Every so often we hear a theory that makes sense superficially but on closer examination doesn’t add up. The most recent one is that the Trump Administration wants a recession (or at least wouldn’t mind one) because interest rates would drop, making it easier to service the national debt.
We will come back to this theory in a moment, but it seems like this is either misguided thinking, or an attempt to place political blame for long-term problems.
Everyone knows that there has to be a price paid for lousy management. If you treat your body poorly, say with gluttony or sloth, it may seem fun for a while, but you eventually pay a price. And rehab is never fun. Companies that manage themselves poorly are often taken over by better managers who make drastic changes. Not fun either. And the government, when it gets out of control, needs to be reined in, too, which can upset the lives of those who let it get that way in the first place.
No one blames the rehab physician or nutritionist for recommending a path back to health, even if they take away the fun. But for some reason those who come in to fix broken corporations get nicknames like “Chainsaw Al” or “Rambo in Pinstripes.” Now, Elon Musk may brandish a chainsaw (as a gift from Javier Milei) but doesn’t wear pinstripes, so he gets called other names.
What we are saying is that any budget restraint now being implemented might cause some short-term pain – maybe even a recession – but that doesn’t mean a recession is by design to make the debt easier to service.
