Well before he was elected to the presidency, Donald Trump managed to go bankrupt four times. In each of these bankruptcies he had risked billions of dollars of other people’s money. But while they lost money, he managed to escape unscathed.
The first time, when his Atlantic City gambling casino when bankrupt, Trump’s father bought millions of gambling chips and never redeemed them.
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Who bailed out Trump during his next three bankruptcies? In his op. ed. column in Monday’s New York Times, “Russia, Trump and Laundering,” David Leonhardt suggested that Trump had long been laundering money for crooked Russian businessmen who may have helped him squirm out of these bankruptcies.
Today, Trump is well on his way to his fifth bankruptcy, and once again he is doing this by gambling with other people’s money. Only now, instead of risking billions, he’s risking trillions.
Largely because of the policies of President Trump, our nation is well on its way to bankruptcy. But the money that is at risk is not that of private investors. Now Trump is gambling with the money that is owed by every American citizen.
During the last ninety years our nation faced two similar financial and economic crises – the stock market crash and ensuing Great Depression of the 1930s, and the 2008 financial crisis which brought on the Great Recession.
While it is far too soon to predict just when the next Trump bankruptcy will occur – or even whether he will still be in office – he has almost single-handedly set off the forces that will, by comparison, make our last financial crisis seem like a walk in the park.
President Trump, with a very strong assist from the Republican-controlled Congress, put the first part of his bankruptcy plan in place by passing $1.5-trillion-dollar tax cut last December. While this did provide a temporary economic stimulus during the second and third quarters of this year, it’s long run effect will be a rapidly mounting federal budget deficit.
While very large deficits are quite helpful in fighting recessions, they are very harmful during times of full employment. We are now faced with a string of trillion-dollar deficits stretching will into the next decade. Worse still, these deficits will probably rise substantially every year.
Our rising deficits will push up the national debt even faster, driving up the interest rates that the U.S. Treasury will need to pay in order to refinance hundreds of billions in debt that falls due each month.
The second economic jolt supplied by President Trump has been unilaterally raising our tariffs on hundreds of billions of dollars of goods coming into our country from our major trading partners.
They have already responded to our rising tariffs by raising tariffs on imported American goods. Farmers, many of whom export most of their crops, are expected to be among those most hard-hit.
As Trump’s tariffs push up the prices of imported goods, prices that consumers and manufacturers pay will be driven up. Since 2012, our Consumer Price Index has never risen more than 2.1 percent in any year. This year’s increase will be somewhat higher and next year’s will probably be over 3 percent, forcing the Federal Reserve to raise interest rates more often.
Perhaps late next year, or sometime in 2020, these rising interest rates will choke off business and consumer borrowing, thereby driving our economy into a deep recession. Tax receipts will fall while federal spending on income transfer programs such as unemployment insurance benefits and food stamps will rise, pushing the federal deficit over $1.5 trillion.
By now, China, and our other major trading partners will not have just stopped financing our trade deficits, but they will have begun selling off their stash of U.S. Treasury securities, further driving up our interest rates, and pushing our nation still closer to bankruptcy.
Were this new financial crisis to occur while Donald Trump is still in office, would he be the person you would want to deal with it? His dad will not be there to pick up his chips, nor would his long-term benefactor, Russian dictator Vladimir Putin or his kleptomaniacal business associates be able to provide all the help his American client will need.