Wednesday, January 14, 2015

US is sailing smoothly only for the moment

Yes, there are – other economies are having their problems, but the United States is gonna have even more problems. The reason that we’ve been temporarily spared the consequences is because of the confidence that people have. We’re able to borrow more money, and as we spend that money, that, you know, keeps those forces at bay. But, of course, spending more borrowed money just exacerbates the problem because now we have even more debt, and our capacity to repay the debt is diminished all the more. And so we become all the more vulnerable to the inevitable increase in rates, you know, and the day of reckoning gets worse and worse.

Look what’s happening in Russia right now. I mean, they’ve got a ruble currency crisis and they’ve been forced to raise interest rates thus far up to 17%. You know, I mean, the Russian economy is hurting but, I mean, nothing like what the U.S. would be going through if we had to raise interest rates to 17%. You know, and so we go through a currency crisis, you know, it’s gonna be a much bigger disaster because we’re much, you know, less prepared to withstand it. I mean, if we had to raise interest rates to 17%, the debt – that crisis would dwarf anything that the Russians are experiencing right now.

Peter Schiff is a smart investor and author of several best selling books. He correctly predicted the economic meltdown of 2008 - 2009