Tuesday, February 17, 2015

US has no hope of paying its Debt principal

The degree of debt we have, the degree we are dependent on artificially low interest rates which are obviously unsustainable and the massive trade deficits we have chronically year after year. Last month, we announced the biggest monthly trade deficit in our history. These are growing problems that are ultimately going to lead to a U.S. dollar crisis.

Right now, people are confident in the dollar because they believe the Fed can raise interest rates, and we can actually afford to pay the higher rates–which we can’t. We can’t do it. If the Fed raises rates, we will have a financial crisis.

We would have no ability to service our debt if we had to pay a market rate of interest, but our creditors haven’t figured this out yet.

The real problems in Greece started when interest rates rose. Greece had a lot of debt before rates went up. They couldn’t repay the principal, but they could pay the interest. They could at least pretend by paying the interest.

Well, that’s all the United States does. We have no hope of repaying the principal.

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