As the debt ceiling crisis continues to persist, Peter Schiff, chief economist and global strategist at Euro Pacific Capital believes either a default on the national debt or massive inflation would be possible.
‘”Experts” agree that if the #DebtCeiling is not raised, and the U.S. Govt. is no longer able to borrow, it will be impossible for the Govt. to pay its bills. That means the U.S. has already borrowed more than it can repay. Either default or massive #inflation is inevitable,’ Schiff said in his tweet.
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In the latest development regarding the matter, President Joe Biden said he expects to meet with congressional leaders on Tuesday for talks on the debt ceiling crisis. The President was earlier set to meet with House Speaker Kevin McCarthy and senior Congressional leaders on Friday but the meeting was postponed.
Although the stand-off continues, a wide section of the market believes there will be a resolution and the country will not witness a default. Wall Street has so far avoided any sharp negative reaction to the debt ceiling stand-off.
The SPDR S&P 500 ETF Trust (NYSE:SPY) lost just 0.34% in the last five days while the Invesco QQQ Trust Series 1 (NASDAQ:QQQ) gained 0.77%.
Inflation: However, as far as inflation is concerned, there are strong opinions among certain experts that the Federal Reserve will continue with its aggressive monetary policy for some more time.
For instance, Johanna Chua, chief APAC economist at Citigroup Global Markets, said last week that inflation is likely to be quite persistent and the central bank may go for two more rate hikes in coming times.
This stands in line with Schiff’s opinion that April’s lower-than-expected inflation print at 4.9% should not be a reason for optimism given the fact that the figure is still higher than the Fed’s target of 2%.
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