Mr Schiff discusses the recent market volatility, especially that related to Ben Bernanke's much-discussed re-appointment woes. Schiff speculates that even if Bernanke isn't re-appointed, then the US government will appoint someone even worse.
He follows this with a short revisitation to the current state of Fannie and Freddie.
The Duke then rolls into Obama's proposed 'tax cuts' and asks a simple question: Where's He going to get the money? The 'Great One' certainly won't cut spending. So He's either going to destroy private sector jobs by taxing the private sector more, or He's going to crowd out private sector investment borrowing by borrowing more. Either way, Obama's 'tax-cutting' plans, without being fed by concomitant government spending cuts, will destroy even more of the US economy.
What about Obama's student loan plans, where students will pay a maximum each year, and only for a maximum number of years?
This increased moral hazard will incentivize students to borrow more money, because it won't matter - repayments will be limited to a fraction of what they borrow. There will therefore be much less pressure to scrimp and scrape by, and to keep living costs and course costs down, because if anyone is faced with a situation where they can borrow as much as the like, but only need to pay back a fixed maximum, they would almost be foolish not to push it to the absolute limit (assuming they can live with the immorality of this - I bet many will be able to!). The universities will also start charging more, because once again the students won't care what they're charged, as long as they get a place, because they won't be paying it back. Another unintended consequence is that students will borrow further while at college just to fund more lavish lifestyles. The final consequence, is that because a college degree will then be seen as being that much more attractive, with lavish lifestyles being lived at expensive colleges by one and all, with a maximum fixed upper payment ceiling, then many more will swap their productive lives for the consumptive lives of students, thus flooding the market with people with degrees, thus devaluing all degrees.
(From the British experience, what will then happen is that government will then start rationing places in higher education, based on political whim, reserving cherry-picked slots for its own favoured off-spring. There will also be many more students opting for degrees purely for their own whimsical intellectual interest rather than for their hard-nosed economic interest, treating degrees as three-year drinking, drugs, and sex holidays, all gratis on the taxpayer, rather than as personal investments of time, energy, and wealth. Heck, why not make it a four-year degree, for an extra year of fun? And then a masters degree? And then a PhD? All based upon Peruvian basket weaving in the fourteenth century and its eventual effects on global warming.)