Trumping the Dollar

SANTA BARBARA – “Make America great again,” says Donald Trump, the US Republican Party’s presumptive presidential nominee. He sums up his foreign policy with the slogan “America First”: The United States should do everything possible to sustain its geopolitical dominance, friends and allies be damned. So who is the biggest threat to US primacy? China? Russia? ISIS?

The answer is none of the above. The real threat is Trump himself, the consummate (at least in his own mind) dealmaker. But the “art of the deal” that he seems to have in mind for the US apparently takes the word “art” literally: His vision of US economic and financial relations with the world is the product of a fevered imagination.

Consider his statements about the US federal government’s persistently growing debt. Trump recently suggested that the US should negotiate with its creditors to buy back much of its debt at a discount – in effect, a partial default on trillions of dollars of liabilities, intended to reduce the burden of debt service for taxpayers.

Trump boasts that he did the same sort of deal when his casinos ran into trouble. He built his commercial empire with debt, and then walked away when business went south, as it did in Atlantic City. So why not do the same kind of deal for the American empire?