Tags: Schiff | Treasurys | junk | debt

Peter Schiff: Treasurys Are 'Junk Bonds'; Debt Ceiling Shouldn't Be Raised

By Dan Weil   |   Friday, 27 Sep 2013 08:45 AM

The nation's finances are in such tatters that Treasurys are really "junk bonds," says Peter Schiff, CEO of Euro Pacific Capital.

And the debt ceiling shouldn't be raised because it just perpetuates our problems, he tells Yahoo.

"There's no way we can pay any of this money back," Schiff explains. "We're either going to default or inflate. Either way bondholders are going to lose, so don’t buy any Treasurys."

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All that raising the debt ceiling over the years has done is to make us "broke," he notes.

"The reason we have to raise our debt ceiling is because we can't pay our bills," Schiff adds. "If we could pay our bills, we wouldn't have to borrow more money. But because we're broke, and we can't pay for anything, we have to keep going deeper and deeper into debt."

That will keep happening "until the world wakes up and realizes how broke we are, that we're never going to pay anybody back," Schiff says.

At that point, "everyone stops lending us money, so the only buyer of Treasury debt will be the Federal Reserve. And that's when the game ends," he argues.

"The reason the government has no [fiscal] discipline is because the debt ceiling is raised every time we get there. So there's no reason for the government to stop spending."

The Treasury Department said Wednesday that it would be left with only $30 billion of cash by Oct. 17 if Congress and the president can't agree on a debt ceiling increase.

"I think we've got this false sense of security," Sen. Mark Warner, D-Va., told The Wall Street Journal. "This time the wolf really could be at the door."

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