Trump predicts ‘massive recession’
Speaking to Bob Woodward in a 96-minute interview, Donald Trump once again did something almost unprecedented in a presidential candidate: talking down the stock market with a prediction of a “massive recession,” saying, "it’s a terrible time right now” to invest in the stock market.
Should the markets react on Monday, Trump puts himself in a position to be blamed for investor losses, which is why candidates and politicians generally shy away from such advice.
That was not the only, ahem, unusual position taken in the interview:
He insisted that he would be able to get rid of the nation’s more than $19 trillion national debt “over a period of eight years.”
Most economists would consider this impossible because it could require taking more than $2 trillion a year out of the annual $4 trillion budget to pay off holders of the debt.
Trump vehemently disagrees: “I’m renegotiating all of our deals, the big trade deals that we’re doing so badly on. With China, $505 billion this year in trade.” He said that economic growth he foresees as a consequence of renegotiated deals would enable the United States to pay down the debt — although many economists have said the exact opposite, that a trade war would be crippling to the U.S. economy.
It is quite difficult to see where the funds would come from to undertake such a massive financial burden. And many people question whether completely paying off the national debt would even be desirable, considering the role of Treasury obligations in financial markets. Buying a selling federal securities is a key tool for the Federal Reserve Bank in managing the money supply. But of course, this role itself is not universally recognized as a good thing for the economy. So gold standard advocates and others distressed by the Fed’s manipulation of markets maty find reassurance ion this promise, however unlikely it is to be accomplished.