"Fiscal Cliff" - Increasingly Likely & Desirable?

November 28, 2012

fiscal cliff.jpeg



The debate  is really over who will pay the bill. Neither side will desert their base. 








Latest- More Congressmen Adopting Makow View 


The Budget Control Act of 2011 was enacted as a compromise to resolve a dispute concerning the public debt ceiling. Deficit spending previously appropriated by Congress was bringing the federal government's total debt close to the statutory ceiling. Republicans in Congress refused to approve an increase in the ceiling unless there were deep spending cuts. The Budget Control Act included an immediate increase in the debt ceiling, along with a mechanism for facilitating two additional increases. It also provided for automatic spending cuts to begin on January 2, 2013.  Wikipedia 




by Henry Makow Ph.D.



fiscal-cliff-congress.jpg
As you know, the "fiscal cliff" is a $600 billion combo of tax increases and spending cuts which will take effect in January, and lead to a recession. 

There is no way to avoid going "over this cliff " except to tear up the Budget Control Act and kick the problem down the road. 

Even then, the GOP would have to agree to raise the debt ceiling.  

One way or another, the Piper has to be paid. $600 billion has to be raised. 

There are many ways to do this. Eliminating the mortgage interest deduction is an obvious one. This deduction is unique to the US. A valued added sales tax is another example. 

But there is no time for such bold action and both sides are digging in. 

DEFLATION

One way or another, an annual 600 billion will come out of the economy.

fiscal-cliff-cartoon-sheep.jpg
The debate  is really over who will pay this bill: The people who voted for Obama or the people who voted for the GOP? 

Neither side will sacrifice their base so I predict that the fiscal cliff may look more attractive as December 31 approaches. It is the only thing Congress has managed to agree on so far. 

Both sides appear to suffer equally. Both sides can blame the other. The most egregious injustices can be addressed later. 

_64148711_deficit_gdp_464_v3.gif
The result will be a drop in the stock market and precious metals, until people realize that the world has not ended. Then, it will be pretty much business as usual with confidence in the US dollar restored. (See deficit graph at right)

All over the world, the central bankers are demanding that countries rein in spending. "Austerity" is the watchword. The result will be deflationary but perhaps not horribly so. People will suffer but perhaps the US economy will be stronger in the long run. 

"Slower economic growth is the "short term pain" required to establish the stable economic foundation from which "long term gains" may be achieved," writes one commentator.  

Another commentator argues that the fiscal cliff is the bitter medicine America needs to get its debt under control:

"I think that the only way to move toward fiscal discipline is to jump off the fiscal cliff in January. The CBO says that the economic impact would be a mild recession in 2013, followed by resumed growth. That strikes me as a very small price to pay for cutting the deficit in half, limiting future deficits, bringing down the debt ratio over the next decade, re-establishing the AAA ratings and laying the foundation for future prosperity."

FINALLY

Currency is a mode of exchange and, like the air we breathe does not belong to anybody. In an ideal world, a government would be able to issue as much as necessary to make the economy run smoothly. It would not be a debt to anyone and "sovereign debt" would not be an issue. 

Alas, we have been brainwashed to accept the current situation where private Masonic families control government credit. 

As long as we do, we will all suffer the consequences.


 
---
Related- 

Whining about Fiscal Cliff is Pathetic

Bowles says Fiscal Cliff Deal Unlikely This Year 

Lucrative US "Non-Profits" Pay No Taxes

Masonic Symbolism at IRS Building 



Comments for " "Fiscal Cliff" - Increasingly Likely & Desirable? "

Brian said (November 29, 2012):


Oh yes, we're all goin' over a cliff, whether you characterize it as being "fiscal" or whatever other adjective you choose. For that matter, fiscal is only one aspect of the plunge we're on the brink of taking. Now it becomes a question of how hard the fall.


D said (November 29, 2012):

You're absolutely right. It is actually preposterous to believe that anyone would want to pay back banks that lent at interest, something which was not theirs to lend... rather, it was already "ours". It would be nice to see a few true patriots in the ranks of army brass whom share our views pull off a military coup, put DC on lockdown and carpet-bombthe living shit out the place, then declare that their is no debt, and issue its own interest free currency -- while declaring that if there's anyone in the world whom disapproves, they'll blow them to smitherines too. And then, they'd announce the repeal of all free trade agreements, imposition of high tarrifs on all goods imported by US-based companies with production facilities outside of the US, the nations withdrawal from the UN and NATO, and all US troops from all stations all over the world would be brought home and placed on high alert because it would only be a matter of time before Zionist forces would attempt an invasion.

I can always dream can't I?


TONY B said (November 28, 2012):

Hummmmm, we're going to have a recession in this on going depression??? Talk about depths!

Let the whole damned thing collapse. Then maybe the people will get balls enough to kill all the criminal bankers (Shakespeare had the wrong group - kill that bunch secondly and those bankers and lawyers who are also congressmen, kill them twice) and we can make a fresh start with real and honest money with a total outlaw of "credit," so-called.


Dick said (November 28, 2012):

The "cliff" is non-existent and the debt ceiling is just a number.
Yes, there is a point at which debt outstrips the ability to pay.
We may be there already (thanks to endless war, free trade and Wall Street bailouts). But the question is whether America can buy some time to fight for fundamental reform (ie national banking, a Wall Street Sales Tax, reindustrialization, etc.), or whether it should admit defeat and let the poor starve for the sake of bailing out Goldman Sachs.

If you want $600 billion+, the only way to get it now is a tax on
Wall Street transactions. Middle-class Americans pay ~7% to buy
daily necessities and ~30% income tax, yet a hedge fund operator
pays nothing to buy derivatives, and 15% on his income, which is
classified as capital gains.

I would encourage your readers to visit the United Front Against
Austerity (http://againstausterity.org), which lays out the pro-
industry / anti-Wall Street program the US should adopt. The first
step is to, as you point out, tear up the Budget Control Act and
start agitating for real reform. Deficit reduction will make the
problem worse, as the experience of pre-war Germany shows.


Henry Makow received his Ph.D. in English Literature from the University of Toronto in 1982. He welcomes your comments at