guno
Gold Member
- Banned
- #1
Thankfully this guy will never be president
Donald Trump has said he will approach financing the US government as if it's one of his failing casinos.
He said on CNBC on Thursday that as president he would find ways to renegotiate the public debt and pay less than 100 cents on the dollar if the economy went bad.
"I've borrowed knowing that you can pay back with discounts," he said. "I would borrow knowing that if the economy crashed, you could make a deal."
Some corporate finance deals really do work like this: You issue risky debt, and the lenders know you might not be able to pay them back in full if something really bad happens. But that kind of debt bears a high interest rate, because the lenders know you might not be able to pay them back in full if something really bad happens.
US Treasury bonds have very low interest rates because investors are extremely confident they will be paid in full, even in poor economic conditions. Trump — by openly saying that he would keep partial payment on the table as an option — could spark a crisis in the Treasury markets if he became president. Investors would cease to see Treasurys as a safe asset, and they would demand higher interest rates in exchange for risk.
Donald Trump is floating an insane idea that would tank the American economy
Donald Trump has said he will approach financing the US government as if it's one of his failing casinos.
He said on CNBC on Thursday that as president he would find ways to renegotiate the public debt and pay less than 100 cents on the dollar if the economy went bad.
"I've borrowed knowing that you can pay back with discounts," he said. "I would borrow knowing that if the economy crashed, you could make a deal."
Some corporate finance deals really do work like this: You issue risky debt, and the lenders know you might not be able to pay them back in full if something really bad happens. But that kind of debt bears a high interest rate, because the lenders know you might not be able to pay them back in full if something really bad happens.
US Treasury bonds have very low interest rates because investors are extremely confident they will be paid in full, even in poor economic conditions. Trump — by openly saying that he would keep partial payment on the table as an option — could spark a crisis in the Treasury markets if he became president. Investors would cease to see Treasurys as a safe asset, and they would demand higher interest rates in exchange for risk.
Donald Trump is floating an insane idea that would tank the American economy
