https://www.forbes.com/sites/timworstall/2016/05/07/donald-trumps-glorious-threat-to-default-on-the-national-debt-is-just-the-conventional-wisdom/?sh=1bb27cb7a367

This has of course had all sorts of people up in arms: but the glory of this is that The Donald is exactly correct here, even if we usually prefer that people don’t say so. To prove this point I would mention just four words: Puerto Rico, Argentina, Greece. For what is it that all right thinking people, all financiers, bien pensants and politicians have been calling for in those three cases

That there’s too much debt and thus those who lent the money should be paid back something less than the amount they lent. And one can see a certain similarity between those who argue so and those who are the most horrified at Donald Trump in general. Yet all Trump is actually giving voice to here is the entirely conventional wisdom. When a government owes more than it can pay then we have a sovereign default. Something that can be better or worse managed, entirely true, but this is what we do. In fact, we usually get the IMF in to help it happen, recognising that firstly this is what has to happen and secondly it’s better if it’s properly managed.

So the shock and outrage at what he’s said seems a little over the top. I mentioned yesterday that while this is true we’d all prefer that people don’t mention it too often. But even so, some of the coverage today really is rather de trop.

In the event that the U.S. economy crashed, Donald Trump has floated a recovery plan based on his own experience with corporate bankruptcy: Pay America’s creditors less than full value on the U.S. Treasuries they hold.