Donald Trump declared Monday the U.S. never has to default on debt “because you print the money,” while clarifying his strategy for managing the national debt.
Trump insisted that he never said the U.S. should default or attempt to renegotiate with creditors, as had been reported.
“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,” Trump told CNN’s Chris Cuomo on “New Day.” “First of all, you never have to default because you print the money, I hate to tell you, OK?”
Trump said he would center his approach on debt buybacks if and when interest rates go up.
“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.”
He also repeated his claim that he is “the king of debt.”
“I understand debt better than probably anybody. 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,” Trump said.
The real estate mogul also cited his experience buying up mortgages at discount during the 2008 financial crash, while noting that managing the national debt would be a very different task.
“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 United States 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 had kicked up a firestorm in economic and political circles when, in an interview last Friday on CNBC, the presumptive Republican nominee seemed to suggest that rather than pay its outstanding national debt in full, the country could renegotiate.
Asked if the U.S. needs to pay its debt in full or if it could negotiate a partial repayment, Trump said: “I would borrow, knowing that if the economy crashed, you could make a deal.”
Such a renegotiation risks creating financial turmoil because U.S. Treasuries are considered the safest assets on the planet and a major benchmark for valuing other securities. Risking their safety through a renegotiation like kind Trump seemed to propose could cause borrowing rates everywhere to skyrocket and create chaos in global markets.