Objectively speaking, the U.S. and Italy, for instance, have very similar national debt profiles. Yet interest rates in Washington are currently 600 basis points lower than they are in Rome.
This means that Americans can borrow and spend much more. The result of all this extra debt financed consumption is a boost in employment and GDP. The positive economic impact makes the dollar even more attractive, thereby perpetuating the cycle.
If rates in Italy (or Spain for that matter) were as low now as they were two years ago, those countries would not be experiencing the problems they are today. Their borrowing costs would never have risen and their budgets would still be manageable. Similarly, higher interest rates in the U.S. would completely take the shine out of our economy.
Imagine what would happen here if rates were just 200 basis points higher, let alone 600? U.S. consumers, homeowners, corporations, and governments are particularly dependent on cheap financing. As bad as things are in Europe, they would be even worse here. - in Business Insider
Related, SPDR S&P 500 Index ETF (SPY), ProShares UltraShort 20+ Year Treasuries ETF (TBT), iShares Barclays 20+ Year Treasuries Bonds ETF (TLT), Ishares Italy ETF (EWI)
Peter Schiff`s comments on the economy, stock markets, politics and gold. Schiff is the renowned writer of the bestseller Crash Proof: How to Profit from the Coming Economic Collapse.
- Gold: The Rally Will Gather Momentum As The Year Progresses
- U.S. Dollar: The World Has A Lot More Confidence Than They Should
- Video: Confiscating Excess Wealth
- Dow Jones Industrials & Gold Parity
- Video: The Federal Reserve Will Not End QE
- What Is Full Employment To Janet Yellen?
- Momentum Stocks Are Having Trouble
- Quantitative Easing (QE) Is An Euphemism For Inflation
- China: No Evidence That Demand For Gold Will Slow
- Video: The Bullish Case For Gold
- ► 2013 (395)
- Schiff on RT TV
- Had The Fed Raised Rates Sooner...
- The Fed Just Wants To Keep The Music Going Until T...
- Schiff Radio: Interviewing Jim DeMint
- The Federal Reserve Has Put Another Large Crack In...
- Gold: A Low-Risk, High-Return Asset
- CNBC Video Interview: Why Are Stocks So Strong?
- The Federal Reserve Is Ignoring Inflation
- Gold Is Rallying Again
- The Invisible Hand Versus The Heavy Hand Of Govern...
- We Are Not A Collectivist Society
- The Schiff Report: US Economy Outlook
- Capitalism Means Private Profits And Private Losse...
- 2012 Presidential Race
- Q&A: Retirement Assets
- Fox Business Video Interview
- Recessions In A Free Market System
- There`s No Way We Are Going To Pay The Debt
- The Peter Schiff Show: Kotlikoff Interview
- The U.S. And Italy Have Very Similar National Debt...
- Video Market Update
- Long Term Investing
- A Nickel Ain`t Worth A Dime Anymore
- We Must Repudiate Big Government
- Positioning For A Dollar Crash
- Free Market Capitalism
- The Longer We Postpone, The Bigger The Problems Wi...
- The Problem With Socialism
- An Opportunity To Buy Contra-Dollar Assets on the ...
- The US Dollar Is Riding Higher But...
- This Could Be The Year That Gold Beats Its Inflati...
- The Reason Our Economy Got Into So Much Trouble
- 2012 Presidential Race
- The Fundamentals Have Never Been Better For Gold
- CNBC Video: Gold Outlook
- ▼ January (35)
- ► 2011 (308)
- ► 2010 (300)
- ► 2009 (280)