Trump Warns: ‘Very Massive Recession’ Coming
Republican presidential candidate Donald Trump has warned that a “very massive recession” is coming, fueled by high unemployment, an overheated stock market, and artificially-low interest rates.
Trump, who is vying for the Republican presidential nomination, also said in a sit-down interview with Bob Woodward and Robert Costa for the Washington Post that “it’s a terrible time right now” to invest in the stock market.
“I think we’re sitting on an economic bubble. A financial bubble,” Trump said, fueled by an artificially-strong U.S. dollar that has been created out of unbelievably low interest rates.
“Look, we have money that’s so cheap right now,” Trump explained. “And if I want to borrow money, I can borrow all the money I want. But I’m rich. [….] If I want to borrow money or if another rich person wants to borrow money, you can borrow money at, like, LIBOR plus nothing. And you’re paying one and a half percent interest, it’s crazy, and they’ll give you all you want. If somebody is a great, wonderful person, going to employ lots of people, a really talented businessperson, wants to borrow money but they’re not rich? They have no chance.
“You have — think of it — you have cheap money that nobody can get unless you’re rich. You have the regulators are running the banks. Not the guys that are being paid $50 million a year to run the banks. I mean, when you look at many of your friends that are running banks that are being paid $40 and $50 million, yeah, they’re not running the banks. The regulators are running the banks. You have a situation where you have an inflated stock market. It started to deflate, but then it went back up again. Usually that’s a bad sign. That’s a sign of things to come. And yeah, I think we’re sitting on a very, very big bubble.”
Trump added that the current U.S. unemployment rate of 5-percent has been “statistically devised to make politicians – and in particular presidents – look good,” and is actually “a number that’s probably into the twenties.”
“I wouldn’t be getting the kind of massive crowds that I’m getting if the number was a real number,” Trump said. “People are extremely unhappy in this country.”
The business-mogul-turned-candidate, whose economic outlook counters that of many mainstream pundits, dismissed concerns that his pessimistic forecast could have a negative effect on financial markets.
“I know the Wall Street people probably better than anybody knows them,” said Trump. “I don’t need them.”
Trump said that in his first 100 days as president, he would cut taxes and “renegotiate trade deals and renegotiate military deals,” including altering the U.S. role in the North Atlantic Treaty Organization.
He also insisted that he would be able to get rid of the nation’s more than US$19 trillion national debt “over a period of eight years.”
Most economists would consider this impossible because it could require taking more than US$2 trillion a year out of the annual US$4 trillion budget to pay off holders of the debt.
Trump believes renegotiated trade deals “that we’re doing so badly on” with countries like China, which the U.S. is doing US$505 billion in business dealings with this year, would pay down the debt.
“I’m renegotiating all of our deals, the big trade deals. With China, $505 billion this year in trade,” he said.