Having sold out the Republican fiscal rectitude credo at home by ballooning the deficit, Donald Trump is now set to take his penchant for budget profligacy on world tour.

According to a truly absurd report published Friday in Corriere della Sera, the President last month told Italian Prime Minister Giuseppe Conte that the U.S. is prepared to buy Italian government bonds in 2019. The news comes just weeks ahead of the closely-watched Italian budget announcement which has the potential to put the new populist government at odds with Brussels over a possible breach of the bloc’s deficit limit.

The spread between Italy’s borrowing costs and those of Germany has widened back out to levels seen amid the BTP market meltdown on May 29 and League leader Matteo Salvini continues to insist that he and Di Maio won’t bow to market pressure when it comes to making domestic policy.

The ECB has been the only net buyer of BTPs for quite some time and the irony is that officials in Italy now want to have their cake and eat it too. They want to criticize “eurocrats” and insist on thumbing their noses at Brussels but they expect Mario Draghi and the central bank to effectively subsidize them along the way by supporting the Italian debt market. Is that as silly as it sounds? Yep. It surely is.

But with the ECB set to end asset purchases (reinvestment flows notwithstanding) in December after a short taper to €15 billion/month starting in September, there are now serious questions as to whether renewed tensions between Italy’s populists and the E.U. will lead to more pressure on Italian assets.

Meanwhile, the market is buzzing with rumors that Trump could attempt to intervene in the currency market in an effort to drive the dollar lower in order to ensure greenback strength doesn’t help Europe weather the tariff storm.

That kind of intervention isn’t likely to work. “In a country with an open capital account and independent monetary policy, like the US, currency interventions are well-known to be ineffective in generating lasting changes in the currency’s value”, JPMorgan’s Michael Feroli wrote, in a widely-circulated note out earlier this month.

Still, Trump could conceivably instruct the Treasury to sell dollars for euros and buy BTPs via the Exchange Stabilization Fund – I guess.

“When I first read this, it seemed far-fetched but, given all that has happened in Washington in recent months as well as an Italian government that wants a stimulative budget at the same time keeping bond yields capped — it’s not out of the realm of possibility”, Bloomberg’s Richard Jones writes.

For his part, Nordea’s Jan von Gerich told Bloomberg he “laughed quite a lot” when he first read the Corriere article.

Laugh now, cry later, because there’s no telling what Trump might do. He could start imploring U.S. investors to plow their savings into Italian debt in order to support the populist cause, for instance.

And hey, it might be a good idea to do Italy’s populists a solid now, because according to the IMF, the U.S. will be in worse fiscal shape than Italy by 2023, thanks in no small part to Trump’s policies.

So five years from now, when no one else is willing to buy the debt issued by Trump’s banana republic, Treasury (which by then will probably be operating under the command of Secretary Chester Cheetah) can call in a favor and ask Italy to buy some T-bills yielding 40% to help fund the U.S. government for another three weeks.

(IMF)

Or who knows, maybe this is just Trump’s way of paying tribute to one of his historical analogs…