emazur
11-19-2010, 12:11 AM
Saw this on TV today, reminded me of what Schiff says
http://www.cbsnews.com/stories/2010/11/18/eveningnews/main7068036.shtml?tag=cbsContent;cbsCarousel
"U.S. debt has always been perceived as the least risky type of debt because the United States doesn't default," says CBS News business correspondent Rebecca Jarvis.
The U.S. counts on citizens and financial institutions to give it loans. In return, the treasury pays interest as high as 4 percent on these bonds and treasury bills. Most of the IOUs are held by American investors and the U.S. government. But one-third is owned by foreign lenders like Great Britain, Japan and China (the treasury owes that country $880 billion).
CBS News Beijing correspondent Celia Hatton says, "The No. 1 option out there, the safest place for it to place its nest egg is in U.S. debt."
But that confidence may be eroding. Years of running annual deficits is driving the total national debt to a whopping $14 trillion.
"A day won't go by where I don't get an email from a trader or a hedge fund manager who says the chickens are coming home to roost," Jarvis says. "What they mean by that is that every day we assume more and more debt as a country, it makes us less likely to pay out that debt in the future."
"Even two years ago we were hearing from the head of the Kuwaiti Investment Authority that he was worried about the direction the U.S. was headed in," Mason says.
"This is real problem. And if this continues forever, then there is a real issue in the U.S. economy," Baader al Sa'ad told Mason in 2008. "Somebody has to fund this deficit."
"What investors on Wall Street are most concerned with is not necessarily that the deficit is too big now - but there is no plan to address it in the future," says Jill Schlesinger, editor at large at Moneywatch.com.
The more Uncle Sam pays, the more Americans pay. Interest rates for business loans and mortgages follow the rates government pays its lenders. In the early 1980s, the government had to pay 15 percent to lenders - which pushed 30-year mortgage rates above 18 percent.
Mason says, "We are able to keep servicing this debt because the interest rates are low. The question is what's the breaking point? And we don't want to get even close to that."
http://www.cbsnews.com/stories/2010/11/18/eveningnews/main7068036.shtml?tag=cbsContent;cbsCarousel
"U.S. debt has always been perceived as the least risky type of debt because the United States doesn't default," says CBS News business correspondent Rebecca Jarvis.
The U.S. counts on citizens and financial institutions to give it loans. In return, the treasury pays interest as high as 4 percent on these bonds and treasury bills. Most of the IOUs are held by American investors and the U.S. government. But one-third is owned by foreign lenders like Great Britain, Japan and China (the treasury owes that country $880 billion).
CBS News Beijing correspondent Celia Hatton says, "The No. 1 option out there, the safest place for it to place its nest egg is in U.S. debt."
But that confidence may be eroding. Years of running annual deficits is driving the total national debt to a whopping $14 trillion.
"A day won't go by where I don't get an email from a trader or a hedge fund manager who says the chickens are coming home to roost," Jarvis says. "What they mean by that is that every day we assume more and more debt as a country, it makes us less likely to pay out that debt in the future."
"Even two years ago we were hearing from the head of the Kuwaiti Investment Authority that he was worried about the direction the U.S. was headed in," Mason says.
"This is real problem. And if this continues forever, then there is a real issue in the U.S. economy," Baader al Sa'ad told Mason in 2008. "Somebody has to fund this deficit."
"What investors on Wall Street are most concerned with is not necessarily that the deficit is too big now - but there is no plan to address it in the future," says Jill Schlesinger, editor at large at Moneywatch.com.
The more Uncle Sam pays, the more Americans pay. Interest rates for business loans and mortgages follow the rates government pays its lenders. In the early 1980s, the government had to pay 15 percent to lenders - which pushed 30-year mortgage rates above 18 percent.
Mason says, "We are able to keep servicing this debt because the interest rates are low. The question is what's the breaking point? And we don't want to get even close to that."