Donald Trump just threatened to cause an unprecedented global financial crisis

http://www.cnbc.com/2016/05/06/donald-trump-on-us-debt.html

I voted for Trump in the primary, but he should probably walk this one back immediately. This is one of the worst ideas I've ever heard. It shows that he doesn't fully understand the differences between a business and a country. The whole world economy is based on our currency. We're considered the most stable economy in the world. Since we're considered stable, we're able to maintain very low interest rates. If creditors don't believe we're stable then interest rates will dramatically rise, markets will crash, and the global financial system would collapse.

 

If your logic is sound, then Europe with its negative interest rates has a much more stable economy than America.

 

Europe does not get negative rates when they borrow from other countries

 

For some reason this is news to you??
Where have you been, under a rock? Expect a lot more televised American politics as A reality show.
GO TRUMP!!!...you people...
An I thought Hillary was bad

 

He can 'walk this one back' but its not going to change his mind. I don't know economics but if this guy thinks this about making a deal, then he is going to think he is the right man for the job. This goes under the heading 'Every hammer thinks the problem is about a nail'

 

Quite right. You're talking about the bond market, so my bad.

 

The economy is going to crash eventually. Period!

I got news for you fools. The last 10 administrations cause the problem we are in now.

But to blame Trump already? That's just beyond (*)(*)(*)(*)ing stupid.

Even if it crashes with Hillary at the helm, still not going to be her fault.

The question is, who's going to delay it better?

 

On the other hand, he could challenge the status of the money lenders. Why do they get to decide things that should be decided by all of us?

Money is simply a medium of exchange, not a bullwhip to cow the rest of us. The international bankers, in cahoots with industries like Monsanto, have been literally committing murder...of indigenous farmers with their GMO schemes and with whole countries like Greece and the Ukraine.

Financial services are so twisted right now that people doing the real work on the planet are getting a pittance, while paper pushers and money manipulators are creaming off imaginary money from the world's economies.

A major reassessment is in order.

 

Sadly, you came to that realization too late.

The problem is that millions of people all over the country may make the same mistake.

For me, I don't find this statement from him the least bit surprising.

This is the way he has always done business. It's the way a certain type of real estate developer does business.

Borrow as much as you can of other people's money, take your cut off the top, and then run the project, hoping it turns out; knowing that if it doesn't the bank, the engineers and the contractors will be left holding the bag.

That's the way Trump has operated throughout his career.

He isn't going to walk this back, because he sees nothing wrong with it. It's perfectly reasonable to him. He has been doing it all his life. His father did the same thing.

As you noted, HE can't lose. But in this case the bondholders, will be the United States of America and anyone who owns a T bill, does business in the US dollar, or has their livelihood in any way measured by the value of the cash in their pocket.

Yes, Donald Trump is reckless and stupid enough (when it comes anything involved with government) to wreck the global economy.

And he will turn right around and claim that the workout (which will come in the form of a global depression) made him a winner.

 

oooo

you want a life with no risk?

that bank, engineer and contractor also take a risk. I take a risk with every order that we accept from customers because we provide terms

We also take a risk that with social media today, my firm could be wrongly bashed and sure there's recourse, but it's akin to shutting the barn door after the horse got away

A businessman is needed to fix the mess caused by politicians. A little truth to Americans is a long-time coming and the people need to be told in plain English how bad things really are

 

I think that Trump has a much better grasp of this than most.

 

Trump has lied so much now... He can't expect to be able to remember them all. He'll change his mind about this tomorrow anyway so no worries.

 

He is even crazier than I thought he was. Oh, how many times have I already said this to myself!

 

Well then, you are clearly an example of the financially literate Trump supporter.

 

The whole world economy is not based on your currency. Only your economy is.
It does however have knock on effects.

The problem you have that will destroy the global economy is this. 2/3 of all your state spending is borrowed money. 2/3 of your military you can't afford. 2/3 of your police, you can't afford. 2.3 of your fireman you can't afford. And so on.

You will default. It's a certainty.
Your interest rates will rise. it's a certainty.
Everyone around the world who trades with you will also take a hit. This will all happen.

The big question on every ones mind is when? And what can be done about it?
Trump may or may not turn out to be the big debt negotiator. And his negotiations may or may not crash the global economy.
But you are damned if you do, damned if you don't. Because if you continue to do nothing, you will collapse like the Soviet Union eventually.

So what have you got to lose? A smaller collapse today than a bigger collapse tomorrow. That is your worst case.
Doing nothing isn't a solution. Things are getting worse each day.
So he tries and fails... it beats not trying and still failing.

 

So Trump wants to create another bankruptcy... he will still claim that he personally never went bankrupt, he just drove the country into bankruptcy... but since it wasn't under his tax ID, he didn't go bankrupt.

 

The US is not at the brink of default yet. We've had our debt-GDP higher after WWII. We grew our way out of it and it was on decline until Reagan. Reagan and Bush were horrible for it. Clinton made it better. W made it a lot worse and it just completely exploded under Obama. It hasn't leveled off and probably won't level off until our economy grows at a rate faster than 2%. It actually appeared to be stalling and leveling off right around 101%, but between 2013-2014 it began climbing again and is now at 104%.

 

Actually the whole world economy is dependent on the dollar. It's the world's reserve currency, because it's considered to be safe. The backing of the US dollar allows people to conduct business with certainty throughout the world. If the US were to ever default (or negotiate for creditors to accept less) then the stability will go out the window. Lenders would require much higher interest rates, we would see a decrease in borrowing, and the global economy would completely collapse. If Trump continues with this rhetoric and people start to believe he might get elected president, the bond markets will completely collapse before this even happens. Who wants to invest in T-bills at these ridiculously low rates if it's not even safe?

 

More like 4 out of the last 5. However, it's reasonable to argue that FDR and LBJ are most responsible, because they created the ponzi-scheme programs that were the most unsustainable.

 

Because if our debt is questioned then it's considered a more risky asset and the interest we will have to pay on everything in the future will increase.

 

Well first of all, the president is only one of three parts of the process, so even if he wanted to jump off the fiscal cliff, a cliff that we are teetering on, he would need the other parties to give him a push. in any event, we are gonna be falling off that cliff sooner or later anyway, so im not too concerned. All we are doing at the moment is simply making our rickety ladder higher.

 

We have time and we are only doomed to fall off the cliff if we are not smart about our finances in the future. Maybe that means we're pretty much screwed.

 

Everyone does know that Congress is in charge of finances. The president typically just chooses how to allocate funds.

Even if Trump is a financial nut (which I doubt given his current financial situation) I think there is a limit to how much damage he can do fiscally. However, congress can totally Bork things up even worse than they are now. The current average term in congress is 12.8 years, so here's a hint for the fiscal conservatives: "Start by getting rid of your congressman".

 

How many bankruptcies has Trump been through, remind us? And you want to trust him not to bankrupt America? Foolish naivete.

 

That is how most rich people operate.