The president's comments about Treasury notes were, for all intents and purposes, gibberish. But more importantly, they were also potentially dangerous.

Summary

Trump recently suggested the U.S. national debt might be inflated by fraudulent treasury payments, raising concerns among economists and financial experts.

Nobel laureate Paul Krugman warned that both Trump and Elon Musk have a history of not paying debts and that “if markets even suspect that this habit will extend to Treasuries, God help us.”

The White House quickly walked back Trump’s remarks, but the clarification seemed unconvincing.

Critics argue this incident shows Trump’s lack of understanding of financial and economic fundamentals.

  • kibiz0rEnglish
    31·
    1 day ago

    “We’re even looking at Treasuries,” the Republican said. “There could be a problem — you’ve been reading about that, with Treasuries and that could be an interesting problem.”

    For some reason, the president went on to add, “It could be that a lot of those things don’t count. In other words, that some of that stuff that we’re finding is very fraudulent, therefore maybe we have less debt than we thought.”

    His comments were, for all intents and purposes, gibberish. But more importantly, they were also potentially dangerous.

    “For those not familiar with how financial markets work, US Treasuries are the ultimate safe asset, used as collateral for everything,” economist Paul Krugman explained. “Even a hint that some Treasuries might not be honored could bring everything to a screeching halt.”

    • ImplyingImplications@lemmy.ca
      18·
      23 hours ago

      Much of the economy only works because people believe in it. The UK had an economic crisis in 2022 when Liz Truss, Prime Minister for 50 days, passed a budget so terrible it tanked their stock market.

      The budget included enormous tax cuts for the highest tax brackets, resulting in a £60 billion budget deficit, all while there was a cost of living crisis for the UK’s poorest. UK stocks plummeted so much over the thought that the Prime Minster had no idea how to manage the economy that it caused “safe” investments, like retirement funds, to start failing. The UK central bank stepped in and said they’d print money in order to keep safe investments liquid which likely stopped the UK from experiencing a great depression. Liz Truss resigned because of the fallout.

      It’s not an exaggeration to say that Trump hinting that the government might not honour their debts could collapse the economy.