Donald Trump just threatened to cause an unprecedented global financial crisis

[TomCADem]

Donald Trump is proposing to simply default on the debt and renegotiate sort of like what Trump did with some of his properties. Yup, lets treat the U.S. economy like a private business. Hey, maybe we can treat social security the way private businesses treat pension assets.

http://www.msn.com/en-us/money/markets/donald-trump-just-threatened-to-cause-an-unprecedented-global-financial-crisis/ar-BBsIua5?li=BBnb7Kz&ocid=iehp

"I would borrow, knowing that if the economy crashed, you could make a deal," Trump said. "And if the economy was good, it was good. So therefore, you can't lose."

With his statement, Trump not only revealed a dangerous ignorance about the operation of the national monetary system and the global economic order, but also offered a brilliant case study in the profound risks of attempting to apply the logic of a private business enterprise to the task of running the United States of America.

* * *

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. If a bank fails as a result, then it's the FDIC's responsibility to clean it up.

The government doesn't work like that. Right now, people and companies all around the world treat US government bonds as the least risky financial asset in the universe. If the government defaults and banks fail as a result, the government needs to clean up the mess. And if risk-free federal bonds turn out to be risky, then every other financial asset becomes riskier. The interest rate charged on state and local government debt, on corporate debt, and on home loans will spike. Savings will evaporate, and liquidity will vanish as everyone tries to hold on to their cash until they can figure out what's going on.

[realmirage]

1. This is the Frankenstein we need to defeat

The general election is here

[xocet]

2. Thanks for posting this. It clearly points out the danger of a Trump presidency. n/t

[Initech]

3. Donald Trump would turn America into a third world dictatorship really quickly.

We can't let that happen people!!