Tuesday, October 20, 2009

Schiff: Spending up, industrial output down

With consumer spending contributing 71% of U.S. GDP, industrial output down and the trade deficit expanding, Peter Schiff finds no grounds for saying the economy is recovering.

. . . rather than allowing a painful cure to return our economy to health, the government prefers to numb the voting public with a toxic saline-drip of deficit spending and cheap money.

The primary factor that enables our government to peddle economic snake oil is the dollar's unique role as the world's reserve currency, and our creditors' willingness to preserve its status. By buying up dollars and loaning them back to us through Treasury debt, productive countries give American politicians carte blanche to play Santa Claus.

As long as foreign governments keep lending, we'll keep spending, he observes.

But he thinks the foreign spigot will soon be turned off, and the real depression will begin.

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