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Debt default is imminent

Published time: July 11, 2011 20:52
Edited time: July 13, 2011 00:52

Another week has gone by and lawmakers still can’t figure out what to do with the debt ceiling. As the country comes closer to crashing into that daunting 14.3 trillion dollar mark, is a default imminent?

Euro Pacific Capital President Peter Schiff says it is a rouse that we are even discussing defaulting at all at this point. According to Schiff it’s inevitable, and if Congress was actually concerned that it wouldn’t happen then they would be frank about it.

Schiff says that the president and Congress should tell the people that “we will be honoring our debt” and that America will make cuts elsewhere. “But that’s not it!” says Schiff. He says that the best thing the country can do is not raise the debt ceiling, and if lawmakers are really conference about deficit spending, then “the only way to stop it is to stop it dead in its tracks.”

“These are only just excuses,” he adds.

According to Schiff, the talks of defaulting are only being used by lawmakers to justify raising the debt ceiling. But if we default? No big deal. “We are going into another recession regardless,” he says.

He also adds that America defaulted before in 1971 and the country managed to survive.

Schiff notes that defaulting isn’t an automatic consequence to not raising the ceiling, but with the Congress and the president refusing to come up with a plan, default seems only more and more likely.

Schiff says that America can eliminate the debt ceiling all together and that the entire debt will have to be restructured if the country wants to avoid massive inflation. In the meantime Schiff says that “anything that diminishes the appeal of the dollar will impact the United States.”

Economist and radio host Richard Wolff adds that neither side of the aisle is really "facing the basic issues" of what's wrong with the economy. That, he says, is putting America in "serious trouble."

"We have very high and persistent unemployment . . . and what we are doing is arguing over the technicalities of the debt ceiling limit," says Wolff.

Wolff says that if the spending cuts proposed by Obama go through and federal benefits are slashed, the consequences on the public will be dire.