The economy of the United States of America may be experiencing a bumpy road right now because of several reasons.
peter schiff was interviewed by Kiplinger and he has this to say about the current economic status and the economic outlook of the country.
When asked about he thinks about the economic status of the United States of America, he says, “I still think we’re in the early stages of a depression. People assume the economy is recovering because the numbers look better. But the numbers only look better because of the additional debt we’ve accumulated. When you borrow and spend trillions of dollars, the numbers look better in the short run. People will spend that borrowed money, so there will be some jobs created in the process.”
He continues to point out, “But once that borrowed money is spent, it’s gone. The interest burden, however, remains. So the economy ends up in worse shape, and we end up digging ourselves into a deeper hole.”
The US is doing what it can to improve and reverse the effects of a struggling economy through stimulus packages but Schiff believes that will only cause more harm than good.
When asked what will happen next, he says, “Over the course of the next several years, a hangover will set in and interest rates will rise. Interest rates are rising now. They’re still low only because they’re rising from such a depressed level.”
He further reveals, “The next downturn will be worse because we never allowed the economy to recover from the damage caused by the housing mania, and economic imbalances were never fully addressed. We put too much of our resources into housing, education and health care through government subsidies and debt guarantees. Interest rates were too low for too long, so consumers were able to borrow too much.”
The economy may be struggling now, but what should we do to counter its effects? Peter Schiff tells investors what to do: “I’m pursuing two themes. One is resources and raw materials. For that we like energy, agriculture and mining companies.”
“The other theme is that the world is going to change dramatically over the next decade as far as distribution of wealth, purchasing power and living standards. Americans have been living beyond their means, while others have been living beneath their means. That’s going to switch. So we’re focusing on companies that are already active in the markets where purchasing power is going to grow. For example, we want companies that are targeting the Chinese middle class. If investors want to invest in the U.S. at all, they need to focus on multinational export groups that derive some of their income overseas”.
To find out more information about Peter Schiff and his thoughts, you can check out his blog at: http://peterschiffblog.blogspot.com/
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