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Donald Trump’s Idea to Cut National Debt: Get Creditors to Accept Less

MTAtech

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Donald Trump’s Idea to Cut National Debt: Get Creditors to Accept Less

Asked whether the United States needed to pay its debts in full, or whether he could negotiate a partial repayment, Mr. Trump told the cable network CNBC, “I would borrow, knowing that if the economy crashed, you could make a deal.”

He added, “And if the economy was good, it was good. So, therefore, you can’t lose.”

Such remarks by a major presidential candidate have no modern precedent. The United States government is able to borrow money at very low interest rates because Treasury securities are regarded as a safe investment, and any cracks in investor confidence have a long history of costing American taxpayers a lot of money.
Why would a retire citizen in Milwaukee, who bought government bonds because of their safety, agree to accept less than the face value of the bond? Why would they and why should they? They have a contract with the U.S. government who agreed to pay the amount due at maturity.

Moreover, the "idea," such as it is, lacks the understanding that 75% of all U.S. debt is held by other Americans. These are the people that Trump is saying should not get what they were promised.
 

David_N

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Anyone who proposes 'cutting' the national debt is an idiot. :lol: Seriously, they want to drain the private sector of net financial assets. :lamo
 
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Donald Trump’s Idea to Cut National Debt: Get Creditors to Accept Less


Why would a retire citizen in Milwaukee, who bought government bonds because of their safety, agree to accept less than the face value of the bond? Why would they and why should they? They have a contract with the U.S. government who agreed to pay the amount due at maturity.

Moreover, the "idea," such as it is, lacks the understanding that 75% of all U.S. debt is held by other Americans. These are the people that Trump is saying should not get what they were promised.
Moreover, the "idea," such as it is, lacks the understanding that 75% of all U.S. debt is held by other Americans. These are the people that Trump is saying should not get what they were promised.
But I thought china owned it all? :lol:
 

MTAtech

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Anyone who proposes 'cutting' the national debt is an idiot. :lol:
You are mis-characterizing the entire subject, if that was not sarcasitic. If he was proposing raising taxes to lower debt or cutting certain spending to lower debt, those are sensible idea.

He's not doing that, he's proposing that buyers of U.S. debt accept pennies on the dollar. It is an absurd idea because holders of U.S. bonds have no reason or desire to accept this idea.

What it does underscore is that a certain candidate is prone to stream of consciousness ideas that when the rest of us have them, we keep then in our heads until they make sense. This one just blurts out any idea, no matter how unworkable or unwise.
 

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Donald Trump’s Idea to Cut National Debt: Get Creditors to Accept Less


Why would a retire citizen in Milwaukee, who bought government bonds because of their safety, agree to accept less than the face value of the bond? Why would they and why should they? They have a contract with the U.S. government who agreed to pay the amount due at maturity.

Moreover, the "idea," such as it is, lacks the understanding that 75% of all U.S. debt is held by other Americans. These are the people that Trump is saying should not get what they were promised.

Ask that question of the first position lien holders and stock holders.
 

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But I thought china owned it all? :lol:

We own mostly what's made in China, and when China sneezes, we look pretty darn sick. It is never good to be too dependent on someone other than yourself.
 

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Donald Trump’s Idea to Cut National Debt: Get Creditors to Accept Less


Why would a retire citizen in Milwaukee, who bought government bonds because of their safety, agree to accept less than the face value of the bond? Why would they and why should they? They have a contract with the U.S. government who agreed to pay the amount due at maturity.

Moreover, the "idea," such as it is, lacks the understanding that 75% of all U.S. debt is held by other Americans. These are the people that Trump is saying should not get what they were promised.

Doesn't sound too different from President Obama's handover of Chrysler and General Motors to the UAW back in 2009/2010 when he took the bondholders of those company's debt and threw them to the wolves with pennies on the dollar owed to them.
 

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You are mis-characterizing the entire subject, if that was not sarcasitic. If he was proposing raising taxes to lower debt or cutting certain spending to lower debt, those are sensible idea.

He's not doing that, he's proposing that buyers of U.S. debt accept pennies on the dollar. It is an absurd idea because holders of U.S. bonds have no reason or desire to accept this idea.

What it does underscore is that a certain candidate is prone to stream of consciousness ideas that when the rest of us have them, we keep then in our heads until they make sense. This one just blurts out any idea, no matter how unworkable or unwise.

It was serious. Why is it a sensible idea to raise taxes/further depress demand when growth worldwide is so pitiful?
 

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So, Trump has no idea what he is talking about. As usual.
 

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Doesn't sound too different from President Obama's handover of Chrysler and General Motors to the UAW back in 2009/2010 when he took the bondholders of those company's debt and threw them to the wolves with pennies on the dollar owed to them.

You realize there is a significant difference between individual companies and sovereign nations, right?

Particularly the Sovereign Nation with the largest economy in the world upon which a significant percentage of the World's population depends for stability.
 
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cpwill

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You are mis-characterizing the entire subject, if that was not sarcasitic. If he was proposing raising taxes to lower debt or cutting certain spending to lower debt, those are sensible idea.

He's not doing that, he's proposing that buyers of U.S. debt accept pennies on the dollar. It is an absurd idea because holders of U.S. bonds have no reason or desire to accept this idea.

What it does underscore is that a certain candidate is prone to stream of consciousness ideas that when the rest of us have them, we keep then in our heads until they make sense. This one just blurts out any idea, no matter how unworkable or unwise.

Yup. Now, here's your problem - the average voting American? Thinks this stuff makes sense. :)

Enjoy the campaign.
 

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Yup. Now, here's your problem - the average voting American? Thinks this stuff makes sense. :)

Enjoy the campaign.

The average american probably thinks that government spending in a recession needs to be cut. :lol:
 

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Donald Trump’s Idea to Cut National Debt: Get Creditors to Accept Less


Why would a retire citizen in Milwaukee, who bought government bonds because of their safety, agree to accept less than the face value of the bond? Why would they and why should they? They have a contract with the U.S. government who agreed to pay the amount due at maturity.

Moreover, the "idea," such as it is, lacks the understanding that 75% of all U.S. debt is held by other Americans. These are the people that Trump is saying should not get what they were promised.

I'm curious. Why do you think the New York Times would misrepresent Trumps statement so blatantly?

There is no example I am aware of, at least in modern history, where the United States Government has completely defaulted on it's obligations. That being the case, how could anyone suggest Trump's comments suggest he is out to screw the poor retirees and other people who invest in government bonds?

It is a fact that countries who have defaulted have renegotiated their debt. Why would stating the obvious equate to a suggestion Trump wishes for the same course.

The desperation on the left is getting quite humorous.
 

cpwill

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Donald Trump’s Idea to Cut National Debt: Get Creditors to Accept Less

Why would a retire citizen in Milwaukee, who bought government bonds because of their safety, agree to accept less than the face value of the bond? Why would they and why should they? They have a contract with the U.S. government who agreed to pay the amount due at maturity.

Moreover, the "idea," such as it is, lacks the understanding that 75% of all U.S. debt is held by other Americans. These are the people that Trump is saying should not get what they were promised.

So, all those times during the campaign, when Trump promised that he had all the great experience, and his critics responded with "yeah, he could take us into bankruptcy".... Trump thought that sounded reasonable.

:sigh:
 

cpwill

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The average american probably thinks that government spending in a recession needs to be cut. :lol:

Yes. And the average American thinks that we should cut spending by increasing social security payments, but cutting foreign aid. Then we should borrow less, spend more, and tax less, and start reducing government programs, except for the big ones that actually drive government spending.
 

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Yes. And the average American thinks that we should cut spending by increasing social security payments, but cutting foreign aid. Then we should borrow less, spend more, and tax less, and start reducing government programs, except for the big ones that actually drive government spending.

Yes. And the average American thinks that we should cut spending by increasing social security payments, but cutting foreign aid.
Americans are good when it comes to keeping social security. Thank god.
Then we should borrow less, spend more, and tax less
Well, I wouldn't really want to call it "borrowing." The government (fed+treasury) gives a bond to the private sector in exchange for numbers in an account, the government spends by marking down the account, and the private sector benefits with the new spending + the bond. Why anyone would want to reduce spending when growth is so pitiful is beyond me.
 

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I'm curious. Why do you think the New York Times would misrepresent Trumps statement so blatantly?

There is no example I am aware of, at least in modern history, where the United States Government has completely defaulted on it's obligations. That being the case, how could anyone suggest Trump's comments suggest he is out to screw the poor retirees and other people who invest in government bonds?

It is a fact that countries who have defaulted have renegotiated their debt. Why would stating the obvious equate to a suggestion Trump wishes for the same course.

The desperation on the left is getting quite humorous.

where the United States Government has completely defaulted on it's obligations.
It'd be a political choice if we ever defaulted. The US government issues the currency, and can never run out of dollars.
 

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Doesn't sound too different from President Obama's handover of Chrysler and General Motors to the UAW back in 2009/2010 when he took the bondholders of those company's debt and threw them to the wolves with pennies on the dollar owed to them.
The difference is that if GM and Chrysler went bankrupt the stock and bond holders would get pennies on the dollar anyway. Hey, that's capitalism.
 

MTAtech

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I'm curious. Why do you think the New York Times would misrepresent Trumps statement so blatantly?

There is no example I am aware of, at least in modern history, where the United States Government has completely defaulted on it's obligations. That being the case, how could anyone suggest Trump's comments suggest he is out to screw the poor retirees and other people who invest in government bonds?

It is a fact that countries who have defaulted have renegotiated their debt. Why would stating the obvious equate to a suggestion Trump wishes for the same course.

The desperation on the left is getting quite humorous.
The quotes from Trump are what he actually said, which was that Trump wants creditors to accept less than face value for our debt. I don't see how you think direct quotes are a misrepresentation of what Trump actually said. Saying that certainly means that the little old ladies with T-bills would be asked to take less than they expected.
 

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You realize there is a significant difference between individual companies and sovereign nations, right?

Particularly the Sovereign Nation with the largest economy in the world upon which a significant percentage of the World's population depends for stability.
Either way, bond holders get screwed. It's a difference of degree, not kind. Hell, they've been giving "haircuts" for years in europe and are still able to sell bonds.
 

MTAtech

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It was serious. Why is it a sensible idea to raise taxes/further depress demand when growth worldwide is so pitiful?
I am not suggesting that we do so. What I am saying is that raising taxes or cutting spending to keep deficits below GDP growth is a tried method to reduce debt.
 

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I am not suggesting that we do so. What I am saying is that raising taxes or cutting spending to keep deficits below GDP growth is a tried method to reduce debt.

I mean, when the economy is running hot (Full employment + demand pull inflation) maybe..
 

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You realize there is a significant difference between individual companies and sovereign nations, right?

Particularly the Sovereign Nation with the largest economy in the world upon which a significant percentage of the World's population depends for stability.

What's your point? Both actions would require legislative and/or executive action that betrays the bankruptcy and credit laws in place in the country at a direct penalty to those who honestly entered into loan agreements with the government's blessing.

You realize that even governments should be honest brokers if they want to pretend to be virtuous gods of stability. Many would argue that the sovereign nation you speak of was the cause of the two greatest world recessions and depressions known in modern economics. You get no benefit of the doubt, considering your history.
 

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Donald Trump’s Idea to Cut National Debt: Get Creditors to Accept Less


Why would a retire citizen in Milwaukee, who bought government bonds because of their safety, agree to accept less than the face value of the bond? Why would they and why should they? They have a contract with the U.S. government who agreed to pay the amount due at maturity.

Moreover, the "idea," such as it is, lacks the understanding that 75% of all U.S. debt is held by other Americans. These are the people that Trump is saying should not get what they were promised.

Just more evidence that Trump is over his head. He hasn't a clue how the economy actually works.
 

CanadaJohn

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The difference is that if GM and Chrysler went bankrupt the stock and bond holders would get pennies on the dollar anyway. Hey, that's capitalism.

Actually, no - if these companies were allowed to declare bankruptcy, the bondholders would have been first in line and the unions who had pension and other benefit debts owed to them by the companies would have gotten pennies on the dollar. The company would have been reorganized, the union contracts thrown out and renegotiated with far reduced pension and benefit packages, and the bondholders would eventually have recouped any loses from a leaner and more promising future - that's capitalism. What President Obama did was nothing like capitalism.
 
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