As the fiscal 2020 budget deficit of the United States surged past $3 trillion, more than double the previous record deficit, Treasury Secretary Steven Mnuchin called for more federal spending.
According to CEO of Euro Pacific Capital Peter Schiff, the US debt crisis is looming and it’s ironic that the country even has a secretary of the treasury.
“The treasury is empty,” said Schiff in his podcast, adding: “It really should be the secretary of the debt because that’s all we have. We have a gigantic pile of debt. And really what the job of the secretary of the debt is, is to make the debt bigger and to make sure that the people lending us the money don’t stop. So, it’s really a giant con-job where you have to go out there and enable debt.”
He pointed out that in the past, the strategy was to convince the world to buy US debt. “Now they’ve even abandoned that and pretty much left it to the Federal Reserve to backstop the borrowing. The Fed works hand-in-glove with the US Treasury to enable borrowing and spending.”
The economist explained that the whole idea behind an independent Federal Reserve is that it would not work hand-in-glove with the US Treasury.
“The idea was they didn’t want the US government to have its hands on the printing presses… You want to have some kind of buffer between government – Congress – spending the money and the Federal Reserve that’s creating it. But when you have these guys working together; they’re on the phone constantly; they’re like partners in crime now ripping off the American public where the Fed is actually acting as a branch of the Treasury Department. This is what we don’t want.”
All that explains how the US government managed to get more than $26 trillion in debt with a debt-to-GDP ratio of 136.7 percent, said Schiff.
He noted that while Mnuchin keeps saying we shouldn’t worry about debt when the economy is bad, he wasn’t worried about the debt when the economy was supposedly good. “Yet, when we had the strongest economy, or they were telling us that we had the strongest economy in the history of the world, were we worried about the debt then? No. Did we do anything about the debt then? No. Well, yes, actually we did do something about the debt. We made it bigger.”
For more stories on economy & finance visit RT’s business section