Thread: Peter Schiff: U.S. Debt Bubble Will Pop

Peter Schiff: U.S. Debt Bubble Will Pop

Monday, January 26, 2009 11:57 AM

By: Michael Kling

Peter Schiff, the investor who called the subprime crisis well in advance, now says that the U.S. government debt bubble will pop.

Schiff, author and CEO of Euro Capital Pacific, says President Barack Obama wants foreigners to sacrifice and to keep financing mountains of U.S. government debt to bail us out of this mess.

A global economic contraction, however, will end that game, Schiff warns in The Wall Street Journal.

Obama calls for Americans to sacrifice. His idea of sacrifice, however, is lower taxes, more corporate bailouts, and checks mailed to the masses, Schiff says.

In reality, foreigners, especially the Chinese, Japanese, and Saudis, are being called on to sacrifice by funding America’s trillion-dollar deficits.

“That’s a trillion dollars each year for the foreseeable future on top of the trillions of dollars those countries have already financed,â€

Agree, agree! The Chinese, the largest purchaser of US debt, is already getting cranky. What was once the safest currency in the world, backed by nothing but the full faith and credit of the US gov. (read taxpayer) is failing. US taxpayers are losing their jobs left and right, taxes will not be as flush as they were in recent years. And if you issue stock in your company and then issue more stock of equal amount, the first issuance value has basically been reduced. If you issue bonds and then issue more bonds the first issuance goes down in value, while the relative interest rate on the first issuance rises substantially because of the cheap price of purchasing face value (a $10,000 bond paying 5 percent can be bought for $8,000.)
Throwing dollars at everything is not the answer, as the Treasury has been depleting the value of the dollar, printing more continually and the value is diminishing the more they print. Not to repeat that the underlying guarantor of those dollars are dying a rapid death.
Forget the dot com bubble and the housing bubble, we ain't seen nothing yet.