Economist Peter Schiff has warned that the U.S. will default on its debt obligations. He further stressed: “All the bad stuff that they’re saying is going to happen if we don’t raise the debt ceiling is guaranteed to happen because we do raise the debt ceiling.”

Peter Schiff on U.S. Debt Default

Economist and gold bug Peter Schiff warned Monday on the Peter Schiff Show podcast that the United States will default on its debt obligations and that raising the debt ceiling will have devastating consequences.

Commenting on politicians claiming that the U.S. debt ceiling must be raised “because we pay our bills,” the economist argued: “We never pay our bills … We have $31.7 trillion in debt. That’s $31.7 trillion of bills that we have not paid. We didn’t pay them. We borrowed the money. And we want to keep on borrowing the money. Nobody wants to pay any of these bills.” Schiff cautioned:

It’s only a question of time. It’s not a question of if. It’s just a question of when. We will default on our debt. All the bad stuff that they’re saying is going to happen if we don’t raise the debt ceiling is guaranteed to happen because we do raise the debt ceiling.

He explained that eventually, the borrowing and money printing by the Federal Reserve will precipitate a financial and currency crisis. “It’s not about America not wanting to borrow. It’s about the rest of the world not wanting to lend because they know we’re not going to pay them back. And one of the reasons they know that is because we’ve already told them. We are telling them that repeatedly in the debt ceiling battle,” he opined.

The economist detailed that the U.S. could default on its debt obligations in two forms. The first is “an honest default where the government just doesn’t pay back bondholders” and the second is “a dishonest default where we pay with inflation.” In the latter case, he stressed that the Federal Reserve will just “print money and pay people back with worthless or near-worthless paper.”

Regarding commentary in the media framing the debt ceiling as the problem, Schiff argued that the problem is actually the debt. He cautioned:

The problem is that Congress and the president keep running up more and more debt and every time we get to the ceiling, we either raise it or suspend it … The problem is that we keep raising the ceiling, not that we won’t raise it. In fact, the threat is that we raise it again.

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