Finance ministers from the G-20 nations will meet in South Korea to address the global financial crisis. US Treasury Secretary Timothy Geithner is expected to push his plan aimed at rebalancing the world economy.
Geithner wants to set new targets to reduce deficits in countries in order to fix global trade imbalances. Currently, the world's nations are split on his trade plan.
“I don’t even know how they can take Geithner seriously anymore,” said Peter Schiff, the president of Euro Pacific Capital and author of “How and Economy Grows and Why it Crashes.” “The policies that we’re pursuing here in America are exasperating the very imbalances that the Treasury Secretary claims that he wants to reign in. The biggest offender is the United States.”
The US is spending too much, barrowing large sums of money and expanding already large trade deficits, he explained. Geithner may have inherited a broken system, but he continued to break it more, said Schiff.
“It could be repaired,” he said. “America needs to save more. America needs to produce more and we’re not going to do that with the current policies in place. We need to reverse course. We need to shrink the size of our government. We need higher interest rates in America, not low interest rates. People need to save their money, not go deeper into debt.”
The US cannot continue the same policies and blame others; it simply does not make sense.
“Everybody gains from Trade,” added Schiff. “But now we’re not really trading.”
He explained that the US is an addict, addicted to spending and borrowing money. China needs to cut off the supply of money, he argued. Foreign governments enable the US to continue failed policies that continue to hinder the global economy.
“As long as the world will lend us money, our politicians will spend it to get elected, but that’s not helping America,” Schiff said.
“The United States is in the process of collapsing. It doesn’t mean it’s irreparable. I think we are on a collision course with economic ruin, it doesn’t mean that we don’t still control our own destiny,” he added.
He argued that the US can reclaim a viable economy if they enact proper policies to do so. The current policies will lead to economic ruin.