TO FORM A MORE PERFECT UNION: An Honest, Open, Effective, Transparent, Good-Faith, Responsive, Accountable, Much Smaller and Far Less Expensive Federal Government -- Greater Freedom and Liberty -- Fewer and Smarter Regulations -- Fewer and Smarter Taxes (i.e., FAIR TAX) -- More National Security -- More Secure Borders -- More Stable Currency -- An Accurate, Fair, Honest and Unbiased News Media
1. The world is a dangerous place to live — not because of the people who are evil but because of the people who don't do anything about it. — Albert Einstein
2. The quickest way of ending a war is to lose it. — George Orwell
3. History teaches that war begins when governments believe the price of aggression is cheap. — Ronald Reagan
4. The terror most people are concerned with is the IRS. — Malcolm Forbes
5. There is nothing so incompetent, ineffective, arrogant, expensive, and wasteful as an unreasonable, unaccountable, and unrepentant government monopoly. — A Patriot
6. Visualize World Peace — Through Firepower!
7. Nothing says sincerity like a Carrier Strike Group and a U.S. Marine Air-Ground Task Force.
8. One cannot be reasoned out of a position that he has not first been reasoned into.
2016-10-08
What Evil and Destruction Hath Barack Obama Rought?
Only In America!
No. 9 — Only in America ... Could people claim that the government still discriminates against black Americans when they have a black President, a black Attorney General and roughly 20% of the federal workforce is black while only 14% of the population is black, 40+% of all federal entitlements goes to black Americans: 3 times the rate that go to whites, and 5 times the rate that go to Hispanics!
No. 8 — Only in America ... Could they have had the two people most responsible for our tax code, Timothy Geithner (the head of the Treasury Department) and Charles Rangel (who once ran the Ways and Means Committee), BOTH turn out to be tax cheats who are in favor of higher taxes.
No. 7 — Only in America ... Can they have terrorists kill people in the name of Allah and have the media primarily react by fretting that Muslims might be harmed by the backlash.
No. 6 — Only in America ... Would they make people who want to legally become American citizens wait for years in their home countries and pay tens of thousands of dollars for the privilege, while they discuss letting anyone who sneaks into the country illegally just 'magically' become American citizens. (probably should be number one)
No. 5 — Only in America ... Could the people who believe in balancing the budget and sticking by the country's Constitution be called EXTREMISTS.
No. 4 — Only in America ... Could you need to present a driver's license to cash a check or buy alcohol, but not to vote.
No. 3 — Only in America ... Could people demand the government investigate whether oil companies are gouging the public because the price of gas went up when the return on equity invested in a major U.S. Oil company (Marathon Oil) is less than half of a company making tennis shoes (Nike).
No. 2 — Only in America ... Could you collect more tax dollars from the people than any nation in recorded history, still spend a Trillion dollars more than it has per year - for total spending of $7 Million PER MINUTE, and complain that it doesn't have nearly enough money.
No. 1 — Only in America .... Could the rich people—who pay 86% of all income taxes—be accused of not paying their "fair share" by people who don't pay any income taxes at all.
IS THIS A GREAT COUNTRY OR WHAT!
2016-10-04
Bill Clinton’s airport run-in with Loretta Lynch was no accident
Once inside Lynch’s plane, Bill turned on the Clinton charm. He gave Lynch’s shoulder an affectionate squeeze and shook hands with her husband, Stephen Hargove.
How could this have happened? What had gone wrong? Would she be forced to resign?
Hillary was clearly guilty as sin, and the right thing would have been for Comey not only to say so — which he did — but to make her pay for her sins.
2016-09-20
Newsweek Magazine Final Gets it Right!
Finally, Matt Patterson and Newsweek speak out about Obama. This is timely and tough. As many of you know, Newsweek has a reputation for being extremely liberal. The fact that their editor saw fit to print the following article about Obama and the one that appears in the latest Newsweek, makes this a truly amazing event, and a news story in and of itself. At last, the truth about our President and his Agenda are starting to trickle through the protective wall built around him by the liberal media...
By Matt Patterson
(Newsweek Columnist -- Opinion Writer)
Years from now, historians may regard the 2008 election of Barack Obama as an inscrutable and phenomenon, the result of a baffling breed of mass hysteria akin perhaps to the witch craze of the Middle Ages. How, they will wonder, did a man so devoid of professional accomplishment beguile so many into thinking he could manage the world's largest economy, direct the world's most powerful military, execute the world's most consequential job?
Imagine a future historian examining Obama's pre-presidential life: ushered into and through the Ivy League, despite unremarkable grades and test scores along the way; a cushy non-job as a "community organizer;" a brief career as a state legislator devoid of legislative achievement (and in fact nearly devoid of his attention, less often did he vote "present"); and finally an unaccomplished single term in the United States Senate, the entirety of which was devoted to his presidential ambitions.
He left no academic legacy in academia, authored no signature legislation as a legislator. And then there is the matter of his troubling associations: the white-hating, America-loathing preacher who for decades served as Obama's "spiritual mentor;" a real-life, actual terrorist who served as Obama's colleague and political sponsor. It is easy to imagine a future historian looking at it all and asking: how on Earth was such a man elected president? There is no evidence that he ever attended or worked for any university or that he ever sat for the Illinois bar. We have no documentation for any of his claims. He may well be the greatest hoax in history. Not content to wait for history, the incomparable Norman Podhoretz addressed the question recently in the Wall Street Journal: To be sure, no white candidate who had close associations with an outspoken hater of America like Jeremiah Wright and an unrepentant terrorist like Bill Ayers, would have lasted a single day.
But because Mr. Obama was black, and therefore entitled in the eyes of liberal Dom to have hung out with protesters against various American injustices, even if they were 'a bit' extreme, he was given a pass. Let that Sink in: Obama was given a pass - held to a lower standard because of the color of his skin. Podhoretz continues: And in any case, what did such ancient history matter when he was also so articulate and elegant and (as he himself had said) "non-threatening," all of which gave him a fighting chance to become the first black president and thereby to lay the curse of racism to rest? Podhoretz puts his finger, I think, on the animating pulse of the Obama phenomenon - affirmative action. Not in the legal sense, of course. But certainly in the motivating sentiment behind all affirmative action laws and regulations, which are designed primarily to make white people, and especially white liberals, feel good about themselves. Unfortunately, minorities often suffer so that whites can pat themselves on the back.
Liberals routinely admit minorities to schools for which they are not qualified, yet take no responsibility for the inevitable poor performance and high drop-out rates which follow. Liberals don't care if these minority students fail; liberals aren't around to witness the emotional devastation and deflated self-esteem resulting from the racist policy that is affirmative action. Yes, racist. Holding someone to a separate standard merely because of the color of his skin - that's affirmative action in a nutshell, and if that isn't racism, then nothing is. And that is what America did to Obama. True, Obama himself was never troubled by his lack of achievements, but why would he be? As many have noted, Obama was told he was good enough for Columbia despite undistinguished grades at Occidental; he was told he was good enough for the US Senate despite a mediocre record in Illinois ; he was told he was good enough to be president despite no record at all in the Senate. All his life, every step of the way, Obama was told he was good enough for the next step, in spite of ample evidence to the contrary.
What could this breed if not the sort of empty narcissism on display every time Obama speaks? In 2008, many who agreed that he lacked executive qualifications nonetheless raved about Obama's oratory skills, intellect, and cool character. Those people - conservatives included - ought now to be deeply embarrassed. The man thinks and speaks in the hoariest of cliches, and that's when he has his Teleprompters in front of him; when the prompter is absent he can barely think or speak at all. Not one original idea has ever issued from his mouth - it's all warmed-over Marxism of the kind that has failed over and over again for 100 years. (An example is his 2012 campaign speeches which are almost word for word his 2008 speeches)
And what about his character? Obama is constantly blaming anything and everything else for his troubles. Bush did it; it was bad luck; I inherited this mess. Remember, he wanted the job, campaigned for the task. It is embarrassing to see a president so willing to advertise his own powerless-ness, so comfortable with his own incompetence. (The other day he actually came out and said no one could have done anything to get our economy and country back on track). But really, what were we to expect? The man has never been responsible for anything, so how do we expect him to act responsibly?
In short: our president is a small-minded man, with neither the temperament nor the intellect to handle his job. When you understand that, and only when you understand that, will the current erosion of liberty and prosperity make sense. It could not have gone otherwise with such an impostor in the Oval Office.
2016-09-08
The FBI Is In The TANK For Hillary Clinton
Bureau managers were obviously instructed to exonerate Clinton!
By Andrew P. Napolitano
The Washington Times
September 7, 2016
ANALYSIS/OPINION:
On Sept. 2, the FBI released a lengthy explanation of its investigation of Hillary Clinton and a summary of the evidence amassed against her. It also released a summary of Mrs. Clinton’s July FBI interrogation.
The interrogation was in some respects standard and in others very troubling. It was standard in that she was confronted with emails she had sent or received and was asked whether she recalled them, and her judgment about them was challenged. The FBI was looking for gross negligence in her behavior about securing state secrets.
The failure to secure state secrets that have been entrusted to one for safekeeping is known as espionage, and espionage is the rare federal crime that does not require prosecutors to prove the defendant’s intent. They need only prove the defendant’s gross negligence.
At one point during the interrogation, FBI agents attempted to trick her, as the law permits them to do. Before the interrogation began, agents took the hard copy of an innocuous email Mrs. Clinton had sent to an aide and marked it “secret.” Then, at her interrogation, they asked Mrs. Clinton whether she recognized the email and its contents. She said she did not recognize it, but she questioned the “secret” denomination and pointed out to the agents that nothing remotely secret was in the email.
By examining the contents of the email to see whether it contained state secrets, which it clearly did not, Mrs. Clinton demonstrated an awareness of the law — namely, that it is the contents of a document or email that cause it to be protected by federal secrecy statutes, not the denomination put on it by the sender.
This added to the case against her because she later told the FBI that she had never paid attention to whether a document contained state secrets or not. In the strange world of espionage prosecution, this denial of intent is an admission of guilt, as it is profoundly the job of the secretary of State to recognize state secrets and to keep them in their secure government-protected venues, and the grossly negligent failure to do so is criminal.
The FBI notes of the interrogation recount that Mrs. Clinton professed serious memory lapses 39 times. She also professed ignorance over what “C” means in the margin of a government document. “C” in the margin means “confidential,” which is one of the three levels of federal state secrets. The other two levels are “secret” and “top secret.” Under federal law, Mrs. Clinton was required to keep in secure government venues all documents in those three categories. The FBI found that she had failed to do so hundreds of times.
By denying that she had paid attention to notes in margins designating the presence of secrets, by denying that she recognized a secret when she saw one, and by denying that the location of planned drone strikes is secret (an obvious secret with which FBI agents confronted her), she succeeded in avoiding incriminating herself.
But by saving herself from indictment, she may have doomed her campaign for president. In this dangerous world, how can a person seeking the presidency be so dumb or ignorant or indifferent or reckless or deceptive about what is a secret and what is not?
The records released last week also reveal that the FBI must have been restrained from the outset from conducting an aggressive investigation. It did not present any evidence to a grand jury. It did not ask a grand jury for any subpoenas, and hence it didn’t serve any. It did not ask a judge for any search warrants, and hence it didn’t serve any. The data and hardware it gathered in the case were given to it in response to simple requests it made.
I counted five times in the report where the FBI lamented that it did not have what it needed. This is the FBI’s own fault. This tepid FBI behavior is novel in modern federal law enforcement. It is inimical to public safety and the rule of law. It is close to misconduct in office by high-ranking FBI officials.
Someone restrained the FBI.
The FBI did not ask Mrs. Clinton aggressive follow-up questions. Her interrogators just blithely accepted her answers. They failed to present her with documents she had signed that would have contradicted what she was telling them — particularly, an oath she signed on her first day in office promising to recognize state secrets when she came upon them and to keep them in secure venues. And agents violated Department of Justice policy by not recording her interrogation when her lawyers told them she would not answer questions if her answers were recorded.
Now the FBI has interjected itself into the presidential campaign by releasing these documents. Hillary and the FBI Notwithstanding the mountain of evidence pointing to Mrs. Clinton’s guilt, it is highly improper and grossly unfair to release evidence gathered against a person who will not be prosecuted. Moreover, it is tendentious to release only part of the evidence — only what agents want the public to see — rather than the complete file. Yet all this evidence is secret under Department of Justice regulations. Had any of it been intended for or presented to a grand jury, the release of it would have been criminal.
What happened here? The FBI seriously dropped the ball, and Mrs. Clinton was more concerned about being indicted than she was about losing the race for the presidency.
It is apparent that some in FBI management blindly followed what they were told to do — exonerate Hillary Clinton. There is no other explanation for the FBI’s failure from the outset to use ordinary law enforcement tools available to it. Yet some in the FBI are not professionally satisfied by this outcome. They know that a strong case for prosecution and for guilt is being ignored for political reasons.
What else do they know?
• Andrew P. Napolitano, a former judge of the Superior Court of New Jersey, is a contributor to The Washington Times. He is the author of seven books on the U.S. Constitution.
2016-07-29
Two Americas!
By Bob Lonsberry
The Democrats are right, there are two Americas. The America that works and the America that doesn't. The America that contributes and the America that doesn't. It's not the haves and the have nots, it's the dos and the don'ts. Some people do their duty as Americans, obey the law, support themselves, contribute to society and others don't. That's the divide in America.
It's not about income inequality, it's about civic irresponsibility. It's about a political party that preaches hatred, greed and victimization in order to win elective office. It's about a political party that loves power more than it loves its country.
That's not invective, that's truth, and it's about time someone said it. The politics of envy was on proud display a couple weeks ago when President Obama pledged the rest of his term to fighting "income inequality." He noted that some people make more than other people, that some people have higher incomes than others, and he says that's not just. That is the rationale of thievery. The other guy has it, you want it, Obama will take it for you. Vote Democrat. That is the philosophy that produced Detroit .
It is the electoral philosophy that is destroying America. It conceals a fundamental deviation from American values and common sense because it ends up not benefiting the people who support it, but a betrayal.
The Democrats have not empowered their followers, they have enslaved them in a culture of dependence and entitlement, of victim-hood and anger instead of ability and hope. The president's premise “ that you reduce income inequality by debasing the successful“ seeks to deny the successful the consequences of their choices and spare the unsuccessful the consequences of their choices. Because, by and large, income variations in society are a result of different choices leading to different consequences. Those who choose wisely and responsibly have a far greater likelihood of success, while those who choose foolishly and irresponsibly have a far greater likelihood of failure.
Success and failure usually manifest themselves in personal and family income. You choose to drop out of high school or to skip college and you are apt to have a different outcome than someone who gets a diploma and pushes on with purposeful education. You have your children out of wedlock and life is apt to take one course; you have them within a marriage and life is apt to take another course. Most often in life our destination is determined by the course we take.
My doctor, for example, makes far more than I do. There is significant income inequality between us. Our lives have had an inequality of outcome, but our lives also have had an inequality of effort. While my doctor went to college and then devoted his young adulthood to medical school and residency, I got a job in a restaurant. He made a choice, I made a choice, and our choices led us to different outcomes. His outcome pays a lot better than mine. Does that mean he cheated and Barack Obama needs to take away his wealth? No, it means we are both free men in a free society where free choices lead to different outcomes.
It is not inequality Barack Obama intends to take away, it is freedom. The freedom to succeed, and the freedom to fail. There is no true option for success if there is no true option for failure. The pursuit of happiness means a whole lot less when you face the punitive hand of government if your pursuit brings you more happiness than the other guy. Even if the other guy sat on his arse and did nothing. Even if the other guy made a lifetime's worth of asinine and short sighted decisions.
Barack Obama and the Democrats preach equality of outcome as a right, while completely ignoring inequality of effort. The simple Law of the Harvest “as ye sow, so shall ye reap“ is sometimes applied as, "The harder you work, the more you get."
Obama would turn that upside down. Those who achieve are to be punished as enemies of society and those who fail are to be rewarded as wards of society. Entitlement will replace effort as the key to upward mobility in American society if Barack Obama gets his way. He seeks a lowest common denominator society in which the government besieges the successful and productive to foster equality through mediocrity. He and his party speak of two Americas, and their grip on power is based on using the votes of one to sap the productivity of the other. America is not divided by the differences in our outcomes, it is divided by the differences in our efforts.
It is a false philosophy to say one man's success comes about unavoidably as the result of another man's victimization.
What Obama offered was not a solution, but a separatism. He fomented division and strife, pitted one set of Americans against another for his own political benefit. That's what socialists offer. Marxist class warfare wrapped up with a bow. Two Americas , coming closer each day to proving the truth to Lincoln 's maxim that a house divided against itself cannot stand.
"Life is ten percent what happens to you and ninety percent how you respond to it."
2016-07-17
Islamism Comes to the United States of America
Before Obama there was virtually no outlandish presence of Islam in America.
• All of a sudden, Islam is taught in schools. Christianity and the bible are banned in schools.
• All of a sudden we must allow prayer rugs everywhere and allow for Islamic prayer in schools, airports and businesses.
• All of a sudden we must stop serving pork in prisons.
• All of a sudden we are inundated with law suits by Muslims who are offended by American culture.
• All of a sudden we must allow burkas to be worn everywhere even though you have no idea who or what is covered up under them.
• All of a sudden Muslims are suing employers and refusing to do their jobs if they personally deem it conflicts with Sharia Law.
• All of a sudden the Attorney General of the United States vows to prosecute anyone who engages in "anti-Muslim speech".
• All of a sudden, Jihadists who engage in terrorism and openly admit they acted in the name of Islam and ISIS, are emphatically declared they are NOT Islamic by our leaders and/or their actions are determined NOT to be terrorism, but other nebulous terms like 'workplace violence."
• All of a sudden, it becomes Policy that Secular Middle East dictators that were benign or friendly to the West, must be replaced by Islamists and the Muslim Brotherhood.
• All of a sudden our troops are withdrawn from Iraq and the middle east, giving rise to ISIS.
• All of a sudden, America has reduced its nuclear stockpiles to 1950 levels, as Obama's stated goal of a nuke-free America by the time he leaves office continues uninterrupted.
• All of a sudden, a deal with Iran must be made at any cost, with a pathway to nuclear weapons and HUNDREDS of BILLIONS of dollars handed over to fund their programs.
• All of a sudden America APOLOGIZES to Muslim states and sponsors of terror worldwide for acts of aggression, war and sabotage THEY perpetrate against our soldiers.
• All of a sudden, the American Navy is diminished to 1917 Pre-World War I levels of only 300 ships. The Army is at pre-1940 levels. The Air Force scraps 500 planes and planned to retire the use of the A-10 Thunderbolt close air support fighter. A further draw down of another 40,000 military personnel is in
progress.
• All of a sudden half of our aircraft carriers are recalled for maintenance by Obama rendering the Atlantic unguarded, NONE are in the Middle East.
• All of a sudden Obama has to empty Guantanamo Bay of captured Jihadists and let them loose in Jihad-friendly Islamic states. He demands to close the facility.
• All of a sudden America will negotiate with terrorists and trade FIVE Taliban commanders for a deserter and Jihad sympathizer.
• All of a sudden there is no money for American poor, disabled veterans, jobless Americans, hungry Americans, or displaced Americans but there is endless money for Obama's "Syrian refugee" resettlement programs.
• All of sudden there is an ammunition shortage in the USA.
• All of a sudden, the most important thing for Obama to do after a mass shooting by two Jihadists, is disarm American Citizens.
• All of a sudden, the President of the United States cannot attend the Christian Funerals of a Supreme Court Justice and a former First Lady because of previous (seemingly unimportant) commitments.
All of a sudden, I’m sick to my stomach. I’m not sure the majority of Americans recognize the seriousness of the situation and how much “progress” has been made by Islam these last 7 years, a very brief time compared to a 75 year lifetime!
It's a sad state today in the USA.
2016-07-15
The World As We Know It Today
I am sick that our President spent more time justifying the murders than eulogizing the slain.
2016-07-09
Hillary Has A History That Is Not Good
It is desperately sad that our country tolerates and rewards such corruption.
2016-07-01
Hillary Has A Despicable Record
Then President Clinton gave Hillary authority over selecting a female attorney general. Her first two selections were Zoe Baird and Kimba Wood - both were forced to withdraw their names from consideration.
Next, she chose Janet Reno—husband, Bill, described her selection as "my worst mistake." Some may not remember that Reno made the decision to gas David Koresh and the Branch Davidian religious sect in Waco, Texas resulting in dozens of deaths of women and children.
Husband, Bill, allowed Hillary to make recommendations for the head of the Civil Rights Commission. Lani Guinier was her selection. When a little probing led to the discovery of Ms. Guinier's radical views, her name had to be withdrawn from consideration.
Apparently a slow learner, husband, Bill, allowed Hillary to make some more recommendations. She chose former law partners Web Hubbell for the Justice Department, Vince Foster for the White House staff, and William Kennedy for the Treasury Department. Her selections went well: Hubbell went to prison, Foster (presumably) committed suicide, and Kennedy was forced to resign.
Many younger voters will have no knowledge of "Travelgate." Hillary wanted to award unfettered travel contracts to Clinton friend Harry Thompson—and the White House Travel Office refused to comply. She managed to have them reported to the FBI and fired. This ruined their reputations, cost them their jobs, and caused a thirty-six month investigation. Only one employee, Billy Dale, was charged with a crime, and that of the enormous crime of mixing personal and White House funds. A jury acquitted him of any crime in less than two hours.
Still not convinced of her ineptness, Bill allowed Hillary to recommend a close Clinton friend, Craig Livingstone, for the position of Director of White House security. When Livingstone was investigated for the improper access of about 900 FBI files of Clinton enemies (Filegate) and the widespread use of drugs by White House staff, suddenly Hillary and the president denied even knowing Livingstone, and of course, denied knowledge of drug use in the White House.
Following this debacle, the FBI closed its White House Liaison Office after more than thirty years of service to seven presidents.
Next, when women started coming forward with allegations of sexual harassment and rape by Bill Clinton, Hillary was put in charge of the "bimbo eruption" and scandal defense. Some of her more notable decisions in the debacle were: (1) she urged her husband not to settle the Paula Jones lawsuit, (2) after the Starr investigation, they settled with Ms. Jones, (3) she refused to release the Whitewater documents, which led to the appointment of Ken Starr as Special Prosecutor.
After $80 million dollars of taxpayer money was spent, Starr's investigation led to Monica Lewinsky, which led to Bill lying about and later admitting to his extramaritial affairs.
Hillary's devious game plan resulted in Bill losing his license to practice law for 'lying under oath' to a grand jury and then his subsequent impeachment by the House of Representatives.
Hillary avoided indictment for perjury and obstruction of justice during the Starr investigation by repeating, "I do not recall," "I have no recollection," and "I don't know" a total of 56 times while under oath.
After leaving the White House, Hillary was forced to return an estimated $200,000 in White House furniture, china, and artwork that she had stolen.
Now we are exposed to the destruction of possibly incriminating emails while Hillary was Secretary of State and the "pay-to-play" schemes of the Clinton Foundation—we have no idea what shoe will fall next.
But to her loyal fans - "What difference at this point does it make?"
Electing Hillary Clinton president would be like granting Satan absolution and giving him the keys to heaven!
2016-05-08
Trump Could Cause An Unprecedented Global Financial Crisis
There's a big difference between government debt and private debt.
Matthew Yglesias
CNBC
Friday, 6 May 2016
In an interview Thursday on CNBC, Donald Trump broke with tired clichés about the evils of federal debt accumulation. "I am the king of debt," he said. "I love debt. I love playing with it."
But he replaced fearmongering about debt with an even more alarming notion — a bankruptcy of the United States federal government that would incinerate the world economy.
"I would borrow, knowing that if the economy crashed, you could make a deal," Trump said. "And if the economy was good, it was good. So therefore, you can't lose."
With his statement, Trump not only revealed a dangerous ignorance about the operation of the national monetary system and the global economic order, but also offered a brilliant case-study in the profound risks of attempting to apply the logic of a private business enterprise to the task of running the United States of America.
Trump is a businessman, and in terms of thinking like a businessman his idea makes sense.
The interest rate that investors currently charge the United States in order to borrow money is very low. A smart business strategy under those circumstances would be to borrow a bunch of money and undertake a bunch of big investment projects that are somewhat risky but judged to possibly have a huge payoff.
You now have two possible scenarios.
In one scenario, the investments work out and you make a ton of money. In that case, you can easily pay back the loan and everyone wins.
In another scenario, the investments don't work out and you don't make much money. In that case, you objectively can't pay back the loan. You either work out a deal with the people you owe money to in which they accept less than 100 percent of what you owe them (this is called a "haircut") or else you go to bankruptcy court and a judge will force them to accept less than 100 percent.
This is how businesspeople think — especially those who work in capital-intensive industries like real estate. And for good reason. This is the right way to run a real estate company.
Applying this idea to the United States would destroy the economy. The United States of America, however, is not a real estate development company. If a real estate company defaults on its debts and its creditors lose money, that's their problem. If a bank fails as a result, then it's the FDIC's responsibility to clean it up.
The government doesn't work like that. Right now, people and companies all around the world treat US government bonds as the least risky financial asset in the universe. If the government defaults and banks fail as a result, the government needs to clean up the mess. And if risk-free federal bonds turn out to be risky, then every other financial asset becomes riskier. The interest rate charged on state and local government debt, on corporate debt, and on home loans will spike. Savings will evaporate, and liquidity will vanish as everyone tries to hold on to their cash until they can figure out what's going on.
Every assessment of risk in the financial system is based on the idea that the least risky thing is lending money to the federal government. If that turns out to be much riskier than previously thought, then everything else becomes much riskier too. Business investment will collapse, state and local finances will be crushed, and shockwaves will emanate to a whole range of foreign countries that borrow dollars.
Remember 2008, when the markets went from thinking housing debt was low-risk to thinking it was high-risk, and a global financial crisis was the result? This would be like that, but much worse — US government debt is the very foundation of low-risk investments.
What's especially troubling about Trump's proposal is that there is genuinely no conceivable circumstance under which this kind of default would be necessary. The debt of the federal government consists entirely of obligations to pay US dollars to various individuals and institutions. US dollars are, conveniently, something the US government can create instantly and in infinite quantities at any time.
Of course, it might be undesirable to finance debts by printing money rather than raising taxes or cutting spending. In particular, that kind of money printing could lead to inflation, and even though inflation is very low right now there's no guarantee that it will always be low.
But a little bit of inflation is always going to be strictly preferable to destroying the whole American economy, especially because a debt default would cause a crash in the value of the dollar and spark inflation anyway.
Trump doesn't know what he's talking about. This is the second time this week that Trump has revealed a profound ignorance of an issue related to government debts.
The early instance in which he kept proposing that Puerto Rico declare bankruptcy even though doing so is illegal was on a question that's very important to Puerto Ricans but not so important to everyone else. It is, however, important to pay attention to how presidential candidates approach issues across the board — and what we saw with Puerto Rico is that Trump approached the issue by simplistically applying business logic without bothering to check whether it applies to the actual situation.
Now in the CNBC interview he's done the exact same thing on a matter of more consequence — not the debt of Puerto Rico but the debt of the United States of America. It's understandable that a real estate developer might assume that what works in real estate would work in economic policy, but it's not true. And Trump hasn't bothered to check or ask anyone about it.