The guy that currently occupies the Oval Office has declared bankruptcy several time throughout his business ventures. For him, it is just a standard thing to get out from under possibly unprofitible debt. So, I’m sure in his mind he is thinking why not just have the country declare bankruptcy instead of raising the debt ceiling. Believe it or not given the radical right agenda of his base that seems to be a real possibility for this current administration.
Here is a little about that from my friends at the NY Times:
The debt ceiling is politically imposed, and the decision not to raise it, and therefore to choose to default, is also political. It’s something America has avoided in the past. This time, though, will be different.
This country has hit the debt ceiling once, in 1979, and then largely by accident and only to a minor extent. But even that foot fault was estimated to cost the United States about 0.6 percent in higher interest costs for an indefinite period. More recently, congressional debt ceiling brinkmanship in 2011 led Standard & Poor’s to downgrade the credit rating of the United States.
An increase in Treasury interest rates of just 0.2 percent a year would cost the government about $400 billion over the next 10 years. It also would lead to higher borrowing costs for American businesses, because borrowing rates are set by reference to Treasury rates. Moreover, each month holders of tens of billions of dollars in valid claims against the United States would go unpaid, triggering a major recession.
How could this happen?? Well part of it like many other things going on now ia total inexperience and lack of competency. The other is the mindset of Mr. Trump. He just doesn’t see the devastation that would result. He only sees the money.
Personally a pretty big part of my retirement savings are in Saving and Treasury bonds. Those would of course disappear if bankruptcy is declared. I’m sure I am not alone in this condition. If this administration decides that Social Security checks are on the back burner for allocating existing funds then millions of senior citizens would also have to declare bankruptcy.
Then there is China. They currently hold billions and billions of bucks of our debt. How will they respond when they learn those bonds are worthless? I’m not an economist but I also think it would be a pretty sure thing that our national bankruptcy would result in an international depression era that would last for years. Since Mr. Trump doesn’t read or study anything I wonder if he is even thinking of those possibilities?
For those who say this is a “the sky is falling” scenario, you must realize that this could happen with the stroke of a pen in an unstable person’s hand. I wonder who that might be???