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BA Deere
Honored Advisor

Peter Schiff, Trump right on the debt

I don`t like everything Schiff is saying such as "interest rates need to be higher" it`d sound better if I didn`t have debt 🙂  But Trump understands the mess that this country is in better than anyone that ran....maybe even Rand Paul.   we can`t pay this damned debt! get that in your head people and we are close to the day of reckoning..we are at day of reckoning`s doorstep and without 0% interest rates, we`d be inside the house with day of reckoning. 

 

Donald Trump knows that the debt has to be restructured...because he`s had a few personal experiences with that.  All these idiots that have been elected either say  "cut taxes and we`ll grow our way out"...no we won`t, there`s nothing to grow.  The Democrat doofuses say "tax the Koch brothers and we`ll be fine"....no we won`t fools, we ain`t gonna tax our way out of this.  And we can`t cut spending because government spending unfortunately props up the economy.

 

There is that point where it will become very obvious that the debt can`t be paid and the choice becomes 1. do we kick the can down the road until our lenders cut us off at the knees  or 2. while we are still a little solvent, go to the lenders and negotiate the debt to a level that it can be serviced.   In my opinion, the debt will have to be cut to less than 1/3, our creditors will accept that because 30¢ on the dollar is better than nothing.

 

The left will fight this tooth and nail and spin it in such a way to blame President Trump, however it was not he that got us into this mess.  And oh yeah, the restructuring will entail and $1000 bond being worth $300 and entitlements will probably have to be touched, it won`t be Trump, but rather our creditors requiring it.  But remember a little bit is better than nothing at all and the longer this goes on the less goodies there will be 3 years for now if nothing is done we`ll be talking anout 25¢ or 20¢ on the dollar and shortly there after nothing of value at all to be salvaged.

 

https://www.youtube.com/watch?v=ZNNDMCWHSQg

24 Replies
bruce MN
Advisor

Re: Peter Schiff, Trump right on the debt

Every few months you need a dose of Puke. Note particularly those percentages of the gross production the interest, and the debt itself for that matter, comprise. And think about who the debt is owed to and why they keep being satisfied with the return. We for all practical purposes owe the debt to ourselves. http://mobile.nytimes.com/2016/05/09/opinion/the-making-of-an-ignoramus.html?smid=tw-share&_r=0&refe...
bruce MN
Advisor

one more of your favorites

BA Deere
Honored Advisor

Re: Peter Schiff, Trump right on the debt

PK says that by getting our debt to a managable level would "deprive the world of a safe asset to flee to at a time when there isn`t many safe places to go"...Smiley Very Happy    Does PK ever listen to himself???    It`s like the Wizard of Oz (spoiler alert) after Toto pulls open the curtain

 

https://www.youtube.com/watch?v=YWyCCJ6B2WE  

 

Of course presently the interest on the debt isn`t a issue...because hello, we have 0% interest rates, that coincidently in 2009.  If interest rates ever gets back to a historical "normal", the US government is in trouble and I am in trouble.  We have a Federal Reserve that has a itchy trigger finger and would love to raise rates, but they can`t because of the obvious disaster that would result.

 

What could happen if President Trump has the mandate to restructure the debt, then interest rates could rise and that wouldn`t cause our defict to sky rocket.   If I still had debt at that time, it could really nail me, but we could get back to a prime rate of 8 or 10%.  And that would be a tool for the fed to keep their boogy man "inflation" at bay. 

 

We owe well over $1 Trillion to China and we owe Japan a bunch...we also run trade deficits with those countries.  Alot of this QE money has went into stocks and bonds.  The few Aunt Emmas out there that buy US Savings bonds with their farm rent check aren`t as significant as in the past.  Their $500 bond wouuld have to be written down to $160 or whatever, but the return might be 5 or 6% again.

 

r3020
Senior Advisor

Re: Peter Schiff, Trump right on the debt

0% interest rates is nothing but a tax on the elderly who worked their whole lives, saved their money with the hopes of living a comfortable lifer style after retirement. Their money is now used by the government to purchase votes for the elites who live like kings.

BA Deere
Honored Advisor

Re: Peter Schiff, Trump right on the debt

That`s right 3020. And the kid mowing lawns used to take his jar of money in and buy a savings bond and learned to save.  Now for a generation we`ve been taught that "savers are suckers".  It puts alot of money into the Wallstreet casino, that hopes and prays there isn`t a crash and maybe get a 4% return. 

r3020
Senior Advisor

Re: Peter Schiff, Trump right on the debt

BA, now the banks get to print their own money and then lend it to the government for a couple of %. Tax free. Talk about a sweet deal.

OKdon
Senior Contributor

Re: What it proves

Trump has no respect for contracts. Out of four bankruptsies all ofwhich Trump personally bailed out by dumping his responsibilities on to others.

 

Secondly, reneging on the nations debt is simply lunacy. If bond holders are  forced  to take cuts, where will future financial needs come from. Estate taxes or taxing the rich. Nobodywill touch government bonds if the downgrade the current ones.

 

Thirdly, theDonald has been married three time and twice he broke the marriage contract. So deals mean nothing to him and force of will won't give him the power to do so.

 

He is an idiot that is suggesting that the US government reneg on its financial obligations. I know of nothing that would bruise the nation's credit worthiness more.

hardnox
Advisor

Re: Peter Schiff, Trump right on the debt

El Donaldo's initial statement made no sense whatsoever, other than to establish his bona fides that he has special expertise in these matters. When it hit withthe deserved clunk and he walked it back a bit, it actually did, although it would require a lot of context to have any idea whatsover what, if anything, he might be thinking.

 

Federal Debt Anxiety is easily transmissable and someone promising to make it go away has fertile ground.*

 

The economists are our High Priests and apparently there are plenty of folks who are so disappointed and angry that the Methodists haven't delivered on their promises that they're willing to consider becoming Scientologists.

 

*A "haircut" could actually be accomplished in the following manner. First, extinguishing the debt is no huge matter. US govt. securities are essentially part of the money stock and you just turn the electronic entry of the security into an electronic entry for cash. Market eructations aside, it is basically just a massive QE, as the cash has to go chase something that will provide the yield (and safety) that's been taken away. I'll register some irony regarding people who were near hysterical over QE warming up to the idea when their savior wants to go in big.

 

But the US 30 year currently trades at 165% of par. So does the holder of that get par or the market value? All other longer dated treasuries also trade at a premium to par. Paying par would almost certainly be an additional and larger hit to the full faith and credit of the US so I'm guessing in the end you pay market. So rotsa ruck with the haircut.

 

US interest costs are currently quite low but you do eliminate future escalating costs should rates rise- that's about it.

 

Current term structure of US debt is pretty short, which so far has been a good bet. As per discussions on the other page over the last half a dozen years regarding when to make the jump to longer term financing, thus far, not yet.

 

 

 

 

 

 

 

BA Deere
Honored Advisor

Re: What it proves

I think everyone would argee that if a debtor (and the US is the LARGEST debtor nation) is in trouble (and we are, we run up the national debt every year) that it`s time to sit down with your banker sooner than later. 

 

The hole gets that much deeper at the turn of every calender page.  As someone`s creditor, I`d much rather that my debtor come to me when there`s still 30¢ on the dollar than when he gets in Greece territory and there`s nothing.  But, what usually happens is the debtors ignore the problem until it becomes the 800lb ape in the room that no one can ignore.

 

Bernie Sanders type spending would open the cage to the 800lb ape much sooner...maybe that`s what we need, one and done and get it over with? 

 

One "painless" way of dealing with it is inflate our way out, everyone would get "paid in full" with Monopoly money...but they couldn`t say they didn`t get paid.  That`s what a neighbor tried to pay his loans off with "cheaper dollars" that were bound to happen in the "1980`s forthcoming inflation"...it didn`t work for him, but then again he couldn`t print pieces of paper with Harriet Tubman`s picture on it and claim it`s worth "$20".