to make it another arm of the hypothetical (God forbid) Trump administration.
He wants to treat national debt just like his business debt, and sees absolutely no problem with that. The guy has either no idea what he's doing, or is planning to turn the United States into one enormous Trump subsidiary.
I mean, his main objection when discussing the leader of the Fed was that she's "not a Republican". It's actually a pretty big deal that the Fed remain politically independent, and he's openly discussing how to make it another arm of the hypothetical (God forbid) Trump administration.
He wants to treat national debt just like his business debt, and sees absolutely no problem with that. The guy has either no idea what he's doing, or is planning to turn the United States into one enormous Trump subsidiary.
2
If a 10-year bond has a duration of 10, trading at par (100) with a 3% coupon and a yield of 3% - if rates rise 1% that bond will decrease in value to 90. If you issue new 4% bonds at 100, you can buy back the original bond for 90.
Granted, you'll need to issue 90 of 4% bonds to take out the original bonds (and increase the borrowing cost to net 3.6%); but you did just reduce 10 of debt.
Now multiple that by $15 trillion. Its not a terrible idea - and no it is not what Greece/Argentina are doing, completely different. So let's all relax with the "U.S. will be a third-world country" hyperbole.
Granted, you'll need to issue 90 of 4% bonds to take out the original bonds (and increase the borrowing cost to net 3.6%); but you did just reduce 10 of debt.
Now multiple that by $15 trillion. Its not a terrible idea - and no it is not what Greece/Argentina are doing, completely different. So let's all relax with the "U.S. will be a third-world country" hyperbole.
1
As the largest debtor, a government rise in interest rates is in effect a hidden tax. What you are suggesting is that if the government raises interest rates it can impose a tax on bondholders and thereby reduce its debt.
Raising interest rates to take money from the pockets of creditors is a way of imposing a tax without taking responsibility for it. It damages the economy, reduces trust, and is government at its most dishonest. That is a terrible idea.
Raising interest rates to take money from the pockets of creditors is a way of imposing a tax without taking responsibility for it. It damages the economy, reduces trust, and is government at its most dishonest. That is a terrible idea.
1
If the President announces that he is going to violate the 14th Amendment by doing this, the US will have far more critical immediate problems than worrying about whether other countries think we look Third Worldly.
Or was Trump thinking of actually repealing the 14th Amendment? If so, what a relief! We might be able to stave off civil war for years while the amendment is being ratified by the States. Unless he was going to do that unilaterally.
Or was Trump thinking of actually repealing the 14th Amendment? If so, what a relief! We might be able to stave off civil war for years while the amendment is being ratified by the States. Unless he was going to do that unilaterally.
Doug - if you own gov't bonds, you don't HAVE to sell them back to the gov't at 90 - feel free to hold them until maturity and you'll get paid 100 + the interim interest. You'll just be missing out on the market interest.
This happens when rates rise, regardless of Trump. Right now interest rates are low, so people complain about not having enough current income; if raise rise, they'll complain about the value of the bonds they own now going down...
This happens when rates rise, regardless of Trump. Right now interest rates are low, so people complain about not having enough current income; if raise rise, they'll complain about the value of the bonds they own now going down...
2
The moving of wealth to the wealthy who also decided not be taxed created the deficit. The wealthy actually have the wealth to pay off the national and local debt if they want to. Reaganomics decided we are not allowed to talk about the wealthy paying off the debt they created.
Loaning money back to the consumer eventually fails and recession follows.
If the injection of wealth through low interest rates were used in a multiplier manner, such as building infrastructure, the injection would have produced the intended purpose. Rather it just went to push up stocks.
If Trump is really serious about improving the economy he needs to channel wealth to consumers without debt so they can buy products that would create new millionaires. Republicans are not supposed to talk about real solutions. Or the fact wealthy people are really very bad investors.
Our national and other U.S. local government debt are more than debt -such as Puerto
Rican or Greek debt - and really careful planning, not emotional needs, is necessary for some kind of international stability.
Loaning money back to the consumer eventually fails and recession follows.
If the injection of wealth through low interest rates were used in a multiplier manner, such as building infrastructure, the injection would have produced the intended purpose. Rather it just went to push up stocks.
If Trump is really serious about improving the economy he needs to channel wealth to consumers without debt so they can buy products that would create new millionaires. Republicans are not supposed to talk about real solutions. Or the fact wealthy people are really very bad investors.
Our national and other U.S. local government debt are more than debt -such as Puerto
Rican or Greek debt - and really careful planning, not emotional needs, is necessary for some kind of international stability.
3
I'm pretty sure Trump isn't serious about improving the economy. He clearly doesn't know how, and I honestly don't think he cares. He's doing great as one of those wealthy few who "decide not to be taxed", and his plan is to give people like him more breaks and perks.
Trump 'Inc.' used bankruptcy laws to renegotiate debt 4 times, and Trump, himself, is reported to have acknowledged he entered into debt agreements expecting to perform this cram-down when time was ripe.
Such a policy applied to the USA will produce an economic disaster that makes the collapse of banks during the Great Depression of the 1930s look like a walk in the park.
The GOP has performed splendidly in pursuing their business agenda and dogma that began with Reagan to their triumphant Trump end, and still, with the clear vision of the void ahead, the GOP leadership in Congress is far more interested in saving their own salaries, perks and stipends than saving the Country they have been elected to protect.
Such a policy applied to the USA will produce an economic disaster that makes the collapse of banks during the Great Depression of the 1930s look like a walk in the park.
The GOP has performed splendidly in pursuing their business agenda and dogma that began with Reagan to their triumphant Trump end, and still, with the clear vision of the void ahead, the GOP leadership in Congress is far more interested in saving their own salaries, perks and stipends than saving the Country they have been elected to protect.
15
I am pretty certain most newly-elected Presidents are not experts on every aspect of how the government works. Obama was by no means a foreign policy expert coming in. What is most crucial is the team of advisers that an incoming President builds. Trump's corporate experience does give him a leg up over many incoming presidents on fiscal matters, but I'm certain he gets it that he needs to rely on his government experts in the end. Perhaps it would be more objective of the media to evaluate how the entire Trump team looks after it is announced and then draw conclusions about his policies. What politicians say while campaigning are often more ideals than attainable realties.
3
Trump is unique in having no expertise in any aspect of government. Mao once referred to the Chinese peasantry as "poor and blank". Trump is rich and blank.
2
Yet those politicians are still judged by voters based on what they say and what they propose to do. That's the entire idea of a campaign. No voter can seriously be expected to vote for someone on the hope that they WON'T do what they say they're going to do. Yet that is frequently what we're assured in regards to Donald Trump.
But in any case, you can't seriously expect the media not to ask important questions to the Republican nominee until he finally gets around to learning what he's going to be expected to do in office or finding someone who knows what they're talking about. As much as I wish we could just ignore him and talk to someone with a clue, that simply isn't happening.
But in any case, you can't seriously expect the media not to ask important questions to the Republican nominee until he finally gets around to learning what he's going to be expected to do in office or finding someone who knows what they're talking about. As much as I wish we could just ignore him and talk to someone with a clue, that simply isn't happening.
1
Trump does not indicate how he would handle government debt very carefully, because his conception of debt is debt by households and business which is not a good financial situation. Fortunately, he does not adhere to the policy of a gold monetary standard which is part of many Republican candidates’ views.
The real challenge to the neo-liberal financial establishment is to transition from a debt- to a credit-based financial system where money creation is the privilege and obligation of the public sector. Quite a few civil society organizations in the US, UK, Netherlands, Australia and other countries have been studying and advocating such credit-based financial systems.
Personally, I would go one step further and transform the unjust, unsustainable and, therefore, unstable international monetary system by basing it on a monetary carbon standard of specific tonnage of CO2e per person. The conceptual, institutional, ethical and strategic dimensions of such carbon-based international monetary system are presented in Verhagen 2012 "The Tierra Solution: Resolving the climate crisis through monetary transformation" and updated at www.timun.net.
The real challenge to the neo-liberal financial establishment is to transition from a debt- to a credit-based financial system where money creation is the privilege and obligation of the public sector. Quite a few civil society organizations in the US, UK, Netherlands, Australia and other countries have been studying and advocating such credit-based financial systems.
Personally, I would go one step further and transform the unjust, unsustainable and, therefore, unstable international monetary system by basing it on a monetary carbon standard of specific tonnage of CO2e per person. The conceptual, institutional, ethical and strategic dimensions of such carbon-based international monetary system are presented in Verhagen 2012 "The Tierra Solution: Resolving the climate crisis through monetary transformation" and updated at www.timun.net.
Treasuries, governmental debt are highly technical topics and deserve much more thoughtful answers than provided by Mr Trump. What we are seeing are the limitations of his off the cuffs remarks. He talked about bringing in the best advisors. Here is our chance to see if even his most basic promise has any reality.
4
Robert D, advisors give advice. The person receiving the advice has to know enough to decide how to value the advice and how to judge when he/she receives conflicting advice. Trump lacks the basic knowledge of government that would be needed to make intelligent decisions.
Debt is not an esoteric concept -- it is something that is covered in undergraduate economic classes. Anyone with a modicum of understanding of economic policy understands how it works. That doesn't mean that every citizen should have to understand it, but just as Trump fails to comprehend how his zany foreign policy ideas might undermine decades of bipartisan work, his lack of understanding of basic economics means that he is likely to do damage to the domestic economy. Just suggesting that it is OK to default on debt obligations would induce volatility into financial markets.
Debt is not an esoteric concept -- it is something that is covered in undergraduate economic classes. Anyone with a modicum of understanding of economic policy understands how it works. That doesn't mean that every citizen should have to understand it, but just as Trump fails to comprehend how his zany foreign policy ideas might undermine decades of bipartisan work, his lack of understanding of basic economics means that he is likely to do damage to the domestic economy. Just suggesting that it is OK to default on debt obligations would induce volatility into financial markets.
Maybe Trump got the idea that the US could default on its debts from the Republican party, which has too facilely threatened the debt ceiling and to default on our national debt. Even temporary government shutdowns are defaults on our debt obligations. That used to be unthinkable but thanks to the GOP it is now socially acceptable.
20
A President Trump will renegotiate our trade deals so that our foreign trade partners walk away from the table knowing that they "lost". And then he will handle the debt issue by playing financial games. He would likely then get the "very massive recession" that he predicts and his supporters would give him credit for his foresight and point the finger elsewhere.
I would welcome intelligent leaders from the world of business and finance that would help in addressing our nations fiscal issues. I don't think that Mr. Trump's expertise in NY/NJ real estate, bankruptcy protection and marketing represent the required skills.
I would welcome intelligent leaders from the world of business and finance that would help in addressing our nations fiscal issues. I don't think that Mr. Trump's expertise in NY/NJ real estate, bankruptcy protection and marketing represent the required skills.
6
In the debt markets, where I have worked for 45 years, willingness to pay is as important as ability to pay. Gold and US Treasury debt are the "safe spaces" into which global investors flee when the level of risk in world markets becomes uncomfortable. One need only look back to the last government shutdown to see the deleterious effect of jeopardizing that stalwart promise. Trump fails to understand the necessity of maintaining credibility with lenders at the national level, likely because he has repeatedly gotten away with stiffing his lenders in the real estate arena. No sovereign nation can that kind of cavalier debt management.
49
He not cutting a "business deal" that he can walk away from if he doesn't like the terms. Mr. Trump is no longer negotiating real estate contracts, the limits of which are restrained by market forces. As the candidate of his party, his flippant musings actually impact the financial markets themselves. He can't be thinking out loud about walking away from US debt payments, as part of some ridiculous scheme to reduce the federal debt. That kind of loose talk can eventually have effect of completely destabilizing the global financial system. Reducing US debt is not the same as walking away from a failed business venture, something Mr. Trump has far too much experience at.
42
Trump's off the cuff statement that he would lower govt debt by negotiating with creditors is a frightening thought. Imagine the Treasury market responding to that! Treasuries are the safest possible investment. But Trump could destabilize markets all over the world by making statements that suggest the US could partially default on its debt!
That's not gonna happen, because sane people won't vote for him. But still, his verbal idiocy could frighten foreign leaders and investors.
That's not gonna happen, because sane people won't vote for him. But still, his verbal idiocy could frighten foreign leaders and investors.
12
I wonder if the sane outnumber the insane. Let's hope so
2
Trump brags that he loves playing with debt as "the king of debt", a master who borrows with a preconceived plan to renegotiate.
In reality Trump is a master of "truthiness", or the art of cherry picking some facts and fabricating others to create his own faux reality and image.
The documented business history reveals that Trump incurred unmanangeable debt which cost him ownership of valuable assets , and brought him to the brink of personal bankruptcy only to be rescued by creditor support.
To publicly muse that the United States should offer its creditors discounted payment is to fail to comprehend the damage to our credit. If confronted with the reality of a default, Trump's creditors would willingly accept a discount. That ploy, however, impairs credit and ability to conduct business.
In reality Trump is a master of "truthiness", or the art of cherry picking some facts and fabricating others to create his own faux reality and image.
The documented business history reveals that Trump incurred unmanangeable debt which cost him ownership of valuable assets , and brought him to the brink of personal bankruptcy only to be rescued by creditor support.
To publicly muse that the United States should offer its creditors discounted payment is to fail to comprehend the damage to our credit. If confronted with the reality of a default, Trump's creditors would willingly accept a discount. That ploy, however, impairs credit and ability to conduct business.
8
Seems that some of his supporters will vote for him assuming he will Not do what he says, the rest hope for the opposite.
7
Bingo.
Some of Trump's comments on interest rates are, frankly, a relief. Of course, Trump has already set the bar so low that most of us are relieved if he can just manage to utter something that's coherent. Nonetheless, reading and hearing some of Trump's comments since he became the de facto GOP nominee, I hope that Clinton or whoever the Dems nominate has a great campaign and wins in a landslide. Otherwise, we're in for a very bumpy ride.
7
Clueless. Clueless. Too self-centered and egotistical to know he's clueless. Terrifying.
22
Trump could discount our debt by re-inflating our economy, pay back our creditors at 90 on the dollar, but every solution creates more problems.
3
Mr. Trump has established such a low bar of credibility and respectability that when he occasionally says something that is not ridiculous (such as a few sentences about the relationship and implications of low interest rates and a strong dollar - something most astute high school students and almost every freshman level college business student would know) he is given an extra heap of praise ("he showed clarity and consistency in talking about monetary policy and the dollar.").
A more apt title for this article would be "Donald Trump Reveals a Terrifyingly Ridiculous Understanding of U.S. National Debt". Anything less is patronizing to him and a disservice to Americans needing to understand how fabulously ill-equipped this person is to be President of this great country.
A more apt title for this article would be "Donald Trump Reveals a Terrifyingly Ridiculous Understanding of U.S. National Debt". Anything less is patronizing to him and a disservice to Americans needing to understand how fabulously ill-equipped this person is to be President of this great country.
95
I think this article was inappropriately titled, because the balancing of the words Strengths and Weaknesses creates a false equivalence. The way I see it, his statements on how to handle the national debt are quiet absurd and they do not equate with his basic monetary sense.
19
Whatever else he is, Trump has been in the real estate business for decades. Housing and construction are some of the most interest rate-sensitive sectors of the economy. Given Trump's experience in the space, it would be pretty amazing if he didn't have at least a basic grasp of interest rates.
I suppose Trump gets a bit of credit for defying the calls for strong dollar austerity from Ryan et al, but we should reflect on the sad fact of just how newsworthy it is when Trump says something "consistent and coherent," something that "isn't unreasonable." Wow, what a high standard for an American presidential candidate. We've got the cream of the crop here.
Perhaps more dangerous than the "political correctness" Trump decries is the politeness of some members of the media, who are reluctant to say just how crazy all this stuff is. We can't have presidents who outline major policy proposals with a shrug of the shoulders and a "Hey, why not?" attitude.
I suppose Trump gets a bit of credit for defying the calls for strong dollar austerity from Ryan et al, but we should reflect on the sad fact of just how newsworthy it is when Trump says something "consistent and coherent," something that "isn't unreasonable." Wow, what a high standard for an American presidential candidate. We've got the cream of the crop here.
Perhaps more dangerous than the "political correctness" Trump decries is the politeness of some members of the media, who are reluctant to say just how crazy all this stuff is. We can't have presidents who outline major policy proposals with a shrug of the shoulders and a "Hey, why not?" attitude.
15
It's still remarkable how Trump supporters believe that running this country like a Trump corporation is good for the nation. Regardless of his denials, Trump companies have filed for bankruptcy on multiple occasions, this not only costed jobs, but tax payer money. Trump's development fortunes of the 80's was built on top of NY's corrupt real estate industry that involves the mafia, illegal labor and backroom deals with politicians. If you look at Trump's fortunes today, he's not creating anything, it's all brand licensing (if he was to actually claim that his organization is still building projects, Trump would be on the hook for all the illegal labor used by subcontractors). Even the so called public spaces that he allocated in his developments have ultimately fallen on tax payers to up keep. Even properties with his name on it isn't really his, it's all licensed. Even the jobs he has created are low waged service jobs, which explains his connections to the National Restaurant Association and the National Retail Federation, lobbying groups hell bent on stamping out any increases in minimum wages and employee protections.
Trump is not a stupid man, he understands how to game the system well. But, it has all come at cost to others. What his supporters fail to understand is we all will end up carrying the burden and flipping the bill for his ego.
Trump is not a stupid man, he understands how to game the system well. But, it has all come at cost to others. What his supporters fail to understand is we all will end up carrying the burden and flipping the bill for his ego.
37
The statements of a presidential nominee of a major party have immediate consequences for global markets. Win or lose, he's already at the point where he needs to rein in his ready-fire-aim approach. Being "presidential" isn't just about refraining from childish insults. It's also about gravitas, the possession and display of grace and wisdom.
There's little reason to hope that Trump can understand this, sadly.
There's little reason to hope that Trump can understand this, sadly.
24
What would he do about Puerto Rico? Does he even know about Puerto Rico? In case you don't know, Puerto Rico has just defaulted.
5
Gee are we finding out Mr. Trump knows nothing? How many bankruptcies? He seems to think the U.S. is just another company that he can use and abuse. I wonder if that is taught at Trump University?
Is it clear to all yet what a disaster we face, if against all odds this guy gets elected?
Is it clear to all yet what a disaster we face, if against all odds this guy gets elected?
16
Bankruptcy and lawsuits are simply a part of his business model.
9
The man has no idea what he's talking about. The only way he can buy debt at a discount is borrow more money or raise revenue. If your revenues are rising you don't need to pay down debt the country just borrows less . This in effects reduces the deficit . Borrowing to pay down debt only works if interest rates are lower than the original debt. We are st historic lows now so that's not happening. His ignorance of how the system works is dangerous.
17
Alexander Hamilton must be rolling over in his grave at the lunacy of Donald Trump!
10
On monetary policy and a floating dollar (as opposed to the ridiculous gold standard,) Trump is right and Ryan is wrong.
But I would still like to hear less, much less, about Trump and more about Clinton and Sanders.
You are part of the media which will win the election for Trump with all the free publicity.
It is especially bad when you talk about a Trump White House, which makes my blood curdle.
But I would still like to hear less, much less, about Trump and more about Clinton and Sanders.
You are part of the media which will win the election for Trump with all the free publicity.
It is especially bad when you talk about a Trump White House, which makes my blood curdle.
11
How dare Trump not have all of the answers and know all of the minutiae of all things and all policies facing the federal government! He is not allowed to learn these things. He must come with all of the right answers right away, and can not, under any circumstances, adjust his stances and his opinions.
This not only goes for Trump but for all candidates.
This not only goes for Trump but for all candidates.
Sure, nothing prepares a new president to have all the answers, but not understanding the basics.....ridiculous.
9
It is not about having all the answers from the get-go. It is about having the intelligence to understand the basic issues, to ask the right questions and to know how to get the right answers. It is about having a basic understanding of how the national and global economies function and how they are intertwined. It is also about knowing how the constitution shapes and guides the government's actions. Finally, it is also about having the gravitas to use an internal filter before he speaks. Those are the things that Trump lacks, not answers.
23
The effects of a government default on debt is something studied in high school economics classes...using a country like Argentina as a historic example. I expect a bit more in a U.S. presidential candidate. But hey, this may be the new face of the Republican party.
9
This man is ridiculous. His spouting off about sovereign debt like he's renegotiating failed casino bonds is frighteningly misguided. He's wading into discussions of concepts that are way above his pay grade. But, I say, let him drown.
12
He is a fool!
3
So his debt plan has three elements: 1. Increase spending. 2. Reduce revenue. 3. Use the threat of default to get creditors to accept less than promised returns. What a genius! Let's Make America Greece again!
58
"I’ve borrowed knowing that you can pay back with discounts" - indeed, an indication of The Donald's less than stellar business career. You can only really buy back debt at a discount if the creditor fears a default and that he might get a lot less than you are offering. In fact, The Donald has taken his companies into bankruptcy 4 times - so I imagine he does have a lot of experience buying back debt at a discount (but this statement implies bankruptcy was part of the business plan all along).
Here's the thing - I don't want to see the US govt come anywhere near bankruptcy. Debt does indeed need "to be handled very carefully", which is why I don't want the The Donald anywhere near US govt debt.
Here's the thing - I don't want to see the US govt come anywhere near bankruptcy. Debt does indeed need "to be handled very carefully", which is why I don't want the The Donald anywhere near US govt debt.
36
30% of the national debt is owed back to US Corporations (roughly 11 of the 18 trillion). US Corporations make up a small fraction of the US annual income (taxes). The next President should do tow things:
1. Provide US Corporations a tax credit in perpetuity in exchange for their US debt instrument holdings (allow them interest too).
2. Allow for a 90 day amnesty to bring back or onshore all cash with no tax implications.
About 45% is owed to foreign governments. Next President should chargeback military services to those holding bonds and reduce their holdings of the bond accordingly.
1. Provide US Corporations a tax credit in perpetuity in exchange for their US debt instrument holdings (allow them interest too).
2. Allow for a 90 day amnesty to bring back or onshore all cash with no tax implications.
About 45% is owed to foreign governments. Next President should chargeback military services to those holding bonds and reduce their holdings of the bond accordingly.
3
The government can't legally reduce its bond holding for any purpose. If the US even suggests that it will fail to pay back money that it borrows it will drive up the cost of borrowing and destroy faith in the US as a safe haven for investment.
There is no value to an "amnesty" on foreign investment and holdings -- they are legal. If taxes begin again in 90 days, the money would be better left outside the US
You can't correctly value tax amnesty because its value depends on the profitability and the long term viability of the corporate entity. Companies sensibly value predictability. Government bonds (at least until Trump) have a highly predictable value. Tax reductions granted in perpetuity have uncertain net present value, and in any case "perpetuity" isn't necessarily perpetual since a future Congress can eliminate it.
There is no easy way to eliminate debt, and there is not necessarily any reason to try to get rid of it.
There is no value to an "amnesty" on foreign investment and holdings -- they are legal. If taxes begin again in 90 days, the money would be better left outside the US
You can't correctly value tax amnesty because its value depends on the profitability and the long term viability of the corporate entity. Companies sensibly value predictability. Government bonds (at least until Trump) have a highly predictable value. Tax reductions granted in perpetuity have uncertain net present value, and in any case "perpetuity" isn't necessarily perpetual since a future Congress can eliminate it.
There is no easy way to eliminate debt, and there is not necessarily any reason to try to get rid of it.
Thank you, Doug.
debt hysterics and fear mongering are killing the economy. maybe Neal Irwin wants to explain why debt is a problem for the U.S.
4
He can't because it is not.
2
I believe that it was a very serious error when the country turned from ways to fiscally stimulate the economy to imaginary worries about the debt and the deficit. Just ask yourself, when in all of US economic history has too high debt or too large a deficit negatively impacted our economy. Negative deficits (surpluses) certainly have been disastrous. Here is my favorite bit of US economic history.
The federal government has balanced the budget, eliminated deficits for more than three years in just six periods since 1776, bringing in enough revenue to cover all of its spending during 1817-21, 1823-36, 1852-57, 1867-73, 1880-93, and 1920-30. The debt was paid down 29%. 100%, 59%, 27%, 57%, and 36% respectively. A depression began in 1819, 1837, 1857, 1873, 1893 and 1929.
The GDP is about 18,000 Billion so debt service of 250 Billion is about 1.4%. I believe this figure neglects the interest returned by the FED on the bonds it holds which is about 100 Billion, so the actual debt service is about 0.08% of GDP which I believe is the lowest in approximately 60 years.
I worry more about an asteroid hitting NYC than the debt service.
The federal government has balanced the budget, eliminated deficits for more than three years in just six periods since 1776, bringing in enough revenue to cover all of its spending during 1817-21, 1823-36, 1852-57, 1867-73, 1880-93, and 1920-30. The debt was paid down 29%. 100%, 59%, 27%, 57%, and 36% respectively. A depression began in 1819, 1837, 1857, 1873, 1893 and 1929.
The GDP is about 18,000 Billion so debt service of 250 Billion is about 1.4%. I believe this figure neglects the interest returned by the FED on the bonds it holds which is about 100 Billion, so the actual debt service is about 0.08% of GDP which I believe is the lowest in approximately 60 years.
I worry more about an asteroid hitting NYC than the debt service.
30
An asteroid hitting NYC is actually possible! Worrying about the federal debt being a problem is like worrying about an invasion of space aliens.
Interesting fact: The budget surpluses every year of the 1920s produced 4 distinct recessions in just that decade with the last one being the worst in the past century. What are politicians thinking when they talk about balancing the budget and paying down the debt?
Interesting fact: The budget surpluses every year of the 1920s produced 4 distinct recessions in just that decade with the last one being the worst in the past century. What are politicians thinking when they talk about balancing the budget and paying down the debt?
3
The United States definitely has an advantage in regards to deficit spending, thanks to the dollar being the world's reserve currency and the enormous size of our economy.
But your argument (aside from the "problem" of surplus) is essentially that since it hasn't been a problem before, it can't be a problem in the future. I don't really believe that. I don't think we have to eliminate the deficit, but it should at least be reduced to the point where doing so is feasible.
But your argument (aside from the "problem" of surplus) is essentially that since it hasn't been a problem before, it can't be a problem in the future. I don't really believe that. I don't think we have to eliminate the deficit, but it should at least be reduced to the point where doing so is feasible.
There is a danger in trying to give this man "credit" for elementary knowledge of monetary policy: that inflation calls for higher interest rates and economic underperformance for lower ones. It is not so much that he deserves credit for knowing this, as that Ryan et. al. are contemptible for not knowing it. His remarks on the debt are sufficient to show how dangerous he is. You can't just "renegotiate" treasury debt, which is the bedrock of the world financial system.
Such loose, ill-informed comments might have a de-stabilizing effect even if he never gets elected. That he has come this close to the White House is a national disgrace. All decent people, Democrats and Republicans alike, must do everything possible to ensure that he is defeated.
Journalists must resist the urge to give this man his "due" because doing so legitimizes him. All that he is really due is universal contempt, not credit for the 5% of things he might accidentally get right.
Such loose, ill-informed comments might have a de-stabilizing effect even if he never gets elected. That he has come this close to the White House is a national disgrace. All decent people, Democrats and Republicans alike, must do everything possible to ensure that he is defeated.
Journalists must resist the urge to give this man his "due" because doing so legitimizes him. All that he is really due is universal contempt, not credit for the 5% of things he might accidentally get right.
84
Trump's naivete as to what can and can't be done is astounding already, but to suggest that the United States engage in this kind of desperation maneuvers exposes not just his ignorance it also says a lot about the value of his word if his expectation is that everything is always open to renegotiation.
12
If Mr. Trump wants to say it as it is, he might say that all that matters in the financing of anything is cash flow. Not debt levels, interest rates or anything else. To the extent the US government maintains a positive cash flow and as commenters point out, underpinned by the unique golden-egg-laying-goose capability of issuing the reserve-currency dollar, the pyramid scheme can go on indefinitely.
Trump needs only to avoid laying his own egg. Supposedly he will be taking a gander at what comes out of his mouth to minimize poor results at the other end.
Trump needs only to avoid laying his own egg. Supposedly he will be taking a gander at what comes out of his mouth to minimize poor results at the other end.
4
New York City made good on its debts in the 70s and look at the prosperity the good will created. Detroit went under - I don't think it will recover. Puerto Rico is in the throws of a debt debacle - default will forever scar it. Now Trump argues that our Federal Government should act like some of his bankruptcies. Shut them down and start anew. Well there will be no starting anew for our country for there is no international bankruptcy court. The world will remember and our wealth will become worthless.
7
The Trumps of the world simply have no understanding of what the so-called National Debt is. Well he might, but he has to go along with the nonsense.
States and cities need to borrow to pay off debt; they don't issue their own sovereign currency. The Fed chooses to do so, but in reality the U.S. could not possibly go bankrupt. Not a chance in 100 trillion!
States and cities need to borrow to pay off debt; they don't issue their own sovereign currency. The Fed chooses to do so, but in reality the U.S. could not possibly go bankrupt. Not a chance in 100 trillion!
2
So much for ""Making America Great!" By turning us into Argentina or Greece.
Just talking about the possibility of America defaulting on the full value of its debts will raise the interest rate that others will require from the American taxpayer. This man is not only ignorant, but irresponsible.
Just talking about the possibility of America defaulting on the full value of its debts will raise the interest rate that others will require from the American taxpayer. This man is not only ignorant, but irresponsible.
102
Hey, don't knock Greece. It was the world hyperpower back in the time of Alexander the Great. It also managed to conquer Afghanistan -- something we weren't quite able to pull off.
We never tried to conquer Afghanistan. We were fighting the Taliban, not the Afghani government.
Is Donald Trump a black swan?
5
Yeah Yellen has been great keeping those rates down. The banks have to make even more money. To bad all the people who worked hard and saved for retirement have been getting SCREWED for the last 7 yrs with 0 interest rates. Once again those who do the right thing get screwed but the banks who went beserk are scratching back to the top by stepping on the heads of the working people.
2
Here we go again. Another Republican who doesn't seem to understand the government isn't a business and it isn't meant to turn a profit.
It's meant to serve the people.
Somehow that never seems to translate.
It's meant to serve the people.
Somehow that never seems to translate.
160
Trump is a real estate guy not a financial guy. He does understand negotiating leverage, but I'm surprised he does not understand financial leverage.
1
As noted elsewhere in today's NYT, the Donald thinks he can get owners of federal debt to accept less than a dollar for each dollar. Sorry Donald, the rest of the world sincerely believes that every dollar of US debt is actually worth a dollar and will accept nothing less. Trump's debt policy is like that of Greece or Puerto Rico. As it is, as a debt holder of US Savings bonds, I expect to get my dollar back, with interest.
12
I too would like the dollar to be strong, except on a lower level, but then that would be like a weakness, so we can't have that, but may be if we lower it without people noticing, like when we or they are asleep, or something, then may be that'll work.
Meanwhile we certainly must try and pretend to be as strong as we can, in a nice and easy and fluffy sort of way, so that people will like us again without hating, but not too much, because then they'd get cocky, and that's not right, either.
I am totally not flip-flopping here, just testing the waters, searching for a pain-free yet effective solution. So far I am providing this public service for free, because for reasons I can't understand I am not part of the government.
Should we have two kinds of dollars, like one low one for export purposes, and
a high one to buy stuff cheaply abroad? The HILO Dollar. Such as a Twenty Dollar note that has a face value of $20, but on the back side it says $7.
With Sleeping Beauty on the front, seven dwarfs (HIHO) on the back? If that's not possible, then shouldn't we at least try it to see how far we can get with that, as an "almost noble" experiment to prove it to ourselves? Well, and if this doesn't work for some reason, I won't give up, because may be we can invent the electronic "Quantum Halo Dollar", which like Schroedinger's cat is capable of having two values at once based on how we feel about it. Think, Pooh Bear, think!
Meanwhile we certainly must try and pretend to be as strong as we can, in a nice and easy and fluffy sort of way, so that people will like us again without hating, but not too much, because then they'd get cocky, and that's not right, either.
I am totally not flip-flopping here, just testing the waters, searching for a pain-free yet effective solution. So far I am providing this public service for free, because for reasons I can't understand I am not part of the government.
Should we have two kinds of dollars, like one low one for export purposes, and
a high one to buy stuff cheaply abroad? The HILO Dollar. Such as a Twenty Dollar note that has a face value of $20, but on the back side it says $7.
With Sleeping Beauty on the front, seven dwarfs (HIHO) on the back? If that's not possible, then shouldn't we at least try it to see how far we can get with that, as an "almost noble" experiment to prove it to ourselves? Well, and if this doesn't work for some reason, I won't give up, because may be we can invent the electronic "Quantum Halo Dollar", which like Schroedinger's cat is capable of having two values at once based on how we feel about it. Think, Pooh Bear, think!
51
Or even the Cheshire Cat dollar. Now you see, now you don't.
1
Paul Ryan is horrified -- horrified I tell you! -- that the Republican Party has been taken over by the great unwashed. He thus pretends to not know -- but as the lone "smart" Republican in Congress (probably the only one) he must know -- that the GOP has sustained its majority for decades (and his very Speakership) by duping the white working class on guns and gays -- and selling them out on economics. Plus Gerrymandering and voter ID helped, of course.
First it was the Southern Strategy, building directly off George Wallace's appeal to segregationists (excuse me, the new media term is "cultural conservatives"); then it was the Reagan Democrats, perhaps lured by Reagan's prominent visit to infamous Philadelphia (the one in Mississippi famous for lynching, not the one in PA); then the Tea Party, with its respectable fiscal veneer but xenophobic and racist core.
Yes, Ryan is shocked, shocked, I tell you that the Barbarians are at the Gate! The bottom -- and I do mean the bottom (Trump voters) -- has literally and it looks like permanently dropped out of the Republican Party. It couldn't have happened to a more poisonous force in national life -- the GOP.
First it was the Southern Strategy, building directly off George Wallace's appeal to segregationists (excuse me, the new media term is "cultural conservatives"); then it was the Reagan Democrats, perhaps lured by Reagan's prominent visit to infamous Philadelphia (the one in Mississippi famous for lynching, not the one in PA); then the Tea Party, with its respectable fiscal veneer but xenophobic and racist core.
Yes, Ryan is shocked, shocked, I tell you that the Barbarians are at the Gate! The bottom -- and I do mean the bottom (Trump voters) -- has literally and it looks like permanently dropped out of the Republican Party. It couldn't have happened to a more poisonous force in national life -- the GOP.
117
It's sad to see the word "smart" - even in quotes - anywhere in the vicinity of "Ryan". This man from the get-go has been completely mendacious and a Koch boy. It's just by process of elimination that he has any veneer of legitimacy.
That is, of course, if we take the word "smart" to mean being the sort of politician that is brilliant about governance in the best interests of the citizenry as a whole vs. being "smart" about gleaning money and power by way of "governance" for his 0.0001% overlords. It used to be crystal clear he was a total flunkie for the Kochs of the world and there is no need to start being confused about that now.
That is, of course, if we take the word "smart" to mean being the sort of politician that is brilliant about governance in the best interests of the citizenry as a whole vs. being "smart" about gleaning money and power by way of "governance" for his 0.0001% overlords. It used to be crystal clear he was a total flunkie for the Kochs of the world and there is no need to start being confused about that now.
4
Excellent comments!
1 Trillion new debt in the last 6 months.
The real fear from everyone is when Trump has access to the records and exposes the games that have been played - by both sides.
The real fear from everyone is when Trump has access to the records and exposes the games that have been played - by both sides.
3
A plain lie. Document it.
24
Document it? Are you kidding me? Republicans haven't cared about facts for years.
15
So... forget about the bonds, and possible default, and the Federal Reserve?
You're staking the election on the suspicion that there's some great government conspiracy at the heart of... what, exactly? You didn't really explain all that. Then again, I suppose if you knew, you wouldn't need Trump to expose it for you.
Still, funny that you think your savior is going to be the guy who's been chummy with the government and used it to great effect all his life to take advantage of other people. I really can't understand people who think he's some kind of champion for the common man who's going to wreck the Elite gravy train. He's been riding that train all his life.
You're staking the election on the suspicion that there's some great government conspiracy at the heart of... what, exactly? You didn't really explain all that. Then again, I suppose if you knew, you wouldn't need Trump to expose it for you.
Still, funny that you think your savior is going to be the guy who's been chummy with the government and used it to great effect all his life to take advantage of other people. I really can't understand people who think he's some kind of champion for the common man who's going to wreck the Elite gravy train. He's been riding that train all his life.
1
I don't think trump knows much but he says what he is told will get him votes.
1
"...But now you’re talking about something that’s very, very fragile, and has to be handled very carefully.”
He is not talking about debt, not really: He is talking about his own epic ego and need to win at any cost -- as usual.
He is not talking about debt, not really: He is talking about his own epic ego and need to win at any cost -- as usual.
9
I think Mr. Trump is just stating the obvious. The United States is in no position to ever pay back the debt it owes. And, given the gargantuan unfunded liabilities coming down the road, this inability will only grow more and more acute.
However, knowing the country can never repay it's debts and then saying it out loud are two different things, with two different sets of consequences. The former keeps the music playing longer...the latter brings everything to an abrupt halt much sooner.
Mr. Trump needs to learn the nuances of when and when not to open his mouth.
However, knowing the country can never repay it's debts and then saying it out loud are two different things, with two different sets of consequences. The former keeps the music playing longer...the latter brings everything to an abrupt halt much sooner.
Mr. Trump needs to learn the nuances of when and when not to open his mouth.
5
Here's the thing: practically no modern nation has ever paid off its debt in full. The US has sort of done it, in a span between the end of the US Civil War and the start of WWI, largely because many wartime spending measures were never repealed and so there was just a huge surplus that no one ended up doing much with. The $100 billion surplus was a political football during those times. It was arguably a huge strain on the economy to have so much cash gathering dust in the coffers. So that's an interesting aside.
But most nations keep rolling their debt, or find ways to repudiate it. You can, in theory, still be a holder of a perpetual gilt (bond) dating from the French and Indian Wars, making good on a promise by His Majesty's Government George II to pay the bearer in perpetuity a certain rate of interest. Britain essentially never stopped paying for its debts and whatever problems its had, it's not because of the debt; it's being the nexus of a geopolitical storm over two centuries that goes well beyond simply monetary policy. You could also be any number of other nations whose debt is now beyond collections due to revolution, inflation, forgiveness or simply no longer existing.
Debts governments owe aren't like personal debts. Conflating the two is the surest sign of naivety when it comes to this sort of thing.
But most nations keep rolling their debt, or find ways to repudiate it. You can, in theory, still be a holder of a perpetual gilt (bond) dating from the French and Indian Wars, making good on a promise by His Majesty's Government George II to pay the bearer in perpetuity a certain rate of interest. Britain essentially never stopped paying for its debts and whatever problems its had, it's not because of the debt; it's being the nexus of a geopolitical storm over two centuries that goes well beyond simply monetary policy. You could also be any number of other nations whose debt is now beyond collections due to revolution, inflation, forgiveness or simply no longer existing.
Debts governments owe aren't like personal debts. Conflating the two is the surest sign of naivety when it comes to this sort of thing.
47
Your observation that "Debts governments owe aren't like personal debts. Conflating the two is the surest sign of naivety when it comes to this sort of thing" is right on the money, but I fear that this is exactly the sort of truth to fall on deaf ears when it comes to all-too-many average American voters.
9
@Don Carleton
You have to realize you are trying to talk to people who get their economic ideas from opinions, not from factual information.
You have to realize you are trying to talk to people who get their economic ideas from opinions, not from factual information.
9
Donald Trump is terrifying the greedy, selfish, and incompetent "Establishment", and its "leeches" and sycophants, turning their arrogance against them, making them fearful of losing their lives of comfort and privilege, etc., and having to possibly face some of the very difficult realities in life that the average person has to deal with on a daily basis, and that people who are poor, and in need, would consider a good life. Their immaturity, shrillness, denial, and back-stabbing is getting worse, and their insecurities are getting out of control. The need for REAL leaders in our most important leadership positions is finally starting to be more obvious to the average person, and is becoming more important, every day.
7
Interesting that somehow you think Donald Trump is other than greedy, selfish and incompetent.
9
"The need for REAL leaders in our most important leadership positions is finally starting to be more obvious to the average person, and is becoming more important, every day."
And Donald Trump isn't one of them. He's never lead anything except the conga line at the Miss America after party.
And Donald Trump isn't one of them. He's never lead anything except the conga line at the Miss America after party.
4
Federal spending is growing far faster than either the economy or tax revenues, a situation that legendary hedgie Stanley Druckenmiller calls "the most unsustainable situation" he has seen in his career. Also, for the 1st time in history the US just went 10 years without 3% GDP growth. In another 1st, the number of companies going out of business in the US is greater than the number being started. These are not positive trends, and more government and taxes will only accelerate them. Hillary's "more of the same" as the last 20 years approach? No thanks.
3
Sorry, Dakar, but you are WRONG to say that at present "Federal spending is growing far faster than...the economy." In fact, as a percentage of GDP it has been on a downward trend since 2009.
See the chart provided by the St. Louis Fed here: https://research.stlouisfed.org/fred2/series/FYONGDA188S
See the chart provided by the St. Louis Fed here: https://research.stlouisfed.org/fred2/series/FYONGDA188S
35
Why do people like you persist in repeating these lies?
What do you gain by it,what is your motive?
It creates suspicion and misinformation, and leads to destructive opinions, it has not place in rational discussions.
What do you gain by it,what is your motive?
It creates suspicion and misinformation, and leads to destructive opinions, it has not place in rational discussions.
10
Dakar, look at 1837 to 1843.
4
Its par for the Trump/GOP Goofy Golf Course that he claims to be concerned about the national debt while proposing tax cuts primarily for the top 5% that would add $10 trillion to the debt in the next decade, raising interest rates by competing with the private sector for capital.
It's gonna be so great!
It's gonna be so great!
23
I think, therefor I am; and if we don't think, here we are.
23
Despicable D thus illustrates yet another reason CEO's do not have the requisite skill set to be POTUS, as we learned from Harvard Business Review in 1996:
https://hbr.org/1996/01/a-country-is-not-a-company
And this comes on top of his uniqueness as a nominee to have never sought nor held political office (thus having no track record whatsoever of actually fulfilling blathering campaign promises), nor has he ever been in the military.
Additionally, since he would be the oldest person to ever sit in the Oval, we need a better medical evaluation, considering the recently vetted GOP'er Veeps and wannabees Cheney and Palin.
https://hbr.org/1996/01/a-country-is-not-a-company
And this comes on top of his uniqueness as a nominee to have never sought nor held political office (thus having no track record whatsoever of actually fulfilling blathering campaign promises), nor has he ever been in the military.
Additionally, since he would be the oldest person to ever sit in the Oval, we need a better medical evaluation, considering the recently vetted GOP'er Veeps and wannabees Cheney and Palin.
7
This is a challenge - to admit that someone I don't trust at all has just made more sense than Ryan ( and Cruz, but that was a given).
5
This is the problem: he seems to make sense, and it's tempting to ignore all those complicated explanations of why that isn't the case.
1
No Need to Discount the Debt
We can print all the money we need to pay any debt at any time.
Apparently Trump thinks we are on a gold standard of some kind or that our debt is in Swiss francs. He is an ignoramus.
We can print all the money we need to pay any debt at any time.
Apparently Trump thinks we are on a gold standard of some kind or that our debt is in Swiss francs. He is an ignoramus.
12
Because that would cause inflation, isn't that just another way of saying we will not (cannot) pay our debt? Is Trump saying anything different than you?
http://money.usnews.com/money/blogs/my-money/2012/10/04/16-things-you-ne...
http://www.economicshelp.org/blog/85/economics/national-debt-printing-mo...
http://money.usnews.com/money/blogs/my-money/2012/10/04/16-things-you-ne...
http://www.economicshelp.org/blog/85/economics/national-debt-printing-mo...
No one, including Mr. Trump is willing to seriously address our debt. I've read by 2017 the debt will be $21 trillion. We are currently paying $250 billion in annual interest. If rates increase 2 percentage points, the interest will almost double to $500 billion. Mr. Trump is correct when he says there is no money in the budget to pay that amount of interest. President Obama doubled our debt - Ms. Yellen is taking orders from the White House - do not raise rates. Our country is leveraged as far as it can - debt will be our downfall.
2
Interest on the debt is 6% of the federal budget and 1.2% of our national income (GDP). We never had a problem paying the interest when Pres. Reagan was tripling the debt and interest rates on our 10 yr Treasury bond were 5 times higher than they are now.
Fear mongering about the debt is nonsense because we can always print money to pay any obligation just as we have been doing for decades.
Fear mongering about the debt is nonsense because we can always print money to pay any obligation just as we have been doing for decades.
85
Explain to me how someone with a 14-year term of office, who cannot be recalled,
"takes orders from the White House." If from anyone, it would be from the too-big-to-fail banks which actually own the Fed. Which is reason #1 to not "Audit the Fed,", but "Do not renew the charter of the Fed." There is no need for a privately-run corporation to enable new debt creation- Congress can do that. But the suddenly-in-vogue Fed-predecessor Alexander Hamilton aside, the man who kept his vow to leave office with the nation owing no one anything, Andrew Jackson, deserves a second look.
"takes orders from the White House." If from anyone, it would be from the too-big-to-fail banks which actually own the Fed. Which is reason #1 to not "Audit the Fed,", but "Do not renew the charter of the Fed." There is no need for a privately-run corporation to enable new debt creation- Congress can do that. But the suddenly-in-vogue Fed-predecessor Alexander Hamilton aside, the man who kept his vow to leave office with the nation owing no one anything, Andrew Jackson, deserves a second look.
1
> "Fear mongering about the debt is nonsense because we can always print money to pay any obligation"
Good thing they don't have an intelligence-test to qualify for posting
The notion that you can get out of debt via the printing press, completely ignores the existence of currency traders, and the markets they operate in
The international markets would quickly devalue our currency, and we would be in a huge problem
Also ignores the almost certain outcome of some form of Hyper-Inflation
Good thing they don't have an intelligence-test to qualify for posting
The notion that you can get out of debt via the printing press, completely ignores the existence of currency traders, and the markets they operate in
The international markets would quickly devalue our currency, and we would be in a huge problem
Also ignores the almost certain outcome of some form of Hyper-Inflation
2
"Still, Fed watchers have assumed that if a Republican wins the 2016 election, the new president will appoint a new Fed leader."
So, a tradition would be broken? The optics on that will be terrible! If you're a male Fed Chair from a different party, you stay. If the first female Fed Chair, you go. Uh huh.
So, a tradition would be broken? The optics on that will be terrible! If you're a male Fed Chair from a different party, you stay. If the first female Fed Chair, you go. Uh huh.
17
He wasn't listening at Trump University when they discussed macro economics. The debt of the U.S. is very different than private debt. But then, The Donald has never had a company that could print money when needed!
8
In a way he did. It's called bankruptcy court
2
Talk about something interesting: what does Hillary Clinton say on this topic?
2
Probably would need to donate to the Clinton Foundation to find out.
11
Lots. You don't know that because she doesn't talk about it in sound bites.
2
How about a leveraged buyout of China?
How about a military takeover of the Cayman Islands?
This article has me relieved about Trump, but Paul Ryan is probably hyperventilating in a broom closet right now.
I'm no fan of Trump, but:
a) the kind of discounting he's talking about happens all the time when interest rates rise, even for AAA bonds (See CL's comment), and
b) his willingness to acknowledge that a strong dollar is generally a handicap makes him more literate on monetary policy than all Republicans and most Democrats, but
c) he still seems to think that higher interest rates impair our ability to repay.
What makes the US federal gov't different from Argentina is that we borrow in our own fiat currency. That means we control the supply of the money that we notionally 'owe' under the bonds. We can create it, at will, as we did with the FED's quantitative easing program. At the rate of $1 Trillion/year. And oh yeah, there was no rampant inflation and 'debasement' of the US Dollar as a result. Accordingly, if it came down to it, we can just print the money and pay off the debt with freshly minted US dollars. This would be a bad idea for many reasons, but it is at the heart of why there is zero risk of default of federal US gov't bonds.
I'm no fan of Trump, but:
a) the kind of discounting he's talking about happens all the time when interest rates rise, even for AAA bonds (See CL's comment), and
b) his willingness to acknowledge that a strong dollar is generally a handicap makes him more literate on monetary policy than all Republicans and most Democrats, but
c) he still seems to think that higher interest rates impair our ability to repay.
What makes the US federal gov't different from Argentina is that we borrow in our own fiat currency. That means we control the supply of the money that we notionally 'owe' under the bonds. We can create it, at will, as we did with the FED's quantitative easing program. At the rate of $1 Trillion/year. And oh yeah, there was no rampant inflation and 'debasement' of the US Dollar as a result. Accordingly, if it came down to it, we can just print the money and pay off the debt with freshly minted US dollars. This would be a bad idea for many reasons, but it is at the heart of why there is zero risk of default of federal US gov't bonds.
15
It's almost guaranteed to blow up in America's face having a debt king influence the interest rate. If interest rates rise significantly, Turmp's properties will fall in value and simultaneously his debt will become unpayable. There is no way he's going to do what's in America's best interest.
At some point rates will rise whether the Fed wants them to or not as inflation forces them higher.
At some point rates will rise whether the Fed wants them to or not as inflation forces them higher.
1
It has always been a given that if Trump is nominated and elected the country, which is already bankrupt, will be driven to financial ruin by his spendthrift approach to business.
3
The US is not in any sense bankrupt, In fact a country that can print the currency its debts are in cannot go bankrupt unless it wants to.
7
Regardless of your feelings for Trump, he's actually right on debt. If you borrow long-term at current rates, and then rates (yields) rise down the road, the market price of the bonds decreases. Who wants to buy a bond with a 3% coupon when they could go buy a bond issued tomorrow with a 5% coupon? The market price of the 3% coupon bond would be lower than that of a 5% because it is simply less interest than other bonds at that time.
As a result, the issuer of the 3% bond could potentially tender the bonds (offer to buy them from investors) at a price less than face value. For example, the bonds may be worth $92 in the market. The issuer could offer to pay investors $95 for the bonds. This could be better for the issuer if they would otherwise owe $100 at maturity of the bond (so they get $5 off). In that case, the investor gets $3/bond above market value for the bonds and can invest in something with better coupon and the issuer pays $5 less than they would have at maturity of the bonds. Purely hypothetical situation, as the issuer has to have the $95 sitting around OR borrow for it, and remember that rates are higher so borrowing would be more expensive.
If Trump wants to try to negotiate bond rates after issuance, then that would be completely different. But buying back bonds at less than face value is not controversial at all, it is simply a matter of changes in market conditions.
As a result, the issuer of the 3% bond could potentially tender the bonds (offer to buy them from investors) at a price less than face value. For example, the bonds may be worth $92 in the market. The issuer could offer to pay investors $95 for the bonds. This could be better for the issuer if they would otherwise owe $100 at maturity of the bond (so they get $5 off). In that case, the investor gets $3/bond above market value for the bonds and can invest in something with better coupon and the issuer pays $5 less than they would have at maturity of the bonds. Purely hypothetical situation, as the issuer has to have the $95 sitting around OR borrow for it, and remember that rates are higher so borrowing would be more expensive.
If Trump wants to try to negotiate bond rates after issuance, then that would be completely different. But buying back bonds at less than face value is not controversial at all, it is simply a matter of changes in market conditions.
15
And the expert opinion that the net effect of that strategy is minimal...?
SS, we have no way of knowing the context of what Trump said. He might have added that statement as a minor musing in response to a longer question, not as "This! It is my policy!!!" He's just willing to say things, for better or worse. If the interviewer had asked, do you think that will solve our problems, he might have answered, not at all. We just don't know, because the coverage is not balanced.
I am not an expert, I don't know if what Trump says makes sense or not, but I do know the press is biased.
I am not an expert, I don't know if what Trump says makes sense or not, but I do know the press is biased.
So are we now just inventing stories and headlines from out-of-context quotes to sway the folks that only read the headlines?
He is actually saying if it got bad, he would borrow with the knowledge that discounting them may be an option. It is a risk, but when the alternative is destroying the credit rating by either not paying or taxing the 53% to death, I think that is an OK risk.
Far cry from being coherent, it may be the only option if we keep dumping money on silly stuff and can't/won't raise the funds.
He is actually saying if it got bad, he would borrow with the knowledge that discounting them may be an option. It is a risk, but when the alternative is destroying the credit rating by either not paying or taxing the 53% to death, I think that is an OK risk.
Far cry from being coherent, it may be the only option if we keep dumping money on silly stuff and can't/won't raise the funds.
3
"alternative is destroying the credit rating by either not paying or taxing the 53% to death"
Why would this happen? The public debt was almost 50% larger as a percentage of GDP in 1946 and it didn't happen. In fact, during the next 27 years we increased the debt (in dollars) by 75% and enjoyed Great Prosperity.
Also our debt is in our own currency which we can print as much of as we need. The only limit is inflation which seems unlikely give the huge slack in the economy.
Why would this happen? The public debt was almost 50% larger as a percentage of GDP in 1946 and it didn't happen. In fact, during the next 27 years we increased the debt (in dollars) by 75% and enjoyed Great Prosperity.
Also our debt is in our own currency which we can print as much of as we need. The only limit is inflation which seems unlikely give the huge slack in the economy.
5
What Trump said about debt is fine... he's talking about hypothetical extreme cases, which won't happen.
4
Well, he was a hypothetical extreme case but he happened.
18
The Federal Reserve and our monetary policy has been one of the few areas of government that has been incredibly successful and non-partisan. Its independence is a huge asset. Please don't let Mr. Trump try to game the system.
102
I don't see how he would 'game' the system if he were President. He largely agrees with Yellen's policies but would like to appoint a person of his choice as the next chair. Hardly unreasonable and also partly aimed at some in the GOP who are unhappy at the Yellen Fed's loose monetary policy.