The U.S. Debt: Big Problem or Big Hype?

Are fears about the burgeoning U.S. government debt merited, or overblown? In an interview with CNBC, University of Texas Economics Professor James Galbraith says that the debt discussion involves a good deal of “fearmongering”, and that low interest rates mean the U.S. will have “no problem” financing its debt. (In fact, according to CNBC, the amount of interest the U.S. paid on its debt in 2009 was actually lower than it was a decade earlier, because of those low rates.) But money manager and U.S. Senate candidate Peter Schiff, who warned of the subprime crisis that many others failed to see coming, disagrees. He says that the low interest rates the U.S. is now paying on its debt are essentially “teaser rates” that will rise in the future — much like those of subprime loans — greatly increasing the financing costs on that debt.

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