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Pento Portfolio Strategies president Michael Pento explains why it's worth going over the fiscal cliff now to fix the economy.
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And bring on the fiscal -- our next guest says its work taken the pain now.
To fix the economy Michael Pinto with president -- portfolio strategies.
And Michael you know congress' budget office came out last week and raised all kind of fears my gosh if we let the automatic cuts go through hundred billion right away and the automatic tax increases.
That we would suddenly -- something like 450 billion from the trillion dollar deficit my -- and the deficit at -- from 7% of GDP to four point 2%.
But two million people get laid off Michael is it worth laying off two million people to make this happen.
So what's -- all tired of this is the fourth year -- role of trillion dollar plus deficits.
The real fiscal clip will be a bond market collapsed at a US dollar collapse.
That's what we should be concerned about this week -- know what.
Republicans and Democrats have raised the debt ceiling like have will be in dogs.
For years the sequestration.
Is our only hope to pare down these deficits otherwise we're gonna hit that real fiscal cliff.
And there's no getting out of it once international investors lose confidence in our currency and our bond market.
We will be rendered insolvent as a nation so I don't understand I wanna say one thing before I know you're you're anxious to get in there I want it.
Actually debate you but not -- gold standard to because that's you can actually gonna save the middle class but let 40% this fiscal clip.
Is cutting the this this spending from Washington DC.
And -- they get their money from the get it from the private sector what they printed so that in the long run is a good thing since the meltdown began and 0809.
Have we extended our problems because we keep trying too much to avoid pain is it necessary to under the bill paying to fix this well it's like trying to avoid a hangover by staying drunk forever.
We have to -- -- We have to reduce our debt.
We have to protect our currency if we continue down this path we were gonna be like Greece Greece's two year note.
Went from one point 3% to a 153%.
In two years from vs the fact that if that -- does not -- -- Zimbabwe dollar price in Zimbabwe bond market.
It is the Euro currency and -- -- backed by the Euro currency.
It happened we utilized our credit rating AAA we thought I was gonna increase our interest rate costs it turns out interest rates on ten years right now are lower than they were at the worst part of the crisis -- -- 09 all right let's say we take the -- we decide we're gonna lose -- literally Ayatollah so what do you what do you Sam let me just hope -- your -- -- lose two million more job OK is -- a cycle at some point though where the two million unemployed no longer pay taxes they suck up more benefits and -- -- -- a downward spiral we can't get out of it.
Not no not that.
Now that that'll never happen once -- two million people lose their jobs because they were employed some way by the government the private sector still has those.
You know you not tax in the private sector as -- to the degree you were before so the private sector will pull -- slack in my taking year it happened in Argentina it happened in -- Zimbabwe.
Once they stop their borrowing and spending it could happen here United States one year of paying meteor and a half and then we -- our way into prosperity.
And if suddenly the the the deficit fault only 4% have been that low since 1969.
Is one side effect that our ten year rates actually might go lower because they're even a less risky by than they were before.
What's wrong -- that.
-- -- -- Let's look like for the problem not lowered to lower interest rates are provided artificially by the Federal Reserve -- a huge problem but a low -- moderate to come because we have reduced supply is a wonderful.
All right thank you very much to -- -- -- Michael pent --
