Remember when Trump ran as the “businessman president?” You’d think that a businessman would at least have a functional grasp of finance, right?
Well, you’d be wrong. Consider Trump’s “explanation” of how he shaved off a portion of the debt:
The country – we took it over and owed over $20 trillion. As you know the last eight years, they borrowed more than it did in the whole history of our country. So they borrowed more than $10 trillion, right? And yet, we picked up $5.2 trillion just in the stock market. So you could say, in one sense, we’re really increasing values. And maybe in a sense, we’re reducing debt. But we’re very honored by it.
And he tried to push a related point in Harrisburg:
Very proudly, just in the stock market alone, we have increased our economic worth by $5.2 trillion, that’s right, since Election Day. $5.2 trillion. Think about that, that’s a quarter of the $20 trillion that we owe.
Now, finance is a complicated field; the “science” of money management hitches all the wonderful subjective vagaries of social science to all the complicated illusory objectivities of mathematics and statistics. As with most things, I know just enough about applied economics to be dangerous, but I know more about finance and money management than the president does — and I say that with confidence because everything he said in those two quotes is absolute bullshit, and there’s no context you can put them in where they aren’t absolute bullshit.
Money does not work like this. Gains in the stock market have no effect on the national debt. What’s more, a national debt isn’t a bad thing. The national debt only becomes a bad thing when the nation shows that it can’t pay that debt off.
Here’s a pop quiz: who do you think owns most of the national debt?
If you answered China, you’re wrong. The United States Government owns most of the debt of the United States Government. That debt is wrapped up in mandatory spending programs like Social Security.
Do you want to cut the debt? Start there. Cut Social Security. Raise the retirement age.
You can’t, though. Social Security — for obvious reasons — is really popular. So what do you do, then, if you can’t cut the biggest portion of your debt? You can raise taxes or print money to pay for it or, if you’re the Republicans, ignore the danger and play chicken with the national debt.
The problem with treating it like a game is that, eventually, you roll snake eyes instead of boxcars. What happens then? The United States defaults on its debt. Think what German Ordoliberalism did to Greece and you’ll start getting a taste for what Republican neoliberalism wants to do to the United States and the world economy.
And it might happen a lot sooner than we thought — especially given that the orange idiot we have in office now, a so-called “businessman,” knows less about money than I do.