Peter Schiff: Government Spending Has Bankrupted the U.S.

Peter Schiff recently appeared on the Capitol Report on NTD News to talk about the state of the US economy. He explained how government spending has created the price inflation Americans continue to struggle with, and how it has bankrupted the United States.

The Biden administration keeps touting its “investments” in infrastructure and other programs. Meanwhile, average Americans continue to say they’re struggling with price inflation. Peter pointed out that the administration isn’t really investing in anything. It’s just spending money it doesn’t have.

And that’s creating inflation.

All of that government spending is being financed by deficits and that’s really the source of the inflation. And it has been the source of the inflation for many, many years because the Fed has been monetizing all the government debt by creating money. That’s what’s been putting all the upward pressure on prices. So, it’s the government that’s responsible for the inflation. As long as the Biden administration keeps spending money that it doesn’t have, inflation is going to get worse.”

The NTD anchor played a clip of Vice President Kamala Harris pointing out that the average American is just a $400 unexpected expense away from bankruptcy. Peter pointed out that the US government is also bankrupt.

We admitted that during the fight over raising the debt ceiling. We said that if we can’t raise the debt ceiling, we have to default on what we’ve already borrowed, which means we’re broke. We don’t have the resources to pay our bills. All we can do is go deeper into debt so that we don’t have to pay our bills. So, the whole country is broke thanks to all this reckless borrowing and spending that has been made possible by a cooperative and complicit Fed that has kept interest rates artificially low and monetized all that debt.”

The artificially low interest rates also blew up all kinds of economic bubbles and incentivized malinvestments in the economy.

Now that the Fed is forced to allow interest rates to rise, the air is coming out of this bubble and it’s going to be felt throughout the US economy.”

The anchor also asked Peter about America’s relationship with China. Commerce Secretary Gina Raimondo recently said, “Decoupling is neither in our economic or national security goals.” Peter said the US can’t afford to decouple from China.

You have to recognize that China is both our biggest supplier and our biggest banker. The Chinese loan us the money to buy the stuff that they produce that we can’t. Our entire standard of living rests on the support of China, and if we lose that support, it’s going to collapse. Now, We’re in the process of losing that whether we want to or not. I think the Chinese realize it’s in their interest to drive the decoupling, and that’s what’s going on.”

Peter mentioned the recent BRICS summit and the expansion of that economic bloc.

They’re looking to de-dollarize, and to reduce and eventually eliminate their dependency on the US dollar. And when they no longer need dollars, well, then they no longer need to sell us their stuff because they have plenty of domestic demand for what they produce. That means the United States is going to be in a lot of trouble because we don’t have the industrial capacity to produce what we’re now getting from China. And despite what Biden is saying about some kind of manufacturing renaissance, it’s all a bunch of BS. The manufacturing sector continues to shrink under his presidency and our trade deficits have hit record highs.

So, how do we mitigate the danger? Peter said we need to reduce the burden that the government puts on the American economy.

We need to see massive deregulation. We also have to see substantial and across-the-board cuts in government spending so we can relieve the economy of the burden of paying for that spending so that we can start producing again the things that we are now importing from China and other countries. Because when the dollar collapses, which I think is inevitable as it loses its status as a reserve currency, we’re not going to be able to consume unless we can produce. And right now, our productive capacity is being inhibited by government.”