Fiscal cliff this and fiscal cliff that. Mathematically it is game over. Tax the rich, cut benefits to the needy; it doesn’t matter because the debt itself is un-payable not to mention the interest. Let’s assume that the Congress does “cut a deal,” it will buy some time only (maybe very little) and cannot avoid the final resolution. The final resolution being default, whether it be non payment or devaluing the currency it will still be a default where someone somewhere (many everywhere) loses “value” and does not get paid.
Whether a “deal” gets done before Jan. 1 is a moot point because whatever is actually done will do nothing. As a side note, I find it revolting (typical) that Congress plans to adjourn before the first of the year and President Obama plans a 3 week Hawaiian vacation whether or not a deal is struck. I am not saying that the current bankruptcy is this President’s or Congress’s sole fault; it is not (but they did help put the cherry on top). What I am saying is that it is THEIR job to at least TRY to find a solution. That is what “the people” entrusted in them when they voted for them. In my opinion, the president and Congress should lock themselves in a room (viewable with full audio on C-SPAN) and come up with something…anything… because that is their job and they do get paid taxpayer money for their “work.”
That said, if I were “king,” I would have a different solution with much less drama leading up to Jan. 1. I would tell the public (I try through my writings) that “game over” has arrived and the “reset” button needs to be pushed. I would tell the whole country, “Let’s everyone hold hands and jump off the fiscal cliff together singing Kumbayah!” We have been kicking the can into the wall at the end of a dead end street for years, no matter how hard you keep kicking the “can” it can go no further and do no good. It is time to “fess” up and admit failure (if not fraud).
Follow this through, actually “going over the cliff” is THE only way to balance the budget, REALLY and TRULY balance the budget. If the federal government doesn’t have the revenue… they can’t spend it can they? Add to this a NO vote on raising the (unlimited) debt ceiling and presto, we have to live within our means! Yes I know, the financial world will come to an end as will our standard of living. The economy will contract AT LEAST 8% (which is the amount of current deficit spending) plus the ripple effects from this “stimulus withdrawal.” The economy very well may contract 50% or more initially when things grind to a halt and possibly level out at a level 25-35% lower than where it (falsely) is now. At least it will then be “real.” “Paper pushers” will need to get real jobs and the economy will morph its way back to one of actual production rather than being one of paper speculating.
Read More at milesfranklin.com . By Bill Holter.