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Trump's pick for director of OMB is Mick Mulvaney, who wants to default on the debt

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A

AuthenticM

Member
yep

Over the weekend, President-elect Donald Trump tapped Rep. Mick Mulvaney (R-S.C.) to be his director of the Office of Management and Budget. This Cabinet-level post is responsible for producing the federal budget, overseeing and evaluating executive branch agencies and otherwise advising the president on fiscal matters. It’s a position with tremendous, far-reaching power, even if the public doesn’t pay much attention to it.

Which is why it’s so concerning that Trump chose Mulvaney, who seems poised to help Trump ignite another worldwide financial crisis.

Mulvaney was first elected to Congress in 2010 as part of the anti-government, tea party wave. A founding member of the right-wing House Freedom Caucus, he is among Congress’s most committed fiscal hawks. He has repeatedly voted against his own party’s budget proposals because they were insufficiently conservative.

All this will presumably put him at odds with Trump’s plans to balloon federal deficits through a $7 trillion cut in individual and corporate income taxes, another half-trillion in infrastructure subsidies and other major spending expansions.

...

Whatever their differences on line-item details, though, Mulvaney and the president-elect have at least one major thing in common: an alarming openness to defaulting on the federal debt.

As you may recall, during the campaign Trump repeatedly flirted with the idea of defaulting on U.S. debt obligations. In a CNBC interview in May, he suggested that his experience in offloading private debt would translate nicely to federal obligations. That is, he’d simply persuade the country’s creditors to accept less than full payment.

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

A Fish Aficionado

I am going to make it through this year if it kills me
Munch Poke said:
I'm curious as well. Is there a breakdown on how the debt is owed exactly?
Click to expand...
spring-2016-to-whom-does-the-US-government-owe-money.png


The debt is more like an expense report than private debt.
 
Z

Zukkoyaki

Member
A guy who is concerned about the Federal Reserve devaluing the dollar thinks defaulting on the debt would be an okay idea? Like, that wouldn't hurt the dollar at all? Huh.
 
D

daveo42

Banned
At least this gives me a heads up on moving all my current stocks into stable funds for the foreseeable future because the US Market will more than likely hit the brakes hard if we start defaulting on debt. I wonder if Trump knows he can't bankrupt the United States like it was one of his numerous business.
 
S

studyguy

Member
They won't default on anything to debtors.
Security is basically the only thing the treasury has going for it. It would be suicidal for the country's economy. We're not Argentina or Greece.
 
Goro Majima

Goro Majima

Kitty Genovese Member
The one silver lining is that if the US defaults and the dollar tanks so that we enter a period of hyperinflation, all current debt can be easily paid off. So if you have a mortgage, student loans, credit card debt, auto loan, etc. - it'll be incredibly easy to pay those off.

Of course the whole mass collapse of the economy, chaos in employment, etc. won't be fun.

A Fish Aficionado said:
spring-2016-to-whom-does-the-US-government-owe-money.png


The debt is more like an expense report than private debt.
Click to expand...

It's crazy how China has been offloading US debt pretty quickly here in recent months.

China is no longer the biggest foreign holder of U.S. debt
 
B

Brandson

Member
This was one of Trump's few policy positions that was somewhat predictable. Trump believes that not paying what you owe is a successful negotiating tactic. That may be true in business from time to time, but if you do the same thing as a country, the value of your currency will drop off a cliff. A low US dollar would favour US exporters and manufacturers but is mostly bad for the general US public as everything they buy will become more expensive.

Trump might be betting that China would rather negotiate a lower return on the US debt they hold rather than risk the impact of a low US dollar on the Chinese economy. It's a risky move. I don't see it working out well for the US, but you never know.
 
R

RCSI

Member
Hopefully there is enough sane people in the Senate to not confirm this guy.

But who am I kidding...
 
L

Lagspike_exe

Member
Dollar got a severe reputation hit after Nixon disengaged from the gold standard and started printing. Defaulting on the reserve currency would be unheard of in history of monetary policies.
 
G

giga

Member
Abhorrent views on the Fed and monetary policy. I can only hope that Congress doesn't let the majority of his extreme views to pass.
 
Q

Quixzlizx

Member
Brandson said:
This was one of Trump's few policy positions that was somewhat predictable. Trump believes that not paying what you owe is a successful negotiating tactic. That may be true in business from time to time, but if you do the same thing as a country, the value of your currency will drop off a cliff. A low US dollar would favour US exporters and manufacturers but is mostly bad for the general US public as everything they buy will become more expensive.

Trump might be betting that China would rather negotiate a lower return on the US debt they hold rather than risk the impact of a low US dollar on the Chinese economy. It's a risky move. I don't see it working out well for the US, but you never know.
Click to expand...

That's not how bonds work. It would be like publicly listing your company on the NYSE, then threatening to cancel individual shareholders' shares.
 
A

AndyD

aka andydumi
Brandson said:
This was one of Trump's few policy positions that was somewhat predictable. Trump believes that not paying what you owe is a successful negotiating tactic. That may be true in business from time to time, but if you do the same thing as a country, the value of your currency will drop off a cliff. A low US dollar would favour US exporters and manufacturers but is mostly bad for the general US public as everything they buy will become more expensive.

Trump might be betting that China would rather negotiate a lower return on the US debt they hold rather than risk the impact of a low US dollar on the Chinese economy. It's a risky move. I don't see it working out well for the US, but you never know.
Click to expand...

If anything he will go after internal stakeholders first. Look at that Social Security fund and internal individual and institutional debt.

Companies have "settled" pension funds with one time payments, I imagine he will want to do the same with military and civil service pensions as well.

Unless it's all bonds, and those are all the various bond holders. By that I mean they all hold the same type of bonds, so you can't selectively negotiate with them.
 
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