Puerto Rico

Who Would Bankrupt America First, Hillary Clinton or Donald Trump?

Lessons from Puerto Rico.

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The Republican and Democratic presidential nominees have been chosen. Ignore the deluded supporters of Bernie Sanders and Ted Cruz. It's over. The odds at ElectionBettingOdds.com make it clear: It will be Donald vs. Hillary.

A closer contest would be: Who will bankrupt America first, Trump or Clinton?

Trump's a contender because he promises a trade war. That's what gave us the Great Depression. Trump claims that China is "raping" America. No, Donald, rape is force. Your proposed tariffs are also force. Trade is voluntary and good.

Big difference.

Clinton might bankrupt America first, however, because Democrats promise more regulation and handouts—free college, free pre-K, higher minimum wage, etc. Similar activist government spending just destroyed Puerto Rico.

This week, Puerto Rico defaulted on $370 million worth of bonds.

The territory's "generous" government squandered the island's resources. Decades of leftist governors hired their friends. In Puerto Rico and Greece, about one in four workers works for government, compared to 14.6 percent in the mainland U.S.

Puerto Rico's current governor points out that Puerto Ricans enjoy 30 days of paid vacation every year, 18 sick days and 14 paid holidays. That's about two months paid leave every year. No wonder businesses wither.

The government gives "free" energy to government-owned enterprises. This encouraged "investments" like the government-owned ice rink. Yes, ice skating was what bureaucrats thought the tropical island needed. Maybe they saw that movie, Cool Runnings, and thought winter sports in the tropics sounded fun.

Puerto Rico's long reliance on handouts and welfare created a culture of helplessness and entitlement. A U.S. inspector general found that some Puerto Ricans got Social Security disability payments because of their "inability to communicate in English." Really. They live on a Spanish-speaking island.

After years of decline, one Puerto Rican governor tried to do the right thing. Luis Fortuño, a free market guy who admired Ronald Reagan, froze government salaries, cut spending by 20 percent, eliminated some stupid regulations and fired 17,000 government workers. At the time, 250 policemen did nothing but approve liquor licenses.

Fortuno's policies might have helped the economy, but voters didn't like the cuts. Thousands of union protesters held demonstrations outside his house, calling him a Nazi. Fortuno was defeated in the 2012 election by a leftist, Garcia Padilla.

Padilla pledged to "create 50,000 jobs." But governments don't create real jobs. Padilla destroyed jobs by doing things like raising corporate taxes. As the island went broke, he promised to "cut down on tax evasion," "create two working groups to find ways to boost liquidity," and so on.

Give me a break.

This week, former governor Fortuño emailed me, "The territory's government increased expenses by almost 10 percent in 2013. That move commenced a downward spiral."

Now, more than a thousand Puerto Ricans leave the island every week for places with slightly less-bad politicians. But this will make life even tougher for Puerto Ricans left behind. Government having fewer suckers to tax makes it even harder to pay the bills.

Puerto Rico's debt has risen in the past 15 years from 60 percent to 100 percent of its gross domestic product. If it were a country, its fiscal situation would be about as bad as that of Greece. Like Greece, Puerto Rico is discovering that, eventually, other people get tired of bailing you out.

A group of hedge funds issued a report recommending going farther down the free market path Fortuño started on. They call for further simplification of labor regulations, cutting the number of government workers and privatizing government-run firms.

But some in Congress, warning of a "humanitarian crisis," want to bail the island out instead. Fortuño says that's a terrible idea. "That would reward irresponsible behavior."

It would. The real solution is to build a future in which bailouts aren't necessary, in which growing businesses, not government spending projects, flourish.

I hope Clinton and Trump learn something by watching other economies fail before the entire U.S. ends up like Puerto Rico and Greece.

COPYRIGHT 2016 BY JFS PRODUCTIONS INC. 

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160 responses to “Who Would Bankrupt America First, Hillary Clinton or Donald Trump?

  1. “Now, more than a thousand Puerto Ricans leave the island every week for places with slightly less-bad politicians.”

    How many of those people are going to vote for politicians in their new homes who promise to do the same shit that made them leave?

    1. I believe that’s called “pulling a California”.

      1. Or in New Hampshire, “pulling a Masshole”.

      2. The rest of them enjoy cheap cocaine.

  2. At least Donald has experience with bankruptcy.

    1. Negotiating favorable terms in a bankruptcy. Seems like a very relevant qualification lacking in those with a political resume.

  3. I love the premise that we’re not already bankrupt.

    1. “Who would bankrupt us worser?”

    2. I’m not broke, I still have checks.

    3. Look, all we need to do is mint a $20 trillion coin. Problem. Solved.

      1. Coins are too expensive to make. Paper currency is cheap.

        1. Paper currency? Pffftttt…….Just make it electronic, and the tracking system run by the Fed.

    4. “A quadrillion here, a quadrillion there — soon you’re talking real money!”

      1. +1 Super Dirksen

        1. +0.1 Zimbabwe dollars

        2. I’ll wager 400 quatloos on the newcomer.

    5. Yes, I always get a kick out of the premise that the US isn’t already bankrupt.

      I think the next four years is when the shit finally hits the fan. Oh well, we had a good run. Prepare for the coming of the Second Republic!

      1. Prepare for the coming of the Second Republic? We’ve only gotten to the Man on a White Horse stage. Then we have the mob rule and the civil war stages before the restoration. They’d better hurry up with that anti-aging potion if you expect to live long enough to ever see a republic again.

        1. Ok, so 1) mob rule and drumhead justice for our Ruling Class – will the executions be televised?, and 2) a despot that makes war on our neighbors (but hey, full-employment!) – Mexico and Canada?, then 3) a restoration of the Republic after our defeat by a coalition of allies?

          Interesting times, interesting times…

        2. I can live with it as long as we band together and mass execute all the progtards. By the way, is this a good time to discuss my plan to euthanize the progtards?

          1. Piss of douche, you are no better than idiotic progtards….FOAD.

            1. You go first you stupid bitch.

    6. Bankrupt how? By not being able to repay debts?

      1. The country with the biggest debt has the most powerful military.

        Not a coincidence. Who’s going to come collecting?

        1. Historically, it was the army – when they couldn’t get paid anymore.

          1. +- 1 Continental

        2. Well, they could just start dumping their holdings – driving up interest rates. They can also stop buying our new issue debt – also driving up interest rates. Pretty soon, debt service will cripple the budget. Then, to ‘eliminate’ the debt, Congress will authorize printing money to pay it all off and voila! we aren’t in debt anymore. Of course, our currency will be useless but Congress won’t care about that as it won’t have any effect on them.

          Yes, you’re right – we’ll be fine. You’ll be fine too, dancing around and hanging with Goldberry.

        3. Well, the US had the most powerful military before it had the biggest debt.

          What, exactly, are you implying? That the US has stopped paying its debt and is telling its creditors to pound sand?

          1. Not yet. But when the debt becomes unserviceable, somebody will be pounding sand.

            1. Right. We will.

            2. Anybody remember Alexander Hamilton and the Whiskey Rebellion? He found a way to make worthless paper worth something after his buddies bought up a bunch of it at cut rate prices. Nobody has ever liked farmers – not even back in Genesis days.

          2. Sounds like a plan.

        4. The Us should start collecting tribute from foreign countries instating of giving them money.

  4. Scott Horton shreds Trump to pieces:

    http://tomwoods.com/podcast/ep…..cy-speech/

  5. Btw, it’s great to have you back, John.

    1. Dang, why did I assume from the headline this was a Napolitano piece? Can you blame me for not realizing it was Stossel? Don’t you imagine I’m not the only one who assumed it was Nap? But shouldn’t I have been able to glance at the article and realize my asssumption was incorrect? Am I too easily taken in by headlines? Should I read the article first before commenting on it? Why do I ask these things?

      1. The judge asks what if’s!

      2. Jerrys, I question your style.

    2. “Btw, it’s great to have you back, John”

      Speaking of people who like John,
      where’s Francisco lately?

  6. Trade is voluntary and good.

    You haven’t studied the history of trade much, have you?

    Was it “voluntary” when America’s Commodore Perry forced the Japanese to open their markets to the US in the 1850s?

    What about when the European powers forced China to cede places like Hong Kong and Macau to them in order to open those countries up to foreign trade? Just how voluntary was that?

    What about the Opium Wars which the British fought against China over the opium trade? What about the Battle of Plassey which the British fought for control of India and the trade in its commodities and trading routes

    Where was the voluntariness in them? Those weren’t the first wars over trade in some commodity and they weren’t the last.

    Trade isn’t always voluntary. It can also be a cutthroat business that is not necessarily good.

    If you doubt that think about America’s Civil War (slave trade) and the so-called “drug war” of more modern times, both of which were/are about whether there should be any trade in such “commodities” at all.

    1. Was it “voluntary” when America’s Commodore Perry forced the Japanese to open their markets to the US in the 1850s?

      No. It also wasn’t trade. By definition. Conquest or imperialism is not trade. Words have actual meanings.

      1. Forget it. He’s rolling.

        1. 7:50 AM is way too early for e….

          OOOOOOOOOOOOOOOOOOOOOH!

        2. I notice you chose not to rebut my points. Instead you chose to scorn them.

          1. You have no point. Stossel is talking about free trade being good. You’re babbling about a bunch of shit he never referred to in any way as if he had.

            Get back on your meds, pronto.

            1. You have no point.

              I take it you didn’t read what I posted?

              Stossel is talking about free trade being good.

              That was an assertion he made withOUT supplying one iota of evidence in support of it. All I did was provide evidence to the contrary, which apparently you did not understand because rather than rebutting them you preferred to make an empty and fact-free assertion of your own: “You have no point.”

              You’re babbling about a bunch of shit he never referred to in any way as if he had.

              With all due respect, that statement merely underlines your own ignorance.

              More specifically, it underlines that (a) you didn’t understand the points I was making and (b) you yourself apparently know nothing about trade or history. Instead you prefer to make scornful remarks and diss the views of others. Views which you seem to know nothing about and cannot be bothered researching.

              1. All I did was provide evidence to the contrary,

                No, you didn’t. The examples you gave were about governments using force against each other over trade policy; they have nothing to do with whether the trade itself is good.

                Trade itself is always voluntary and (according to libertarian values) good. That is, people only trade with each other if both sides believe they benefit from the exchange. That’s true whether they trade bananas or opium. The fact that you may disapprove of bananas or opium and hence believe that the exchange was not good for one of the parties is irrelevant.

                1. The examples you gave …have nothing to do with whether the trade itself is good.

                  Governments and their laws are what control trade. Furthermore, governments generally act in response to pressure from their constituents. Those constituents would include traders and trading companies.

                  When governments negotiate trade treaties or send gunboats out to force a country to trade with their own country who do you suppose they are acting at the behest of? We see that now with the TTP where corporations were brought right into the treaty negotiation process.

                  Trade itself is always voluntary and (according to libertarian values) good.

                  By that yardstick the slave trade was “voluntary and good”. So is the trade in cocaine or heroin. Or in info on how to build a nuclear weapon. Or for that matter selling your country to the nearest enemy. As you go on to claim:

                  The fact that you may disapprove of bananas or opium and hence believe that the exchange was not good for one of the parties is irrelevant.

                  On the other hand if you try to trade in slaves, cocaine, or nuclear weapons plans (or selling out your country) you would probably wind up in jail–if you get caught. But I suppose you would class that as irrelevant also. Trying to NOT get caught generally requires smuggling.

                  In short, your line sounds less like a empirical principle and more like a religious mantra used by smugglers to justify their actions.

              2. No, I read what you wrote. Your obsession with those events has nothing to do with Stoseel’s premise. There is nothing to rebut. You’re basically saying because some specific events in the history of trade have been coercive, that free trade is bad and/or illusory. Stossel was never defending any of those events you mention as examples of free trade, and if you really are painting all trade with that of a brush based on your specific examples, then you really have no point.

                It’s like saying that because a few random cars you owned a long time ago were unreliable, the. All cars must be unreliable. It’s a ridiculous premise. There is no real argument to refute.

                Are we clear now?

                1. Stossel was never defending any of those events you mention as examples of free trade.

                  Here is what Stossel’s wrote:

                  “Trade is voluntary and good.”

                  Now point out to me where the word “free” occurs.

                  By referring to “free trade” you are reading words into his statement which Stossel himself NEVER WROTE.

                  To be sure he is using it in connection with Donald Trump and Trump’s statements (I hesitate to use the word “policies” when it comes to Trump), but even Trump does just talk about FREE trade.

                  But then neither is Stossel. So let’s give a fuller version of what he wrote:

                  “Trump claims that China is ‘raping’ America. No, Donald, rape is force. Your proposed tariffs are also force. Trade is voluntary and good.”

                  First, here we see more clearly that he isn’t just talking about “free trade” but trade in general.

                  Secondly, and more to the point, if Stossel can claim that “trade” is NOT the same as “rape” (yet tariffs apparently are) why am I not allowed to debunk him through those examples I gave?

                  It’s like saying that because a few random cars you owned a long time ago were unreliable…. All cars must be unreliable.

                  Now you are simply misrepresenting my argument. How is that in any way comparable to what I wrote?

      2. Conquest or imperialism is not trade.

        Tell that to the Dutch East India Company. Or the (British) East India Company. Or the Hudson Bay Company. Amongst innumerable other such institutions. What do you imagine they were up to?

        You may not like it, but historically conquest and imperialism have gone hand in glove with trade.

        1. conquest and imperialism have gone hand in glove with trade mercantilism, the very thing Smith and Ricardo et al. argued against in advancing their theory of free trade.

        2. So? And very often it hasn’t.

        3. Dead thread-fucking…dude, do better,

      1. So when does the example of some natives selling land belonging to another tribe to the Dutch for some beads come into play?

        1. I think I see a budding thesis here!

        2. The Balfour Agreement?

    2. Hadn’t the slave trade been shut down before the Civil War? Asking for a friend.

      1. Importation of slaves into the US was made illegal in 1808.

      2. The international trade was banned in 1808. The internal trade continued until the end of slavery.

    3. How “voluntary” was it for the Chinese and Japanese governments to restrict the trade opportunities of their own citizens? Do you think that wasn’t enforced with coercion?

      1. How “voluntary” was it for the Chinese and Japanese governments to restrict the trade opportunities of their own citizens?

        By that yardstick you would be arguing the US has no right to “restrict the trade opportunities” of drug traffickers or slavers.

        I point that out because one of the things the British objected to, and which sparked the first Opium War, was the Chinese government’s banning of opium. The British grew opium in India and wanted the Chinese to legalise it so they could sell it to the Chinese people and make a profit. Imagine the reaction of the US government if Mexico’s drug lords demanded the US legalise heroin and open up the US drug market to the products produced by those drug lords.

        Do you think that wasn’t enforced with coercion?

        So how is that an excuse for the actions of people like Perry? How would the US like it if (say) China used its navy to force the US to trade with it on terms favourable to Chinese interests?

        1. The British wanted to sell opium to the Chinese because it was about the only thing the Chinese would buy from outside China, and thus about the only way the British could get back some of the gold they had spent there for tea and other goods.

          As for the Chinese Navy forcing the US to do anything – that’s a joke, right?

          1. The British wanted to sell opium to the Chinese because it was about the only thing the Chinese would buy from outside China…

            If the Chinese did not want the British selling opium (or any other particular commodity) to them that is surely their right as a sovereign nation. By going to war with them over that Britain merely demonstrated that, if push comes to shove, trade isn’t always voluntary. There can be coercion in there as well.

            As for the Chinese Navy forcing the US to do anything – that’s a joke, right?

            First of all you’re side-stepping the point, which is that the US would no more like the Chinese forcing them to pursue particular trade policies than the Chinese or Japanese were in the 1800s with the British, Americans, and others doing the same to them.

            Secondly, don’t be so sure about China and its navy. At the moment, I agree that the Chinese are probably not able to force the US to do anything. On the other hand China is now a rising world power. It is already building up its navy; and in particular its blue-water capability. China launched its first aircraft carrier in 2012 and is reportedly now building a second. It has also reportedly developing carrier-based fighter aircraft of its own.

            Given those indications, the day may not be too far off when China really will be in a position to take on the US.

        2. By that yardstick you would be arguing the US has no right to “restrict the trade opportunities” of drug traffickers or slavers.

          It shouldn’t restrict drug trade or consumption, period.

          As for slave trade, any slave brought to the US would be automatically freed under the US Constitution, so that seems like a good thing, no?

          Imagine the reaction of the US government if Mexico’s drug lords demanded the US legalise heroin and open up the US drug market to the products produced by those drug lords.

          Why not? Heroin was legal through most of US history, with no significant ill effects. Of course, Mexican drug lords would be foolish to demand that, since their profits depend on the illegality of their drugs, so you are actually on the side of Mexican drug lords.

    4. How voluntary are all of these things that aren’t voluntary at all?! Now I shall give several other examples of something other than trade and end with a flourishing finger wag!!

      /Point. Proven.

      1. I traded my wallet for not being stabbed once. I thought it was a fair trade.

        1. A bunch of my neighbors agreed to trade my liberty for their security and we both lost. Free markets suck, There oughtta be a law.

        2. Not a fair trade. Just better than the alternative.

    5. Was it “voluntary” when America’s Commodore Perry forced the Japanese to open their markets to the US in the 1850s?

      Had it been voluntary while the Japanese government forced their people to keep them closed?

    6. Was it “voluntary” when America’s Commodore Perry forced the Japanese to open their markets to the US in the 1850s?

      You’re confusing the Japanese government with the Japanese people. The trade that actually took place between individual Japanese and foreign buyers and sellers was voluntary and good.

      If you doubt that think about America’s Civil War (slave trade) and the so-called “drug war” of more modern times, both of which were/are about whether there should be any trade in such “commodities” at all.

      Slavery was a construct created by government; without that construct, there would have been no slave trade and no need to restrict slave trade. Likewise, restrictions on drug trade and consumption is what causes the most harm related to drugs.

      Trade isn’t always voluntary. It can also be a cutthroat business that is not necessarily good.

      Trade, by definition, is always voluntary as far as the trading parties are concerned. Anything that ends restrictions on trade is a good thing as far as I’m concerned.

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  8. Who Would Bankrupt America First

    Clearly the libertarians would. I mean they’d lack the push to do anything to the entrenched welfare state, but would be able to implement their open borders dreams. Never having let sense get in the way of idealism (otherwise they wouldn’t have run under the LP banner), they would declare any step in the right direction to be a good thing (a reflex born of years of abuse) and walk blindly into the proverbial minefield.

    1. 1. Open borders
      2. Entrenched welfare state
      3. ?
      4. Profit!

      1. Eat my shorts!

    2. would be able to implement their open borders dreams

      Outside of Dalmia’s imagination, no.

      1. *psst*, it’s clearly a nonserious post. The starting premise was that a LP candidate actually won an election.

  9. Again with the tranquilized Hillary photo.

    Surely *she* would not bankrupt us!*

    1. * Ignore spurious asterisk.

      1. But if I ignore the asterisk I’m left wondering why it’s there. If I don’t ignore it, I’m instructed to ignore it.

  10. Here’s a betting proposition for you: Who gets indicted first, Hillary over the server or Trump over Trump University? (Keep in mind who’s in charge of handing out the indictments and which party they belong to.)

    1. I don’t know who gets it first; but both will be indicted.

      1. I think the question is whether or not the winner of the election will pardon the loser (after they pardon themselves of course).

        1. This notion of “pardoning oneself” is intriguing.

          “When you’re alone, and you fart, and you say ‘Pardon me’ — that’s *class*.”
          — The late, great Rodney Dangerfield

      2. We can only hope…my best scenario is none of the above wins.

        1. Well, there is a very slight chance that both parties could implode over the next six months and pave the way for Gary Johnson.

  11. The real solution is to build a future in which bailouts aren’t necessary, in which growing businesses, not government spending projects, flourish.

    Hell no! That will allow people to make profits! That creates inequality! Inequality is the greatest crisis of our time! We need less inequality, not more! Can’t have flourishing businesses! All they do is steal from customers and workers alike in their quest for immoral profits! They must be taxed until they aren’t rich anymore! Fairness! Equality!

    1. Everyone is equal when they are dead. Dead is the fairest of them all.

  12. Paw-ternity leave

    Gary Johnson can lock down the cat lady vote by campaigning for National Pet Insurance and paid pet-owner leave.
    It seems in keeping with his inconsistent pot smoking-Republican positions.

    1. It really is a travesty that sites with names like ‘economist’ and ‘market’ in their site name post such trash.

      1. I’m not entirely sure, but maybe your sarcasm detector is broken?

  13. Trump’s a contender because he promises a trade war.

    Not actually what he has promised.

    us-china-trade-reform

    Under the Trump administration trade will flourish. However, for free trade to bring prosperity to America, it must also be fair trade. Our goal is not protectionism but accountability. America fully opened its markets to China but China has not reciprocated. Its Great Wall of Protectionism uses unlawful tariff and non-tariff barriers to keep American companies out of China and to tilt the playing field in their favor.

    Sounds like a commitment to two way free trade, instead of one way free trade.

    Why do you have a problem with Trump negotiating with China for more access to their markets? Why is freer trade a bad thing?

    1. We have a problem with government negotiating the terms of trade period. You collectivize and argue it’s bad for ‘America,’ yet the individual businesses agree to the terms. Not the government. Apple doing business in China is Apple’s business. The American government doesn’t own Apple or the individuals within Apple. In short, fuck off, slaver.

      You have an odd definition of free trade. Erecting barriers for American businesses.

      1. Forcing American consumers to pay a terribly regressive tax is what will make America great again.

      2. You have an odd definition of free trade – leaving barriers that China imposes on American businesses in place.

      3. The problem is that China is very much a command economy with a massive amount of government controls. Far greater than the US. So I can see the value in pushing a trade agreement that (hopefully) levels the playing field with the Chinese. Obviously a tariff war is punitive for everyone.

    2. Wait a minute, I didn’t think we’re allowed to bring up facts around here.

  14. I have a lot of respect for Stossel, but he really needs to learn how our monetary system works. Comparing the federal budget and debt to Greece reveals his poor grasp of how fiat currency systems like ours work. The U.S. federal government is a currency issuer, while Greece and Puerto Rico are currency users. This is not to say the federal debt does not pose risks in the future – but from an operational standpoint there are important differences between harmful inflation (especially hyperinflation) and default (bankruptcy).

    1. Do you seriously believe that John Stossel has no idea the Greeks don’t print their own Euros?

      /lol

      1. I love critiques of the ECB that cry crocodile tears for those PIIGS nations that can’t simply print their way out of monetary crunches, like that’s going to fix the long-term ills of socialist policies.

        1. You can’t print your way out of monetary crunches with respect to outside borrowers: whether you default or inflate, either way, you’re going to have trouble borrowing in the future.

          Of course, inflation is a politically convenient way of ridding yourself of overly generous pension promises. But while politically less appealing, simply cutting the pensions is economically equivalent.

    2. blondrealist, I hadn’t realized you posted this information before I did (below). Good post. I’ve spent years trying to explain to the hard core Austrian econ knuckleheads here how a fiat currency, deficits, and debt really work. Mostly to be called either idiotic or insane.

      Every dollar added to the national deficit is one more dollar of net financial assets created in the economy. Bonds are in all essentials equivalent to cash. Therefore, cash is as much “debt” as bonds are. Taxes are not necessary, therefore, to “raise revenue” but only to prevent inflation.

      The economic fundamentals are what’s really important: how many people are producing which goods and services, and will there be enough of those produced to feed, cloth, house and entertain all of those who need those things. These fundamentals are constantly under assault in a welfare state, because of the strong disincentives to production. So this piece is overall correct: welfare states like Puerto Rico – and the US itself – must be reformed.

      1. Bonds are in all essentials equivalent to cash. Therefore, cash is as much “debt” as bonds are. Taxes are not necessary, therefore, to “raise revenue” but only to prevent inflation.

        Equivalently, you might think of inflation as a “tax on people holding cash”. But that way of thinking is flawed because the absolute inflation rate doesn’t really matter since contracts and interest rates already take that into account. If the inflation rate increases, interest rates just increase with it to cancel it out. It’s only changes in the inflation rate that cause borrowers or lenders to win/lose a little in the short term, and that’s happening only because it’s not been worth people’s time to correct for it at current inflation rate changes. Taxes (income, property, wealth, capital gains), on the other hand, are independent of inflation.

        1. That should say “Taxes (income, property, wealth, capital gains), on the other hand, are (generally) independent of inflation.” Of course, some taxation is in absolute amounts (fuel) or on a fixed monetary value (real estate). But generally, taxes are a percentage of whatever something (labor, good) is nominally worth in your current currency at the current level of inflation.

    3. Actually, there is very little difference between harmful inflation and bankruptcy. Lenders only give the kinds of loan terms the US is getting because they judge the risk of inflation to be very low. If there is any indication that the US might try to pay off its debt with printed money, it wouldn’t be able to borrow any money anymore. That is, for the US to try to pay off its debt by printing money or for Greece to default on its debt has pretty much the same consequences: lenders lose what they have already loaned, but they won’t write any new loans (or only at ridiculously high interest rates).

      The one difference is that inflation screws over people who hold cash or have savings accounts; that makes it worse, not better, than for the government simply to go bankrupt. At least those Greeks with money under their mattress still have that money.

  15. I hope Clinton and Trump learn something by watching other economies fail before the entire U.S. ends up like Puerto Rico and Greece.

    They won’t.

  16. Yes, tariffs are force. But so are labor&environmental; laws that local companies have to comply with.

    If you apply force to local companies, but not to offshore ones, you end up losing everything. So it’s either tariffs, or a difficult-to-administer policy of requiring importers (and their suppliers, to the end of the chain) to conform to all the same laws a US company would.

    Repealing all the US labor and environment laws would also work.

  17. Yes, tariffs are force. But so are labor&environmental; laws that local companies have to comply with.

    If you apply force to local companies, but not to offshore ones, you end up losing everything. So it’s either tariffs, or a difficult-to-administer policy of requiring importers (and their suppliers, to the end of the chain) to conform to all the same laws a US company would.

    Repealing all the US labor and environment laws would also work.

    1. If you apply force to local companies, but not to offshore ones, you end up losing everything.

      Quite the opposite: if China is willing to destroy its environment to send us Teenage Mutant Ninja Turtle Figurines at half the price a US company would charge, that’s a good thing for us: we get the cheap crap and don’t even have to destroy our environment for it. And the people who would be making that low end plastic crap in the US can do something better and more productive.

  18. Puerto Rico’s long reliance on handouts and welfare created a culture of helplessness and entitlement. A U.S. inspector general found that some Puerto Ricans got Social Security disability payments because of their “inability to communicate in English.” Really. They live on a Spanish-speaking island.

    But don’t you dare suggest that Appalachian whites in a similar predicament should buck the welfare and find work outside their moribund local economies, because that means you hate poor whites and want to bulldoze their homes.

  19. Some basic facts for those (above) who get confused about who can and cannot go “bankrupt.”

    A territory (like Puerto Rico) can go bankrupt.
    A state (like Illinois – just saying) can go bankrupt
    A member state of the European Union can go bankrupt
    An American corporation can go bankrupt
    An American citizen can go bankrupt

    The European Union cannot go bankrupt
    The United States of America cannot go bankrupt

    Can you spot the essential difference? Answer: The sovereign issuer of a currency can never go bankrupt; the user of a currency can go bankrupt. The ECB issues currency that Greece must use. The Fed issues currency that Illinois must use. Otherwise, I agree with John’s fine article.

    1. Can Venezuela go bankrupt?

    2. Answer: The sovereign issuer of a currency can never go bankrupt; the user of a currency can go bankrupt.

      That’s false: sovereign issuers of a currency can borrow in foreign currencies, and then they can certainly default on those loans.

      Even if you print your own currency, loan contracts take into account inflation. The only reason we have low 30-year interest rates is because people believe that the US government isn’t going to devaluate the currency. If there is the slightest indication of significant devaluation as an attempt to get around loan repayments by a sovereign nation, interest rates will skyrocket faster than you can print money, and your currency ends up being literally worth less than the paper it is printed on.

    3. The USSR didn’t go bankrupt, numbskull?

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  21. Trump is not against trades – he’s against one way trades. Any trade deal should work for both sides.

    1. Correct. It is t about tariffs. It’s about stopping shit like China’s government subsidizing exports so they can artificially lower their prices and break domestic producers. Or this bulkshit where they invalidate Apple’s trademark for the iPhone over there.

      1. It’s about stopping shit like China’s government subsidizing exports so they can artificially lower their prices and break domestic producers.

        So, when the US government gives free money to low-income consumers in the US, that’s a good thing, but when the Chinese government does the same thing, it’s a bad thing? Why exactly?

        1. Where did I say that it’s good when the US does that? It isn’t. Mans it it’s not good when China does it.

  22. “Who Would Bankrupt America First, Hillary Clinton or Donald Trump?”

    Trick question, we are already bankrupt.

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  24. too late

    it has been accomplished

  25. Amazing that there is no mention of why bond buyers kept shoveling up PR bonds – despite what was very obvious about the non-productiveness of what the proceeds were used for.

    Because PR by federal law is the only bond issuer who gets triple-tax exemption regardless of the bond owners residence. So every muni bond fund used those bonds to hedge the ‘single-state risks’ they otherwise have. And no surprise no one will mention that triple-tax exemption when it comes time for either a)a fed bailout or b)the big creditor-debtor pissing contest

    1. What’s this triple tax emption, you have federal and state taxes, in my neighborhood you are full of shit.

      1. The Jones-Shafroth Act of 1917. PR is not a state. It is a colony of the federal government.

  26. “Progressives” giveth, and “conservatives dare not taketh away. That’s how we slide into Greece.

    1. The right has been making this argument for 80 years.

      Wonder when they’ll look at a calendar.

    2. Not too many real cnservatives left. Soon all reality will collapse.

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  28. The question is moot. Obutthead has already bankrupted the country, and is real close to crashing the economy. (but still has 7 months)

    1. Obama was president in 2007 when the deepest recession in 80 years hit? Who knew!

      No wonder you guys think Trump is a good deal…

      1. What the fuck are you babblin’ ’bout? No one said either of those things.

  29. Puerto Rico ought to be an island paradise; it’s in a great location and has great weather and scenery. But the real estate market is iffy, and the political and legal situation is even iffier, so people are reluctant to invest. That’s really what needs to be addressed politically. In particular, Puerto Rico really needs to make a decision on statehood vs independence.

  30. So free pre k and college….policies that many advanced nations already have…will bankrupt us? That’s what conservatives said about public school 100 years ago. Guess no one bother to inform Germany or Japan.

    And lack of regulation led to a generation of children being poisoned in Flint. It led to 13 dead firefighters and EMTs in a TX fertilizer plant explosion, even as the head of the TX legislature said they were proud of this since it showed how few regulations they have.

    It is an article of religious faith in ‘free markets’ (whatever they are), rather than an empirical fact, that deregulation is ALWAYS good.

    This faith based economics is one reason conservatives have a monster as their party’s candidate for president.

    1. Flint was not caused by deregulation.

      It is insane to me how fucking retards like the above will push whatever lies they heard some news anchor or pundit spew to further their agenda.

      1. It’s an example of ignoring regulations. People were complaining to the EPA in 2003. Nothing was done until 2010.

        You right wingers just keep bending the facts to suit your myths. No wonder Trump is your candidate.

        1. you realize this is a website frequented by libertarians, right? This isn’t National Review.

      2. It just follows it’s programming from Media Matters, MoveOn, etc..

  31. Thatcher was wrong. When you run out of other people’s money, you just print more.

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  33. Neither. We’re already bankrupt from the previous two administrations. The MIC is out of control by the people. Corporate subsidies far outweigh social handouts. Basically, we’re phuqued.

    1. Corporate subsidies outweigh social spending? No, no they don’t.

      1. I’m pretty sure it does.

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  37. Padilla pledged to “create 50,000 jobs.” But governments don’t create real jobs. Padilla destroyed jobs by doing things like raising corporate taxes.

    Of course Stossel knows the Trump is proposing to lower the corporate tax rate, right?

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  39. Stossel, this was a diatribe, nothing of consequence about the title. Shame.

    1. You’re kidding, no?

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  42. ‘the entire U.S. ends up like Puerto Rico and Greece.’ Ignorant conflation on the part of porn-stash…The US federal government is Monetarily Sovereign, Puerto Rico and Greece are not. There is no operational funding constraint for the issuer of the currency like the US government. There is always constraint to the extent that private sector entities can borrow and spend (like you or me). The key takeaway is that the federal government’s balance sheet is not like a household’s or a state government’s balance sheet. The US government, as an issuer of currency can never be said to be “running out of money.”

    The constraint for a currency issuer in a fiat system like the USA is never solvency, but rather inflation, a foreign exchange crisis or real constraints (such as real resources or the output of the economy).As currency monopolist, the US government can spend any amount up to the point of ACCEPTABLE inflation.

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  44. Protectionism didn’t give us the Depression, altho Jude Wanniski would like ppl to think so, but it did give us WWII. I would like, also, to point out that Tampa Bay is in the NHL play-offs.

  45. Both Billary and Trump are proponents of big government. It seems we’re inclined to let this country wither away. Half the country believes that government is their benefactor and the other half is filled with rage that can only be quelled by the meandering jibberish coming out of Trump’s mouth. How did our electorate become so delusional? They became addicted to mainstream media and took their collective cues from the polarizing extremist sound bytes emanating from NBC, Fox, etc.

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