Peter Schiff's Treasure Trove in “The Real Crash”

By:  Thomas R. Eddlem
05/29/2012
       
Peter Schiff's Treasure Trove in “The Real Crash”

Peter Schiff's latest book, The Real Crash: Americans Coming Bankruptcy -— How to Save Yourself and Your Country, is a treasure trove of economic wisdom and policy proposals. Americans ignore the valuable insights of Peter Schiff at their own peril.

 

The Real Crash: Americans Coming Bankruptcy -— How to Save Yourself and Your Country by Peter D. Schiff, (New York: St. Martin's Press, 2012), 335 pages.

The Real Crash is a treasure trove of economic wisdom and policy proposals that will — unfortunately — not be followed by policy makers in Washington without a complete political revolution of returning the U.S. government to its constitutional limits. Author Peter Schiff (pictured next to his book) has a dire prediction for America's future: “Think of the austerity measures in bankrupt countries like Greece — that's where we're headed,” Schiff warns. Schiff expects higher taxes and ultimately a national bankruptcy similar to that facing Greece — and will soon face the other European PIIGS countries (Portugal, Italy, Ireland and Spain).

For the coming economic crash, Schiff, President of Euro-Pacific Capital, has a policy recommendation that is the lesser of two evils: “It's time for the United States of America to declare bankruptcy.” And he says that the longer the United States government waits to declare a restructuring of its unmanageable debt, the worse the economic crash will be. “We are already bankrupt, it's time we declared it. The U.S.A. is insolvent, and should enter the sovereign equivalent of Chapter 11 bankruptcy.”

If that sounds drastic at a time when Treasury bills are selling on the open market for almost zero interest, The Real Crash will serve as a wake-up call about what's coming. Cheap finance of U.S. government debt cannot last forever, Schiff points out. Interest rates must rise eventually, and the federal government's interest finance costs — already more than $450 billion per year — will eventually go up by several multiples and increase the deficit further. Schiff correctly labels the national debt “the mother-of-all adjustable-rate mortgages.”

Schiff notes that this will have an immediate impact on the U.S. budget, explaining that “given the short maturity of our debt, it's very possible that in any given year, over $5 trillion in debts will mature.” That's a figure, Schiff reminds the reader, more than twice federal revenue in any given year.

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