Pages

Friday, May 6, 2016

The Full Spectrum Of Economists Agree That Trumps Latest Brainstorm Is Just Plain Nuts

Trump lives in a bubble surrounded by sycophants.

Compendium Of Pax Posts About Donald Trump

Trump’s national debt plan would spike rates

Washington • In the event that the U.S. economy crashed, Donald Trump has floated a recovery plan based on his own experience with corporate bankruptcy: Pay America's creditors less than full value on the U.S. Treasurys they hold.
Experts see it as a reckless idea that would send interest rates soaring, derail economic growth and undermine confidence in the world's most trusted financial asset.
The presumptive Republican presidential nominee suggested in a phone interview Thursday with CNBC that he would stimulate growth through borrowing. If trouble arose, he added, he could get investors to accept reduced payments for their Treasury holdings.
Trump later clarified that comment to say he would offer to buy the bonds back at a discount from investors in hopes of refinancing them at lower rates.
"I would borrow, knowing that if the economy crashed, you could make a deal," Trump told CNBC.
Such a move, never before attempted by the U.S. government, would likely spook investors whose trust in Treasury notes keeps global financial markets operating.
The need to refinance would likely cause interest rates to spike as investors demanded a greater return for the perceived risks of non-payment. More tax dollars would have to go toward repaying the debt. Many investors would shift their money elsewhere. And the economy could endure a traumatic blow.
"It seems Trump is planning to try to run the country like one of his failed business ventures, and that does not bode well," said Megan Greene, chief economist at Manulife.
The move would also end a policy introduced during the presidency of George Washington — and celebrated in the Pulitzer Prize-winning Broadway musical "Hamilton"— to pay full face value on the debts incurred by the country. The government's unfailing payments of its debt have long pleased investors and supported the economy because the country can borrow at lower rates than it otherwise could.
"Defaulting on our debt would cause creditors to rightly question the 'full faith' commitment we make," said Tony Fratto, a former Treasury Department official in George W. Bush's administration. "This isn't a serious idea — it's an insane idea."
Trump has touted his acumen for restructuring four of his companies under bankruptcy laws. When Trump Hotels & Casinos finished a 2004 bankruptcy reorganization, it cut $500 million off $1.8 billion in debt and reduced the interest rate to 8 percent from 15 percent.
"I don't think it's a failure' it's a success," Trump told The Associated Press at the time.
But countries function differently from businesses. Nations usually print their own money and service their debt through taxes, unlike corporations that can sell off assets and equity stakes to manage debt or close up shop. Interest rates would spike if a government refused to pay what it owed as investors priced in the risk of default and became resistant toward lending.
"It would make a bad situation worse and increase U.S. borrowing costs on its debt going forward because we would have lost our credit rating," said Chad Stone, chief economist at the Center on Budget and Policy Priorities.
Publicly held U.S. debt is $13.8 trillion, and taxpayers will devote likely $255 billion to interest payments this year. The market largely sets interest rates on the debt, based in part on Federal Reserve policy.
The yield on a 10-year Treasury note is about 1.8 percent, a figure that would shoot up if Trump pursued this strategy. This would cause debt payments to climb at a precarious moment for the federal budget when Social Security, Medicare and Medicaid costs will likely increase the need to borrow.
"There is no upside," said Douglas Holtz-Eakin, an economist and president of the conservative American Action Forum. "It's a false hope."
The federal government flirted with default risks in 2011 and 2013 when President Barack Obama and the Republican-led House of Representatives reached an impasse over raising the government's borrowing limit.
The government narrowly avoided defaulting on its debt payments in both instances. Still, these breakdowns did cause damage. The 2011 crisis led to a credit rating downgrade by Standard & Poor's, while the 2013 crisis produced a government shutdown.
The statements by Trump reflect his often conflicting statements on economic policy.
Just as he floated a plan that experts say would raise interest rates, Trump separately discussed the need to be cautious about higher rates during the same CNBC interview in which he bragged about being "the king of debt."
"It's a real dilemma, and we have to be very, very careful," he said. "I love debt. I love playing with it, but of course now you're talking about something very, very fragile."

Melania Trump
First Lady?
Or, First Centerfold?

Trump's Immigrant Slovenian Wife (And Nude GQ Model) Gives First Interview

Melania Trump On Her Rise, Her Family Secrets, and Her True Political Views: "Nobody Will Ever Know"

"Who Is Melania Trump?" The New Yorker

Trump Is The Nominee From Hell: The Early Numbers Are In And They Spell Disaster For The GOP

This Fall, Democratic Candidates Will Link GOP Opponents To Trump's Rife Psychopathies

"Like shooting fish in a barrel!"
"Here's How It's Done" Video

Clinton Is "More Conservative Choice": Longtime Republican Crosses Party Lines (NPR)
Republicans: Lost In A Wilderness Of Their Own Making

An Incomparable Compendium Of Donald Trump Quotes, Arranged By Year

Comments By Trump... And About Trump

The Thinking Housewife's Courtship Of Donald Trump: Having Her Cake And Eating It Too

Donald Trump: The Paranoid Style In American Politics And The Ongoing Festival Of Hatred

Update On Ivana Trump's Revelations Concerning Donald's Fondness For Hitler's Speeches 

"Mediocre Philosophy Sells. It Makes The Half-Literate Feel Smart"

Trump: For The Fearful, Random Decisiveness Is More Attractive Than Wisdom, Prudence, Truth

Spot-On Truth-Teller Donald Trump: The Most Important Thing Said At The Republican Debate

Moderate Republican For Trump: Only Trump Can Restore GOP Sanity... By A Landslide Loss
http://paxonbothhouses.blogspot.com/2015/07/dear-fred-last-night-after-spanish.html

Video Of New Hampshire State Representative And Trump Supporter, Susan DeLemus, A Case Study In Madness

Donald Trump Describes His 1-Year-Old Daughter In Most Cringe-Worthy Video Clip Yet


First Lady, Melania Trump, Is A Slovenian Immigrant

Trump: For The Fearful, Random Decisiveness Is More Attractive Than Wisdom, Prudence, Truth

"Lies, Lies, Lies"
"On The Media" Explores Donald Trump's Appeal And His Historical Background

Evangelicals LOVE Donald Trump: 
We Are Known By The Company We Keep

Donald Trump: "Everything I'm About To Tell You Is A Lie." Supporters Cheer

The Self-Chosen Face Of The Republican Party: Not Any Old Asshole... An Asshole's Asshole

Trumpward Christian Soldiers

Trump's "Piece Of Ass" Quote

Don't Forget: Donald Trump Wants To Bang His Daughter


Trump Says Illegals Flooding Across Border...
... But In Which Direction? 

"Are Republicans Insane?" Best Pax Posts


Mark Twain, Adolf Hitler And The Dunning-Kruger Effect

New York Times Interviews David Dunning, Co-Author Of The Dunning-Kruger Effect 

McArthur Wheeler: Patron Saint Of American "Conservatism"

Stupidity For Dummies: The Study Of Ignorance Helps Understand How Intelligence Works


Alan: Despite Trump's encouragement of the worst angels of our nature, I want him to win the Republican nomination 
to reveal the terrified face of American conservatism.
Remember: If you're terrified, the terrorists won.
And you made their victory possible.
Quos deus vult perdere prius dementat



No comments:

Post a Comment