Are U.S. budget and trade deficits now at unsustainable levels?
Richard Russell, Robert Wiedemer, Philip Klapwijk, Glenn Dobbs
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Host: Today, the U.S. finds itself moving full speed ahead through some very dangerous waters. Like a family that spends far more money than it takes in or consumes far more than it produces. We find ourselves surround by a growing mountain of debt, but has escalated to crisis levels unprecedented in world history. Is it any wonder then that the foundation of our nation's financial system has been shaken to the core? Endless say that the situation is unsustainable and we will have to pay the piper. Ironically, it's these dangerous economic times they say that makes this the perfect time to both protect and increase ones wealth with gold.
Richard Russell: We're just statistics now. People can't comprehend the debts and deficits we're running up. It's never happened in the history of the world.
Robert Wiedemer, PhD: Our debt to income is 7 to 1. We have income of $2 trillion. We are about to have a deficit of $14 trillion. That's a toxic acid; that's a toxic loan. It only works because people are confident that they can keep rolling it over and rolling it over, but how long can you do that if interest rates go up? Kind of like adjustable rate mortgage, right? Who’s the biggest holder for adjustable rate debt in the world right now? The U.S. government. Did you know that 37% of our debt is less than 1-year maturity? We've really got to roll it over and when we roll it over and interest rates rise, we're going to be in real trouble. At 10% interest rates, I mean that isn't very high, right? We had 10% interest in the early 90's. We had much higher than that. We'd be paying almost as much in interest payments as we'd be bringing in taxes. It's a real problem.
Philip Klapwijk: In the United States, the authorities seem to be hell bent on avoiding recession at all costs. It seems that recessions have been band in the United States. The market forces are not allowed to operate any more in this economy. Therefore, the weak or the reckless are not allowed to go to the Wall, you have to pump public money into failing companies, and this will have an impact, I think, on the long-term value and such of the U.S. dollar.
Glen Dobbs: Of course, the dollar has been the reserve currency of the world for many decades now. Unfortunately, I don't think that's going to continue.