Peter Schiff has been sounding the warning for some time on the inevitable bubble that the U.S. government is becoming, and once that bubble bursts, according to Schiff, there's nowhere else to go but to experience what he calls a "financial hangover."
The most recent bubbles related to the tech industry, which when it burst led to the Federal Reserve creating the pain of the housing bubble, which we're still in the midst of, and now Schiff says once the government bubble bursts, it will be devastating to our economy, and the consequences will be extremely painful for the majority of Americans.
Who knows how far it will reach beyond America as well, as the housing crisis shows, as many institutional investors, including countries, had invested deeply into securities backed by the mortgages which collapsed.
What will happen in the bond market is anyone's guess, but whatever happens, it's not going to be good, at least as far as the Treasury market goes.
Schiff and others who understand what's going on have been strongly arguing and urging the government to remove itself from the private market and quit their socialist agenda.
The history of socialism has proven it doesn't work, and to continue on that path will lead to disaster; it's only a matter of when, not if.
As Schiff also points out, the idea that the financial and economic crisis of 2008 was caused by too much capitalism, is a joke and at best based on ignorance, and at worst, an excuse for government officials to attempt to manage even more of the private sector, which effectively takes the decisions largely out of the hands of entrepreneurs and transfers it to the clueless politicians, who know nothing of what it takes for business and economic success.
With the government increasingly interfering in what should be private sectors like healthcare, housing, cars, banking and insurance, the result will ultimately be a decreasing private sector which will be counted on to support the giant government squid whose tentacles have extended into everything.
The problem is, there won't be enough money to do that, as increased bailouts, higher taxes and falling productivity will eventually cause the whole thing to crash.
Maybe the government, and more importantly, Americans and others in the world, will learn at that time there is a great need to limit the size of government and keep it constrained to its purpose, and leave the free market to those who know how to work in it the best.
The views expressed are the subjective opinion of the article's author and not of FinancialAdvisory.com