R: Hello Mr. Viera, Thank you for this interview today. What do you make of Donald Trump’s statements about our national debt and likely default?
V: Good Morning, Rebecca. Donald Trump needs to be careful about what he says, recently he got in trouble for mentioning a well-known truth that you really can’t talk about because it puts our finance and banking system at risk.
R: how are we at risk?
V: Let me explain. When Donald Trump mentions the possibility of buying back debt at a discount, He seems to have been following Argentina’s treasuries debt restructuring that was just finished by the new president Macri. What he seems to miss is the 12 years of inflation, economic contraction and misery created by such a historical default. In other words, he doesn’t understand the ramifications of these actions. If we attempt something like this the lack of faith in our treasury would ultimately hurt our economy and perhaps push us into default in the U.S.
R: What do you think about the “print the money” statement made on May 9th on CNN?
V: Trump was misquoted from the New York Times and other publications, he wasn’t pushing for the U.S. to default. Trump claims to be the “king of debt” and is telling us the truth that has been going steady since Q.E. or the quantitative easing program. The federal reserve has already bought 4.5 trillion in debt of which 2.7 trillion was in federal securities who were simply “printing the money”. Many critics of Trump say that such money printing will be inflationary but the Fed program has not even been able to create a modest 2% inflation.
R: This 4.5 trillion debt is made from nothing, where did this money go?
A: Well Rebecca, the 4.5 trillion dollars was supposed to end up in banks and be distributed to the people. The banks instead speculate in the market driving up stock prices and real estate. The CPI (consumer price index) is barely moving. The central banks, unfortunately, have been pumping money into the economy without much to show for it. “Growth is mediocre” as put by Christine Lagarde. Chief of the IMF.
R: Mr. Viera, what do you think Trump was truly trying to say?
A: Perhaps Mr. Trump was talking about what is commonly known as monetizing the debt. Since it’s a fake debt,to begin with, where the treasury prints debt in exchange for dollars. Since the Fed is legally allowed to return the debt, to the treasury to be destroyed why not just buy it straight and get it over with. This, of course, would be too much of a shock since the bank needs debt to make money, perhaps this is what Mr. Trump was trying to say.
R: Mr. Viera in your opinion does Donald Trump Know exactly what he is talking about.
A: Good Question, Rebecca, somehow he does understand but without the detailed knowledge, but it is a positive thing that he’s challenging the taboo of money creation. Question is, who should be in control of the money supply? Should it be the public, or done by the government? Should it continue like it is today and be private and held in the hands of banks and the Fed? As our monetary system slows and shows it’s age, crumbling in both Europe and Japan under the weight of negative interest rates. This question will need to be answered in the development of a new monetary system where the dollar might not be the world reserve currency.
The secret is we have been “printing the money” for the last 100 years with nothing to back it up.