I see Trump’s suggestion that the US haircut holders of treasury debt through a different lens than most observers. Almost every year, I walk into an introductory economics class in the fall and try to disabuse students of the notion that debt and credit assets like bonds are two unrelated things. They are shocked to discover that the savings bonds many have stashed away are pieces of the “national debt”, and that eliminating this debt would mean draining the world of all such bonds—that America’s collective public debt is (apart from foreign holdings, which is another story) America’s collective private wealth. Yes, the unequal ownership of that wealth is scandalous, but that’s about how much inequality we have, not how much wealth.
So I see the same with the Donald. It doesn’t sound like Trump realizes that his own bond portfolio would take a hit. My guess is that he is as clueless as his supporters, none of whom have the slightest idea that the Great One has just proposed taking a slice out of their savings. Interestingly, this observation hasn’t appeared in the popular media yet, at least from what I’ve seen. Journos and pundits talk about how unorthodox the idea is and how it could trigger a financial crisis, but not that it’s a monetary form of self-cutting.
Incredible.
6 comments:
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This is pretty funny, Peter. You post something about Trump's odd views on debt and assets, and you got a comment from some scam artist trying to con people into dealing monetarily with a "GOD fearing man." Ouch.
Yeah, but my point is that it's not just Trump. The general public and the commentariat don't seem to have figured it out.
Nice, succinct post about a non-problem, the "National Debt." The commentariat is paid by the .01% to not understand this issue. Which leaves the rest profoundly confused and purposefully ill-informed. This is the key means by which the .01% continues to increase the wealth and power gaps between themselves and the rest. Because you know, DEBT. (Completely disregarding increasingly dangerous levels of private debt, such as student loans.)
Finally someone gets it - why is this not discussed in a wider audience? Why the obsession with a non-issue in the US. And btw no surprise that the Donald does not get it.
@Peter Dorman
I started reading econ blogs during the collapse in 2008 and I don't think I was exposed to the concept that "the national debt is our national wealth" until I stumbled on the New Economic Perspectives Modern Money Primer some 5 years later. I remember thinking "How did I not know this?"
So I think your point stands that this isn't widely known, even among people that have some interest in economics.
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