Economist sees Trump on the brink: "Serious consequences for the global economy"

Moin.de Economist sees Trump on the brink: "Serious consequences for the global economy" Henrik Jonathan Zinn • 14 hours • 2 minutes read The duty of a head of state is to increase the well-being of his own people. US President Donald Trump has also committed himself to this principle. However, through his tariffs, he has managed to minimize the economy so quickly that the exact opposite has happened. Economic expert Hans-Werner Sinn sees the US on the verge of national bankruptcy. He explained this in an interview with "Focus." Donald Trump has thrown the world into turmoil with his tariff madness. The consequences for global sales markets are devastating, even though some of the requirements have since been reversed. In an interview with "Focus," former ifo President Hans-Werner Sinn explains that Washington is pursuing a very specific purpose with the tariffs: to avert US insolvency by exerting economic pressure on trading partners. Trump administration is sitting on horrendous debt This has achieved little so far, as the 77-year-old sees the Trump administration on the brink of financial ruin. "Word has gotten around that the US is on its last legs. Hardly anyone wants US government bonds anymore. Large investors reacted with horror when they realized how poor the US's credit rating is," Sinn said. Germany is massively rearming! Trump's demand met Large investors have long since lost confidence in US government bonds, which is putting Trump under additional pressure. Scenarios are already circulating in the White House that would be considered insolvency for private debtors. "But of course, the aim is to avoid open insolvency. In my interpretation, that is precisely what the tariff threats are intended to achieve," Sinn said. In his opinion, the precarious situation is due to the US's chronic trade deficit, because it has consumed more than it produced for decades. "It imported consumer goods from the rest of the world and paid for the resulting current account deficit with debt. The result was rapidly rising foreign debt and even faster rising interest burdens. The net foreign debt of the US economy amounts to an incredible $26 trillion, and more than another trillion, or $1 trillion, is added every year," the "Focus" interview states. The interest on the national debt, which Trump is struggling with, already amounts to 13 to 14 percent of the national budget. The consequences of a US bankruptcy would be catastrophic – for the entire world. Sinn paints a bleak scenario: "If US government bonds lose value, this will impact banks around the world. The banks will suffer price losses and have to adjust the value of the securities on their balance sheets downwards. This creates a risk of bankruptcy. With the dollar, the US had the exorbitant privilege of borrowing in a currency it could print itself. It is now becoming apparent that the US has overexploited this privilege – with serious consequences for the entire global economy."