The American Debt Ceiling or Lack thereoff is the Problem not the Solution - Peter Schiff
Another insightful episode with Peter Schiff about the real Problems and Solutions
Peter Schiff is a Contrarian and he has been right so far and sometime it pays to be a Contrarian, if we are judging his works. He was right about the 2008 Market Crash and nobody listened including this writer and we paid a heavy price for that lack of knowledge. Now we know better and hence listen to the Peter Schiff Show. He is now issuing more warnings, so good to pay attention and prepare accordingly.
noun
1. a person who opposes or rejects popular opinion, especially in stock exchange dealing
Example: "it has become fashionable to be a stock-market contrarian"
adjective
1. opposing or rejecting popular opinion or current practice
Example: "the comment came more from a contrarian disposition than moral conviction"
We are rebranding our Transcripts section with two new sub-sections to include TLDR - Too Long Did not Read stories and TLDW. Too many stories everyday to Read and choose from and write a post, so too with YouTube Videos and hence what we are calling TLDW - Too Long Did not Watch. We did the heavy lifting for you.
So to cure that malady we offer a new TLDW series. A Summary of Videos too long to watch. According to Substack this post is a 11 minute read, so a savings of about 49 minutes of your time. If you found value here, help support the work, Subscribe, Merci.
The Debt’s the Problem. Not Raising the Ceiling Is the Solution - Ep 889
In this video, financial commentator Peter Schiff discusses various economic and financial issues. He argues that the stock market is not a reliable indicator of the economy's strength, as investors rely on the Federal Reserve's quantitative easing policies to boost the market.
Schiff also criticizes the trend of money-losing companies going public and warns that raising the debt ceiling only exacerbates America's debt problem. He urges a return to free-market capitalism and sound money. Schiff predicts a future currency crisis and calls for increased public education on these issues.
00:00:00 PS talks about how the stock market has been the lone positive in the leading economic indicators as it has been going up over the past 12 months. This is a positive indicator of economic strength as investors expect stronger corporate earnings and better future economic growth. However, this is not how it works anymore. Schiff says that bad news is good news for the stock market as investors become bullish on stocks and expect the Fed to cut rates and/or resort to quantitative easing to stimulate the economy. Conversely, when the stock market is going down, it's because of good news, as investors think the economy is going to be strong and want to sell stocks.
00:05:00 PS discusses how a weak stock market should be counted as a positive sign for the economy and a strong stock market as a negative. He explains that all of the economic strength seen in the stock market is due to the weakness of the economy, and investors expect it to get even weaker. Schiff also talks about the decline of money-losing companies, such as BuzzFeed, that were born during the era of zero percent interest rates and quantitative easing. He argues that these companies should not be going public and that the public should not invest in businesses that haven't even proven themselves profitable.
00:10:00 PS discusses the problem with money losing companies going public and how the IPO market has changed, with the original investors using the IPO to cash out while the public is conned into buying a business that has never made any money. Schiff acknowledges that while there are exceptions, like Amazon, that became successful despite losing money at the time of their IPO, these are rare cases. Schiff notes that if a business cannot make money on a small scale, there is no point to scaling it up so that it can lose even more money. The drunkenness of cheap money is wearing off, and bankruptcies are starting with many more likely to come, causing many companies to raise their prices.
00:15:00 PS discusses how after decades of not caring about earnings, companies are now forced to raise their prices to remain profitable, due to the shift in focus towards profits, in which the bottom line is no longer ignored by investors. Businesses now must find the sweet spot in which they can make a profit, which likely involves layoffs and reduced scales. With increased prices, consumers may get a break as they were previously subsidized by investors, but this will not be reflected in the CPI. Companies that can't raise prices will go out of business, and those that can do this will target higher prices, leading to the natural consequences of inflation.
00:20:00 PS discusses the problem with raising the debt ceiling and explains that the actual problem lies in the excessive amount of debt that the government keeps adding on. He argues that everyone wants to raise the ceiling, and even though the Republicans might put some strings attached to the deal, they ultimately want to raise it as well. Schiff argues that the government wants to raise the debt ceiling because they have not paid their bills, emphasizing the fact that America has $31.7 trillion in debt that needs to get paid. Schiff suggests that the solution to the problem is not raising the ceiling, but instead introducing a permanent solution to the problem of excessive debt.
00:25:00 PS discusses the US national debt and the debt ceiling. He argues that paying interest on the national debt is not prioritized, and the government only pays creditors if it can find someone else to loan money from. He believes that the US government is running the world's biggest Ponzi scheme, and people are starting to wake up to this concept, leading to a move to exit the dollar and US treasuries. Schiff provides a history lesson on the debt ceiling, explaining that it was enacted in 1917 when the US entered the First World War, and Congress became concerned about the amount of borrowing the government was doing.
00:30:00 PS explains how the Federal Reserve Act was amended in 1913, where the Federal Reserve was not allowed to own U.S. treasuries. However, after World War I began, Congress needed money, and the Federal Reserve was then allowed to own, which was against the original act just a few years prior. Similarly, during World War II, the government needed money, and they passed the Victory tax to raise taxes on everyone. Additionally, for the first time in 1942, the federal government withheld taxes from employee paychecks, a practice that continues to this day. Schiff believes that war is detrimental to economic freedom, as the government uses it as an opportunity to usurp power, and nobody pays the cost of war now, because the government just prints money to pay for it.
00:35:00 PS discusses the history of tax withholding and its role in the U.S. economy. He explains that tax withholding started during World War II as a way for the government to collect taxes, and it has continued since then. Schiff argues that tax withholding allows for higher taxes because Americans would not be able to pay such high taxes without it. He then shifts focus to the debt ceiling and its history, explaining that the Federal Reserve was granted the ability to own treasuries in 1917, which enabled the government to run up debt. Schiff argues that Congress wanted the debt ceiling to limit the amount of debt the government could accumulate, but it has been raised multiple times since then, resulting in $32 trillion of debt. He criticizes Republicans for claiming they do not want to raise the debt ceiling, yet they voted to raise it under President Trump when they controlled Congress. Schiff asserts that the real issue driving the debt is government spending, including welfare and warfare spending.
00:40:00 PS discusses the US government's increasing debt and how the debt ceiling needs to be raised to continue top-up. He doubts the government's effort to curb the deficit, stating that Congress is only concerned about the deficit in the future, not on the present. In fact, they spend more and cut less in current years, and as a result, the US is in debt by over $2 trillion. To balance the budget, a cut of one-third is needed right now, and if interest rates don't go up, then the cut needs to be 50%. Every program would have to be cut in half, or some must be eliminated entirely.
00:45:00 PS highlights the dire state of the US government's finances, noting that the majority of tax revenue goes towards Social Security, Medicare, and interest on the national debt. He goes on to explain that by the end of next year, with rising interest rates, more than 90% of government spending will be concentrated in those areas, and if National Defense is included, it will exceed 100% of tax revenue. Peter argues that the government is not going to change this trajectory, and the longer it takes for the inevitable financial crisis to occur, the worse the explosion will be. He notes that elected officials care only about their own political careers and are saddling future generations with debt while giving them nothing in return.
00:50:00 PS, a businessman and financial commentator, warns about the consequences of raising the debt ceiling and the buildup of debt. According to him, the younger generation is not going to pay the bills either because they are too incompetent to generate income to pay taxes or too confident to leave the country. The situation leads to a currency crisis, and it is the current generation, the baby boomers, who will suffer the consequences because of their accumulated wealth and expectations of Social Security and Medicare that they will not get. Schiff additionally highlights that the spending cuts are a recurring conversation that never leads to action.
00:55:00 PS discusses the problem with not raising the debt ceiling, as it causes the government to keep spending relentlessly, ultimately leading to a currency crisis and inflation. The only way to cut spending is to not raise the debt ceiling and force the government to take responsibility. However, politicians are not willing to do this, as the only thing they care about is getting reelected, and cutting spending would result in angering voters. The debt will continue to increase, leading to a currency crisis, and the baby boomer generation will have to deal with the aftermath. Schiff highlights the danger that lies ahead and stresses the importance of educating the public and returning to free-market capitalism, sound money, and a complete rejection of socialism, central planning, and central banking.
Endure till the End and take Care of Yourself. Remember on planes they always tell you put the mask on first, before helping others. Therefore, Take Care of Yourself First and then do what is in your control, and then leave the rest to the universe to solve.
We are 100 Percent Independent and Supported by Readers and Viewers like YOU! Digital Hugs appreciated and Subscribers are even more deeply appreciated.
Until we meet again.
For we wrestle not against flesh and blood, but against principalities, against powers, against the rulers of the darkness of this world, against spiritual wickedness in high places.
Ephesians 6:12
- Corona Times News
FAIR USE NOTICE
The views expressed by guests, subjects and speakers are their own and their appearance on this website does not imply if any way an endorsement of them or any entity they represent. Views and opinions expressed by the speakers do not necessarily reflect the views of Corona Times News. THIS CONSTITUTES A 'FAIR USE' OF ANY SUCH MATERIAL AS PROVIDED FOR PURSUANT TO TITLE 17 UNITED STATES CODE SECTION 106A-117 REGARDING USE OF COPYRIGHT MATERIAL.
DISCLAIMER
The content provided on The Corona Times News is for general information and entertainment purposes only. No information, materials, services, and other content provided in this post constitutes solicitation, recommendation, endorsement or any financial, investment, medical, health, educational, or other advice. Seek independent professional consultation in the form of legal, financial, and fiscal advice before making any investment decisions. Always perform your own due diligence. And don't forget to have a wonderful day.