Peter Schiff: A Higher Debt Ceiling Won't Solve The Problem; It Will Make The Problem Worse
In January, the US government ran up against the debt ceiling, kicking off another fake debt ceiling fight. Three months later, Congress still hasn’t agreed on a plan to raise the borrowing limit. Peter Schiff talked about it in his podcast, saying the lack of a higher debt ceiling isn’t the problem; the ever-increasing spending and the debt are the problems. Refusing to raise the ceiling would provide the solution.
In just the first six months of fiscal 2023, the Biden administration ran a $1.1 trillion budget deficit. Excessive spending is pushing the government toward a crisis point when it will no longer be able to finance spending through extraordinary measures. But Republicans in Congress want to attach strings to the new debt ceiling. Democrats want a “clean” bill to raise the spending limit.
Peter zeroed in on a key point in this “fight” - everybody wants to raise the debt ceiling.
It’s not like the Republicans are saying, ‘We’re not going to raise the debt ceiling.'”
Peter ran for Senate in 2010 and a key part of his platform was to stop raising the debt ceiling.
I didn’t want to come up with some gimmick to allow the ceiling to be raised. I wanted it to stop. I wanted to create a permanent ceiling that could never be raised.”
But Democrats (and most Republicans) claim, “We must raise the debt ceiling because we pay our bills!” Peter said it’s the exact opposite.
We never pay our bills. If you pay your bills, you don’t have any debt. Where does the debt come from? It’s unpaid bills. We have $31.7 trillion in debt. That’s $31.7 trillion of bills that we have not paid. We didn’t pay them. We borrowed the money. And we want to keep on borrowing the money. Nobody wants to pay any of these bills.”
This exacerbates the government spending problem. Uncle Sam never has to rein it in as long as he can keep borrowing.
We can keep putting all the spending on a credit card. As long as they raise the debt ceiling, we can continue to not pay our bills.”
Of course, eventually, the borrowing and the accompanying money printing will precipitate a 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. We are telling them that repeatedly in the debt ceiling battle.”
Meanwhile, the mainstream media spins the debt ceiling as a problem. Peter said the debt ceiling is actually the solution to the problem.
The problem is the debt. 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.”
The mainstream, along with Democrats, also claim that if Congress doesn’t raise the debt ceiling, the US will default. Peter said that’s the dumbest thing you can say when you’re running a Ponzi scheme, which is what this is.
We are admitting that every time we tell our creditors that if we can’t borrow more money, ‘You’re out of luck, you’re not getting paid.'”
Peter pointed out that the interest on the debt is around $600 billion. The US government collects about $4.6 trillion in tax receipts.
We’ve got plenty of revenue to pay the interest on the national debt if we want to prioritize paying interest on the national debt. But clearly, we don’t want to do that. Not only are we not prioritizing it; we’re telling our bondholders that they’re the low man on the totem pole. We don’t talk about anything else that’s going to not get paid. Nobody is saying, ‘Well if we don’t raise the debt ceiling, we’re going to have to cut back on congressional salaries,’ or, ‘We’re going to have to fire some of our staffers.’ They don’t say, ‘Well if we don’t raise the debt ceiling, we might have to cut Social Security, and we’re going to have to cut defense.’ No! The only thing they talk about cutting is paying interest on the national debt. That tells you where you are as a creditor.”
Ponzi scheme 101 is don’t tell anybody that you’re running a Ponzi scheme.
We’re so dumb; we’re running the world’s biggest Ponzi scheme and we’re telling everybody that it’s a Ponzi scheme.”
And Peter said he thinks the world is starting to wake up. That’s why you’re seeing a move to get out of the dollar.
It’s only a question of time. It’s not a question of if. It’s just a question of when. We will default on our debt. All the bad stuff that they’re saying is going to happen if we don’t raise the debt ceiling is guaranteed to happen because we do raise the debt ceiling.”
Peter said a default could take two forms. We could have an honest default where the government just doesn’t pay back bondholders. Or we could have a dishonest default where we pay with inflation. In that case, they just print money and pay people back with worthless or near-worthless paper.
Those are the only two choices and everybody knows that.”
Peter went on to put the debt into a broader perspective and gave an overview of the history of the debt ceiling.
In this podcast, Peter also talked about money-losing companies going public and how a strong stock market now signals a weak economy.