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Via SchiffGold.com,

Does the massive national debt matter?

A lot of people don’t think it does, at least not yet. They point to Japan as an example of a country that has a much higher debt-to-GDP ratio and is doing fine. Peter Schiff said they’re looking at the wrong country. The US is more like Argentina than Japan.

The debt to GDP ratio in Japan is over 200%. The US debt-to-GDP ratio is only around 125%. If Japan is doing fine, why should we worry here in the US?

Peter notes the fact that Japan isn’t really doing “fine.”

The yield on a 10-year Japanese Government Bond is up to 8.7%. The yen recently broke the 150 mark. Meanwhile, price inflation is ratcheting up.

Peter said the US is in a different situation than Japan and it will get its come-uppance sooner. It will never get to a 200% debt-to-GDP ratio. The US won’t even get to 150%.

Why not?

Peter said the big difference between the US and Japan is that Japan is a net creditor and the Japanese people save at a much higher rate than Americans.

The US doesn’t have as much rope because the country is broke.

The Argentinian central bank is also in a war against price inflation it can’t win. It recently raised its interest rate to 133%. And that’s still below the country’s inflation rate.

Some people will say you can’t compare the US and Argentina. Peter said, “Sure we can.”

Peter noted that at one point, Argentina was one of the wealthiest nations in the world.