I already wrote about the fiscal cliff. On the news, the fiscal cliff is all they’re talking about. My father watches the Communism Channel (CNBC) all day, and they have him all excited about the fiscal cliff.
The fiscal cliff is a fake crisis. It’s an emergency created by politicians and the State. When they made the last compromise for taxes, the budget, and the debt ceiling, they put an unusual loophole in the law. If a compromise is not reached by the end of the year, then huge tax hikes and spending cuts take effect.
Hurricane Sandy was a real emergency. The “fiscal cliff” is a fake emergency. It’s an arbitrary deadline that politicians imposed on themselves.
The “fiscal cliff” actually refers to two separate laws. When the “Bush tax cuts” were extended last time, they expired at the end of this year. If Congress does not change the law again, there will be a huge tax increase.
When politicians cut taxes, they only make a temporary cut. That enables them to pass a new law a few years later, when the first law expires. With inflation and progressive tax rates, there’s a tax hike every year even if Congress does nothing. Inflation pushes people into higher tax brackets, even though salary increases and interest rates don’t keep pace with true inflation.
The “fiscal cliff” also refers to the debt ceiling compromise. When Congress last raised the debt limit, they didn’t reach a full budget compromise. The law said that if Congress doesn’t reach a deal, huge spending cuts take effect.
The “debt ceiling” is another arbitrary limit. In a paper monetary system, the national debt is just a number on a piece of paper. The Federal government can have an arbitrarily large deficit and debt. The only cost is inflation. The government can raise money through explicit taxes, or the indirect inflation tax.
The problem with the “debt ceiling” is that Congress authorizes spending at a certain rate. In a separate law, Congress authorizes borrowing to finance that spending. If Congress simultaneously passed a budget and raised the debt limit, it wouldn’t be a crisis.
There’s one simple point that illustrates how the fiscal cliff is a fake crisis. If Congress wanted to, they could change the law. It only takes a majority vote. The problem is that both sides are stubborn and refuse to compromise. It’s a game of chicken, much like the NHL labor negotiations. There’s no incentive for either side to make any concessions until the last minute.
The fiscal cliff gives the “news” something “exciting” to talk about. It’s a fake crisis and not a real crisis. By creating a law with an arbitrary deadline, that lets politicians seem important. That enables politicians to make deals as the deadline nears. I’m tired of hearing people talk about the “fiscal cliff” all the time, when it’s entirely a fake crisis.
When browsing my piwik, I found something interesting. Someone cited my original fiscal cliff post.
If your government clowns created the money for themselves from thin air, instead of borrowing it at interest from the bankers, who create it from thin air, THEN at least the government won’t be on the hook to pay interest to the banksters.
The bankers are not truly private businesses operating in a free market. They have a government license to print money from thin air and then charge the government interest on it.
This is a huge perk.
I watched the Max Keiser show recently.
If you have ever wondered why our fool of the United Kingdom Prime Minister David Cam-Moron gives so much of our money away to help foreign countries, it is because millions of pounds of that cash ends up in the hands of British ex-civil servants acting as consultants.
Money for the boys.
I am also tired of hearing about this fiscal cliff “crisis”. What I find extremely annoying is that neither party explains what they really want. Each side generates BS to denounce the other side.
I really do not understand what is prevents them from printing as much money as they want? Why is all this fuss?