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Now that this fall’s election is basically set (delegate math reality being what it is), we’re going to do a segment called The Sound Bite every now and then. We play you a piece of tape — sometimes about the election, sometimes about something else — and tell you what’s actually going on.
We started during our Weekly Wrap on Friday, with GOP nominee-in-all-but-fact Donald Trump. In a phone interview on CNBC Thursday, Trump talked about how he might convince holders of U.S. government bonds that they might have to take a discount. A haircut, as bond traders like to say.
“Debt was sort of always interesting to me,” Trump said. “Now we’re in a different situation with the country, but I would borrow, knowing that if the economy crashed, you could make a deal.”
As we said on Friday, that would be irresponsible at best, dangerous and globally destabilizing at worst.
Today, though, from the fair-is-fair department, is another quote from Mr. Trump, also on the general topic of U.S. debt:
“People said I want to go and buy debt and default on debt, and I mean, 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.”
Here’s the thing: He’s right.
We do control our own currency. And we could print as much of it as we need to pay our debts. But we don’t want hyperinflation.
Hyperinflation is where there’s so much money in circulation, an individual dollar eventually becomes worthless — and then there’s the ensuing economic collapse. See Germany after World War I.
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