Experts predict economic disaster from Trump recovery idea

WASHINGTON (AP) — In the event that the U.S. economy crashed, Donald Trump has floated a recovery plan based on his own experience with corporate bankruptcy:

Trump later clarified that comment to say he would offer to buy the bonds back at a discount from investors in hopes of refinancing them at lower rates.

[...] a move, never before attempted by the U.S. government, would likely spook investors whose trust in Treasury notes keeps global financial markets operating.

Nations usually print their own money and service their debt through taxes, unlike corporations that can sell off assets and equity stakes to manage debt or close up shop.

Interest rates would spike if a government refused to pay what it owed as investors priced in the risk of default and became resistant toward lending.

The federal government flirted with default risks in 2011 and 2013 when President Barack Obama and the Republican-led House of Representatives reached an impasse over raising the government's borrowing limit.