Economist and gold bug Peter Schiff has raised concerns about the United States’ debt obligations, warning that a default is imminent, regardless of whether the debt ceiling is raised or not.
Schiff, speaking on the Peter Schiff Show podcast, disputed politicians’ claims that the U.S. always pays its bills, stating that the country has $31.7tn in debt and that any further borrowing or money printing by the Federal Reserve will inevitably cause a financial and currency crisis. “It’s not about America not wanting to borrow. It’s about the rest of the world not wanting to lend because they know we’re not going to pay them back. And one of the reasons they know that is because we’ve already told them”, Schiff said.
Schiff added that the U.S. could default on its debt in two ways, either through an honest default where the government doesn’t pay back bondholders or through a dishonest default where they pay with inflation. He warned in the latter case the Federal Reserve would simply “print money and pay people back with worthless or near-worthless paper”.
Addressing concerns that the debt ceiling was the primary issue, Schiff disputed this, declaring the problem was with the debt itself. “The problem is that Congress and the President keep running up more and more debt and every time we get to the ceiling, we either raise it or suspend it … The problem is that we keep raising the ceiling, not that we won’t raise it. In fact, the threat is that we raise it again”, Schiff argued.