Peter Schiff: Too Late, America Is Already Broke

"In order to pay that off, you'd have to increase taxes by 90%," he said. "However, most households already pay at least 10% in taxes. There's no more money to give; that would put them at a 100% tax bracket. The government wouldn't collect a penny in that case because no one would work if everything they earned was taxed. But if you need a 100% tax rate to pay off your debts, you're broke at that point."

Schiff adds that the country was "feigning solvency" by keeping interest rates at historic lows, which is one of the topics discussed in the new book.

"This means we can pay the 'teaser rate' interest, but once interest rates rise, we're screwed," he colorfully stated. "Now, the Fed can try to keep them low indefinitely, but that will destroy the dollar."

Part of the reason we're "getting away with it" is because of the problems in Europe and the distraction they lend. Once resolved, the attention will once again return here, and investors won't like what they see.

"The euro crisis is a godsend, in a way, but it won't last, and in many ways we're worse off than Europe," he says.

"We're like Facebook," Schiff concludes, referring to the social media site's recent IPO and its attendant problems. "Everyone thinks we're great, but the more they look, the more they don't like."