Slouching towards Venezuela
WASHINGTON (AP) ‐ In the event that the U.S. economy crashed, Donald Trump has floated a recovery plan based on his own experience with corporate bankruptcy: Pay America's creditors less than full value on the U.S. Treasurys they hold.
Experts see it as a reckless idea that would send interest rates soaring, derail economic growth and undermine confidence in the world's most trusted financial asset.
The presumptive Republican presidential nominee suggested in a phone interview Thursday with CNBC that he would stimulate growth through borrowing. If trouble arose, he added, he could get investors to accept reduced payments for their Treasury holdings.
Trump later clarified that comment to say he would offer to buy the bonds back at a discount from investors in hopes of refinancing them at lower rates.
"I would borrow, knowing that if the economy crashed, you could make a deal," Trump told CNBC.
Such a move, never before attempted by the U.S. government, would likely spook investors whose trust in Treasury notes keeps global financial markets operating. |