Tag Archives: debt

Trump Suggests the US Solve its Debt Problem by Printing More Money

Economy, , , ,
Deutschland
In der Geldauflieferungsstelle der Reichsbank in Berlin.
(Aufnahme: Oktober 1923) Geldauflieferungsstelle der Reichsbank in Berlin.
(Aufnahme: Oktober 1923)
6823

During an interview on Fox Business  Donald Trump quoted newspapers who had claimed that “Trump wants to go and start negotiating with creditors.” His answer: “You don’t have to think about this, but we print the money.”

He repeated the same sentiment on CNN:

“People said I want to go and buy debt and default on debt — these people are crazy. This is the United States government. First of all, you never have to default because you print the money, I hate to tell you, OK? So there’s never a default.”

News outlets such as the New York Times annoyed Trump, the presumptive Republican candidate for president, when they suggested that Trump wanted to reduce the national debt by convincing creditors to accept less than full payment. The report said that such statements are a totally new frontier for modern political candidates.

Those remarks were based on an interview Trump gage to CNBC last week. He was asked whether the US should pay its debt in full, or maybe negotiate a partial repayment. Trump’s answer was:

“I would borrow, knowing that if the economy crashed, you could make a deal.”

Trump has described himself as the “king of debt” but added that debt is “tricky” and can be “dangerous.”

“I know how to deal with debt very well — I love debt — but, you know, debt is tricky, and it’s dangerous, and you have to be careful, and you have to know what you’re doing,” he said.

One Third of Consumers with Debt Face Collection Agencies

Consumerism, , ,
One third of consumers with debt end up with the debt collector
One third of consumers with debt end up with the debt collector

According to a recently published study from the Urban Institute, 35 percent of Americans have had their debt and other past due bills reported to collection agencies.

Caroline Ratcliffe, a senior fellow at the Urban Institute, a Washington-based think-tank, explained that often consumers get behind on their credit card payments or their hospital bills. Mortgages, car loans and student loans are also put aside, unpaid. Sometimes gym membership fees and cellphone bills can also go to a collection agency if they remain unpaid for too long. Once debt ends up in the hands of a collection agency credit scores and job opportunities can be negatively affected.

“Roughly, every third person you pass on the street is going to have debt in collections,” Ratcliffe said. “It can tip employers’ hiring decisions, or whether or not you get that apartment.”

The results of the study showed that 35.1 percent of all people with credit cards have been reported to collection agencies for debt averaging $5,178, based on records from September 2013.

The vast majority of this debt is concentrated in southern and western states. Texas is overly represented to collection agencies, with 44.3 percent in Dallas, 44.4 percent in El Paso, and 51.7 percent in McAllen. Las Vegas has about half of its residents with debt in collections.

Ratcliffe blames frozen salaries for much of the debt problem in the worst hit states. In many places wages have been struggling to keep up with inflation during the past five years of economic recovery. In an unrelated survey Wells Fargo discovered that after-tax income dropped for the lowest 20 percent of earners during the same time frame.

The U.S. Downgrade Is A Deserved Wakeup Call

Economy, , , , , ,

The S&P downgraded the United States credit rating from AAA to AA+ on Friday with a warning of potential future downgrades. The downgrade was unprecedented but certainly necessary. America has over the years built up its 14 trillion dollar debt and cannot repay it. America has simply printed money in order to maintain its cash flow, without investing in new development.

The S&P credit rating is supposed to reflect America’s ability to pay its debts. China, Japan and other countries are heavily invested In America and suddenly the value of their investment has dropped. Why is this important to the American economy? Because the economy is based on borrowing money and other nations will stop lending because it is a poor credit risk. Indeed, US debtors are likely to call in their debts rather than to wait and watch the value of the American currency deflate and loose its value.

The economy is slowing down and entering a recession. The usual treatment for recession is government stimulus spending. However, government spending is not stimulating the economy. America’s unemployment rate is officially over 9 % and the GDP is under 2% and in reality is probably much worse than those figures. The government has provided no stimulus measures such as jobs programs or stimulus to business. All it has done is agreed to raise the debt ceiling and print more money. Currently, America pays $250 billion interest per year on its debt.

The weakening of America’s economy is something that people with financial and economic backgrounds could have seen coming if they were willing to face it. Now it is becoming clear to everyone that America will be forced to make difficult concessions to repay its debts and to repair its economy.