I was peacefully eating my brunch of spaghetti because I didn’t wake up in time for breakfast. The TV just happened to be on CNN. I don’t typically watch CNN. However, for the few minutes that I was listening I heard a sound bite and explanation of Donald Trump’s newest controversial comments. These comments were regarding the national debt. If you haven’t heard yet, here is a link. I could not believe what I was hearing. I could have expected this from some democrat especially on CNN. I never heard any politician propose such a disastrous plan to fix our national debt. And yes, this is even worse than Bernie Sanders whose grasp of economics is about as good as a first grader.
Of many troubling statements that Trump uttered, I found two pieces to be the most unwise and cringe-worthy. So now I will quote parts of his quip then explain why ‘Trump Goes Full Retard’ as my title indicates.
If interest rates go up, and we can buy bonds back at a discount, if we are liquid enough as a country, we should do that. In other words, we can buy back debt at a discount. People said I wanted to go and buy debt and default on debt, these people are crazy. This is the United States government. First of all, you never have to default because you print the money, I hate to tell you.
Well Donald Trump, I hate to tell you that buying back bonds at a discount is an unadvised action that would have major consequences. You see the US government has one of the best credit ratings in the world. (Recently was downgraded from AAA to AA during the recession though) This means that if we buy back bonds at a discounted rate it would undermine the value of those bonds therefore making the government liable for lost money on investment. The result is our credit rating sinks even lower! Its similar to private loans when you don’t pay the loan back in full, it tends to sink your credit rating and crush you with creditors phone calls.
The other problem with buying back bonds whether at an discounted rate or not, is that what money will you be buying with? Trump’s tax doesn’t actually raise any revenues because he doesn’t specify any spending cuts. I am curious to see how he will buy debt without just making more debt. It sounds like a person who addicted to credit cards. Its a good analogy because if you use the credit cards to outspend the money you actually have eventually it turns into more maxed out credit cards. The rate that your debt will increase will be huge because of interest rates. I don’t know what makes Trump think that creating debt by buying debt will help shrink anything. In fact, its bound to make it even worse. Trump is literally treating the national debt like its junk bonds or securities. Its totally different because your messing with America’s hard earned financial reputation.
My rant doesn’t end here because the second part of his statement about “you never have to default because you print money” is even more insane than the first part. I think Trump needs to go back to Economics 101 with Bernie! I believe that its common knowledge that printing money is a risky proposition. Its been tried before too by Europe, Asia and even here in the US! The results are never good. Just look at Germany during World War 2. Hitler decided that printing money was a good way to pay for his war. It resulted in mass hardships for the German people. The money was useless paper and all commodities like food and oil were either very expensive or scarce.
I hope Donald Trump realizes the printing money can lead to things like inflation and devaluation of money. As of right now the dollar isn’t the strongest because of the repeal of the gold standard. The dollar is only as good as the government that issues it. If Trump were to print money to pay off the debt this is what would happen. First off, he would never pay it off because before he could print enough money it would be pretty much worthless. Second, inflation would go way up given that our national debt is 20 trillion dollars. Third, the price of everything would go sky high because of inflation and devaluation. Just imagine a dollar being worth the equivalent of a less than penny. You would need hundreds of thousands of dollars just equal the value of a dollar now. I’m not sure of the math but I’m pretty sure that it would only take a couple billion or trillion to make it worthless.
Up until now I haven’t been too hard on Trump. Obviously his ridiculous stances on immigration and women are hard to overlook. I think we all know that Trump’s fantasies won’t come true because the US government tends to repel any major change. To some degree, I think that Trump tries to sensationalize his views in order to get media attention. I also feel like he may not truly be married to his policy positions. He is also not a politician by nature. Despite all of that, I had to throw down the hammer. These comments are pure garbage. It would be one thing if made any economic sense. I just hope that if Trump ends as President that he selects some good economic advisors. For the sake of America’s future financial status.
I hope the Trump supporters will make Trump realize his fatal error. We could be in some seriously trouble if Trump is able to pull any of this crap.
Thanks for reading! oh and Trump, YOU NEVER GO FULL RETARD!