Trump Seriously Thinks Defaulting On National Debt A Good Idea

Donald Trump has revealed his plans for tackling the national debt, and they are even worse than his detractors could have feared.

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In an interview with CNBC on Thursday, Trump, who anointed himself “king of debt,” stated that he is tossing around ideas about reducing the national debt by persuading creditors to accept something less than full payment.

With interest rates currently so low in the U.S., Trump believes it is an ideal time to borrow money for public infrastructure and other needs. This actually sounds surprisingly reasonable and could provide a much needed boost to the economy.

Here’s the kicker though. He also made clear that loans taken out under his presidency may never be paid back by saying:

“I would borrow, knowing that if the economy crashed, you could make a deal.”

Trump, who has a history of bankruptcies, is showing just how unqualified he is for the top job by attempting to apply his business knowledge to the vastly different world of government.

In business it’s viable to borrow money for investment. Now if the project doesn’t pan out as expected, it’s common to renegotiate payments so that the creditor at least gets some of their money back.

Matthew Yglesias from Vox pointed out that:

“The United States of America, however, is not a real estate development company. If a real estate company defaults on its debts and its creditors lose money, that’s their problem.”

Yglesias also later states:

“Every assessment of risk in the financial system is based on the idea that the least risky thing is lending money to the federal government. If that turns out to be much riskier than previously thought, then everything else becomes much riskier too. Business investment will collapse, state and local finances will be crushed, and shockwaves will emanate to a whole range of foreign countries that borrow dollars.”

As the global reserve currency, the U.S. dollar is considered by investors to be the most reliable asset in international finance. If investors begin losing money on this debt, it would throw the entire global financial system into chaos.

Yglesias further explains that the fallout would be “much worse” than that from the global financial crisis because:

“…government debt is the very foundation of low-risk investments.”

Trump is basically talking about defaulting on the national debt, although he refused to acknowledge this.

The very fact that the presidential candidate is openly discussing plans to default on loans is insane, but Trump can get away with these kind of outrageous comments because he knows that his fan base doesn’t care about logic and rational argument.

With the race for the White House heating up, one thing is very clear, we can look forward to many more outlandish comments like this from the king of debt before this farcical election is over.

h/t to Vox

Janine Harrison is an Australian-based writer living in Sydney. She has a keen interest in international politics and culture.