Author Topic: Trump Has Inherited a Terrifying Problem  (Read 2092 times)

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Offline HAPPY2BME

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Trump Has Inherited a Terrifying Problem
« on: February 04, 2017, 01:38:43 PM »
Trump Has Inherited a Terrifying Problem

By Mark Nestmann

Nestman.com

February 4, 2017


The president has ambitious plans for America, but they won’t come cheap.

Chief among them are a trillion-dollar infrastructure program, a border wall with Mexico, and increased defense spending. At the same time, he’ll treat Americans to a sizable tax break. It’s a welcome policy, but it may leave a hole in the country’s piggy bank.

Trump has also pledged to leave Social Security and Medicare untouched, the two biggest drains on the budget outside defense. “I will do everything within my power not to touch Social Security,” he said.

But if Trump is to reconcile his infrastructure spending and tax cuts, he’ll need to find money somewhere.

To make matters worse, the Fed is raising interest rates. As many as three further hikes could be in the pipeline this year. Obama was lucky enough to ride the wave of low rates. Trump will enjoy no such luxury. With higher interest rates comes higher inflation and larger debt repayments.

The Good News…

… is that President Trump has outlined a vision for reduced spending.

He’ll employ a freeze on federal hiring with a view to cutting 20% on staffing costs. A further 10% will disappear on cuts to wasteful departments and programs. Meanwhile, the president’s commitment to job growth should bring tax dollars back into the pot.

Whispers of a $10.5 trillion cut in federal expenditure over the next 10 years are moving through the White House corridors. However, it remains to be seen exactly where this will come from. And whether it will be enough to bring down the deficit.

The big test will be the president’s inaugural budget. It will offer the first clue as to whether he can balance this knife edge.

President Trump Is the King of Debt

On the campaign trail, Donald Trump hailed himself the “King of Debt.” He said, “I’m great with debt… I’ve made a fortune by using debt, and if things don’t work out, I renegotiate the debt.”

Well, he’s now got his hands on the biggest debt pile on the planet. And he faces a challenge to keep it in check.

If the US defaults on its repayments, we may witness the greatest recession the world has ever seen.

Of course, a default is unlikely. Instead, we may see the stirring of the printing press starting up again (also known as quantitative easing) as fresh new dollars are used to pay down the credit (reducing your purchasing power with every print run).

Even worse, the Treasury might just “borrow” funds from the Federal Employee Pension Fund to avoid defaulting. If you think that sounds terrifying and unthinkable, consider this: They’ve done it before.

Time to Create a Plan B

Thanks to Obama’s reckless attitude with the nation’s credit, President Trump may be choked by the debt crisis. It could limit his ability to put his ambitious policies to work. And that may cause the markets to sharply reassess their enthusiasm.

Worse, Trump may be forced to take extraordinary measures to keep the debt sustainable. Measures that threaten your nest egg.

While it’s impossible to time the markets or predict the future, it is possible to take control of your wealth. Perhaps it’s time to create a strategy that spreads your risk and reduces your exposure to the US debt problem.

Offline Rick

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Re: Trump Has Inherited a Terrifying Problem
« Reply #1 on: February 04, 2017, 04:14:43 PM »
Aren't you a regular Polly Anna.

This is not fresh news. It was discussed in my circles during the election. Everyone agreed if the problem was to  be solved, Trump would be the man.

Past Democrats solved this problem by going to war.  Not something I really want


Offline HAPPY2BME

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Re: Trump Has Inherited a Terrifying Problem
« Reply #2 on: February 04, 2017, 04:58:22 PM »
Aren't you a regular Polly Anna.

This is not fresh news. It was discussed in my circles during the election. Everyone agreed if the problem was to  be solved, Trump would be the man.

Past Democrats solved this problem by going to war.  Not something I really want

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