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Donald Trump’s Idea to Cut National Debt: Get Creditors to Accept Less
New York Times ^ | May 6, 2016 | BINYAMIN APPELBAUM

Posted on 05/06/2016 5:38:20 AM PDT by reaganaut1

One day after assuring Americans he is not running for president “to make things unstable for the country,” the presumptive Republican nominee, Donald J. Trump, said in a television interview Thursday that he might seek to reduce the national debt by persuading creditors to accept something less than full payment.

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.

Experts also described Mr. Trump’s vaguely sketched proposal as fanciful, saying there was no reason to think America’s creditors would accept anything less than 100 cents on the dollar, regardless of Mr. Trump’s deal-making prowess.

“No one on the other side would pick up the phone if the secretary of the U.S. Treasury tried to make that call,” said Lou Crandall, chief economist at Wrightson ICAP. “Why should they? They have a contract” requiring payment in full.

Mr. Trump told CNBC that he was concerned about the impact of higher interest rates on the cost of servicing the federal debt. “We’re paying a very low interest rate,” he said. “What happens if that interest rate goes two, three, four points up? We don’t have a country. I mean, if you look at the numbers, they’re staggering.”

(Excerpt) Read more at nytimes.com ...


TOPICS: Business/Economy; News/Current Events; Politics/Elections
KEYWORDS: debt; nationaldebt; trump
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To: sakic

BS.


41 posted on 05/06/2016 6:28:09 AM PDT by Lagmeister ( false prophets shall rise, and shall show signs and wonders Mark 13:22)
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To: reaganaut1

There’s a few problems with that the way I see it. The debt was created at a near zero interest rate. So what to do, give the Fed a haircut on a near zero interest rate? OK, then what? The principle is still outstanding. Just the debt from deficit spending is nearing 100% of GDP, where does that money come from?

You may say too bad to the Fed, you have to eat it. Then what happens? Those electrons or greenbacks are already in the money supply. Now you stand a good chance of unleashing the inflationary pressure that have been held in abatement while the Marxist Muslim has been in power. Even If inflation doesn’t go hyperbolic you still stand a grave possibility of strong inflation.

Inflation is nothing more than stealth tax on productivity. Unless we can negotiate from a strong position with the ability to pay down some principle you are at the mercy of the Fed and the globalists.


42 posted on 05/06/2016 6:28:24 AM PDT by VTenigma (The Democratic party is the party of the mathematically challenged)
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To: ArtDodger

You do realize that is why companies pay so much more for borrowing on much small amounts of money, don’t you?
On the other hand, this is exactly what states and local governments should do when theor outrageous pension promises become unsupportable.


43 posted on 05/06/2016 6:28:38 AM PDT by 9YearLurker
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To: sakic

Certainly, Trump is not about Conservatism, either.

Trump or Hillary is the worst set of options of the last 50 years.

Hillary is a crooked politician. Trump is absolutely clueless about how things work.


Campaigning for Hillary is certainly “not about conservatism”. Yet here we have Cruz and his supporters trying to divide the GOP. Pathetic.


44 posted on 05/06/2016 6:29:59 AM PDT by lodi90 (Clear choice for Conservatives now: TRUMP or lose)
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To: reaganaut1

What should happen is for the fes to stop all grants to states, states in turn reduce their grants to localities, and those stae and local govnments to give their creditors haircuts, as required.


45 posted on 05/06/2016 6:30:25 AM PDT by 9YearLurker
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To: 11th Commandment

And when the assets are redeemed for an amount of electrons less than their carrying value, what balances the other side of the ledger?

Reserves (equity).

And when a bank’s reserve amounts gets too low, how many new loans can it make? That is how the money supply will get reduced, sir.


46 posted on 05/06/2016 6:31:32 AM PDT by L,TOWM (There is no longer a system to work within.)
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To: sakic

Perhaps you needed a candidate thet “ knows how things work”, in other words, a Uni-party hack that goes along to get along? Any ways who was your choice? Bernie? GIlmore? Rubio? Christie? Paul ? Don’t be shy, tell us.


47 posted on 05/06/2016 6:32:53 AM PDT by csvset ( Illegitimi non carborundum)
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To: tacticalogic
It won't work because a lot of people won't be able to afford to keep buying the stuff when the price goes up 20%. For most Americans, the immediate effect is going to be a substantial reduction in their standard of living.

Really? The only thing that will go up are goods and services made/created overseas. What part of the average persons budget goes to buying durable goods? What will the stimulative effect on the economy be of ONshoring and repatriation factories to the USA?

Up until the 1960's the Republican Party was the party of protectionism. So were they the "liberal" party then or is the Republican Party of today ( the one in favor of RAPE trade ) the "liberal" party? Which is it?

48 posted on 05/06/2016 6:33:20 AM PDT by central_va (I won't be reconstructed and I do not give a damn.)
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To: reaganaut1

We are bankrupt. This is the type of stuff that happens when you’re bankrupt. Trump’s just the messenger - its about to get fiscally ugly.


49 posted on 05/06/2016 6:34:53 AM PDT by lacrew
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To: 11th Commandment

What I understand is the the world financial system is on the verge of collapse.

The numbers will soon be meaningless.

All economic and monetary theory has been turned on its head in the West.

Debt that cannot be paid is no longer an asset but a fig newton of someone’s feverish imagination of value.

This will soon be happening everywhere.

Greece, Cyprus, Puerto Rico are but the harbingers of things to come.

Worldwide resets are looming.


50 posted on 05/06/2016 6:35:43 AM PDT by exit82 (Road Runner sez:" Let's Make America Beeping Great Again! Beep! Beep!")
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To: reaganaut1

There’s lots of ways to decrease debt.. my guess is Trump will use them all. Trump knows the national debt at current levels is a ticking timebomb.


51 posted on 05/06/2016 6:36:54 AM PDT by GOPJ (Imagine the shrieking MSM outrage if Trump supporters had tried to flip a car... David French)
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To: reaganaut1

For the past eight years the press has ignored the debt as it has climbed by many trillions. Now Trump is getting them to talk about it while the gay Muslim is still president.


52 posted on 05/06/2016 6:37:03 AM PDT by Moonman62 (Make America Great Again!)
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To: reaganaut1

One of Trump’s biggest mistakes was saying he wouldn’t make any cuts to entitlements. Of course that’s most of the budget. You can’t address the budget deficit and debt unless you tackle social security, medicare and medicaid. It’s tough though because anyone who says they will cut it will get killed, yet it has to be done.

Giving the debt a haircut will of course hit social security the most.


53 posted on 05/06/2016 6:38:08 AM PDT by Beernoser
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To: Dr. Sivana

Just...like...in...the...real...world....So many of the status quo politicians and pundits hide behind the concept that governments and other bigly entities don’t have to bow to principles that rule us little people. Principles such as spending less then the amount coming in... Let’s see if a business man can sort things out in Washington.


54 posted on 05/06/2016 6:38:12 AM PDT by ArtDodger
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To: The Sons of Liberty
See Fleming v. Nestor; no one is actually entitled to ANY Social Security payment. None, nada. In fact, Social Security deposits you make today are not guaranteed or even suggested to be what you will reap in the future. It's a straight-out tax that goes into the general fund, with window dressing "acting" as a potential retirement plan.

The Government could legally welch on 100% of all Social Security payments made starting tomorrow - and it would be 100% fine, from a legal aspect. They could continue to demand you pay in, even when there is zero chance you'd get any pay out, and it would be 100% legal.

It was a sop to buy the votes of retirees - and has grown into a massive entitlement to keep those votes for big Government types. But in reality, it's just another income tax, just one that's capped on the first $110K of your income.

55 posted on 05/06/2016 6:39:24 AM PDT by Shanghai Dan
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To: lodi90

“Yet here we have Cruz and his supporters trying to divide the GOP. Pathetic.”

I thought that was the Trump supporter’s goal. RINOs? Get out! Constitutional Conservatives? We don’t need you! Dems? Welcome! Bernie supporters? Welcome!


56 posted on 05/06/2016 6:40:05 AM PDT by llmc1 (#WeCanDoBetter)
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To: InterceptPoint

Actually, it’s a brilliant way to force a balanced budget! If you can’t borrow, then it HAS to be on a cash basis - and that would be a good thing...


57 posted on 05/06/2016 6:41:36 AM PDT by Shanghai Dan
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To: Dr. Sivana

Flemming vs Nestor: There is no defined right to SS.

regarding bonds, how do you make future generations pay what they did not agree to? it will be ugly. The only question in my mind is do we recognize we cannot service our obligations and restructure the debt in as orderly manner as possible, or carry on until a black swan event overtakes us. Think Puerto Rico without US backstops.


58 posted on 05/06/2016 6:41:57 AM PDT by zek157
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To: The Sons of Liberty

Russians paid Soviet ruble debt in devalued currency.

full pensions bought a bag of potatoes in the 90s.


59 posted on 05/06/2016 6:45:42 AM PDT by zek157
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To: reaganaut1

The damned NYT had no problem with Obama riunning up the National Debt to the tune of $20 Trillion and not a word from the whores at the NYT about that.


60 posted on 05/06/2016 6:48:12 AM PDT by Chgogal (Obama "hung the SEALs out to dry, basically exposed them like a set of dog balls..." CMH)
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