US will never default on debt because you print money: Trump

Donald Trump (File Photo: IANS)

Washington- In an attempt to clarify his stance regarding potential default on national debt payments, Republican presidential candidate Donald Trump stated that, in the US, “you never have to default because you print the money”.

Responding to questions over recent comments indicating that as president, he would renegotiate US national debt rather than pay creditors in full – which could spur a global financial shock – Trump, according to CNN, said the notion that he would default on national debt is “crazy.”

“People said I want to go and buy debt and default on debt, and I mean, these people are crazy. This is the US government,” Trump told CNN on Monday “First of all, you never have to default because you print the money, I hate to tell you, OK?”

Late last week, Trump said that as president, he would “borrow, knowing that if the economy crashed, you could make a deal.” He added, “And if the economy was good, it was good. So, therefore, you can’t lose.”

Trump’s comments alarmed many, as defaulting on national debt would send reverberations throughout global finance given US debt is considered about the lowest-risk financial asset the world over. On Monday, Trump addressed his previous comments.

“I said if we can buy back government debt at a discount, in other words, if interest rates go up and we can buy bonds back at a discount – if we are liquid enough as a country, we should do that,” Trump said. “In other words, we can buy back debt at a discount.”

Trump, the billionaire real estate magnate, called himself the “king of debt,” going on to reference his purchase of discounted mortgages during the housing-bubble collapse that trigger the 2008 recession. However, a nation is different from a business, he said.

“In business (debt buyback) happens all the time. I bought mortgages back when the market went bad, I bought mortgages back at tremendous discounts, and I love doing that,” he said.

“There’s nothing like it actually, it gives me a great thrill. But in the US with bonds, that won’t happen because you know in theory the market doesn’t go down so that you default on debt, and that’s what happens.”

Trump has also made news of late for suggesting that he would like to see a boost in minimum wage protections and less tax decreases for top income recipients in the US than his previous tax plans had indicated.

On Sunday, Trump gave somewhat contradicting statements on wage hikes in the US. On ABC’s This Week, Trump said that “people have to get more” in terms of wages, but his comments centered around the vague pledge to “bring companies back into this country.”

“But my real minimum wage is going to be — I’m going to bring companies back into this country and they’re going to make a lot more than the $15 even,” Trump said. “They’re going to make a lot more than that. That’s what I want to do.”

Later on Sunday, on NBC’s Meet the Press, Trump said that states should decide on their own minimum wages, and that the federal government should not set a wage floor.

“I would like to see an increase of some magnitude,” he said. “But I’d rather leave it to the states. Let the states decide. Because don’t forget, the states have to compete with each other.”

In both Sunday interviews, Trump expressed a belief that, after negotiations with Congress, the wealthy in America may have to pay more in taxes that is proposed in his own tax plan. He did not express a desire to alter his tax plans for top income recipients. In fact, on Monday during an interview with Fox Business Network, Trump said his proposal is centered on “massive tax decreases.”