America Has Long Repudiated It’s Debt

Donald Trump has now suggested that America should “renegotiate” its national debt, similar to what has been done in Argentina, Greece and other low or middle income states.

That has upsetted some writers because it would jeopardize the status of U.S. Treasuries as “risk-free investments”. In a way they have a point as the higher borrowing cost this would mean would most likely outweigh any gains from debt writedown for the U.S. government, so Trump’s suggestion would be as he would put it, “a terrible deal”. While Trump may be a good businessman, he sure doesn’t understand economics.

One much smarter way to in effect repudiate its national debt is to use the old fashioned method of pursuing more inflationary policies by the Fed. That way the debt burden will decline even as Treasuries remain formally “risk free”. Because of money illusion and accounting rules, de facto debt writedowns through inflation are feared much less by investors than formal debt writedowns and would mean much lower borrowing costs for the U.S. government.



Pro-Freedom Americans Should Choose Libertarian Party Candidate

My preferered Republican candidate was Rand Paul, but unfortunately he never managed to gain much support. And then Ted Cruz seemed like the best candidate, but now he has pulled out of the race too.

So, we’re stuck with a choice between a man who, while having a beautiful wife and beautiful daughters and while being quite amusing, has views and a personality inapproriate for becoming the most powerful man on Earth, and a woman who represents a seriously flawed domestic and foreign (“Libya” just about sums it up) agenda and is as the Republican candidate accurately puts it “crooked”.

Being non-American I can’t vote in the coming election. But my recommendation for American readers is to vote for the Libertarian Party candidate, whoever that is (most likely it will be Gary Johnson). He doesn’t stand a chance to actually become President, but given how bad the candidates that have a a chance to win are, it is better for you to send a message by voting for him rather than the statist candidates of the two biggest parties.