Isn't the "Fiscal Cliff" the Best Thing for America?
- Thread starter oldtime
- Start date
Kidding aside, OT, I'm with you in the "what's the fuss?" camp.
The problem IMO is voters actually like big government, as long as they get to pretend they're not paying for it.
The problem IMO is voters actually like big government, as long as they get to pretend they're not paying for it.
Anything that reduces government spending is good for the long term future of the US.
My answer to the thread question: No,of course not. We should follow the present course which is working. Progress is slow but we are moving in the right direction. To change course now and follow an austerity approach makes no sense when the path that the Fed and Treasury are taking us down is working as planned. This is certainly not the time for drastic spending cuts, nor is it a good idea to raise taxes on the middle class. The very modest tax increase on upper incomes that has been proposed will be helpful in holding down deficits without significant negative impact on jobs. The Fed and the Obama administration could do even more to move the economy in the right direction if they had some help from the Republicans. It is rather amazing how much progress has been made in spite of a Republican effort to destroy any constructive action by the Democrats.
Fed action has saved us from a depression, and Bernanke will ultimately be recognized as one of the best chairman in the history of the Fed. The economy is going to be sluggish in 2013 because of the euro weakening relative to the dollar, but the Fed will be able to keep dollar strength under control and prevent a relapse back into recession. Real estate prices will continue their slow recovery.
Fed action has saved us from a depression, and Bernanke will ultimately be recognized as one of the best chairman in the history of the Fed. The economy is going to be sluggish in 2013 because of the euro weakening relative to the dollar, but the Fed will be able to keep dollar strength under control and prevent a relapse back into recession. Real estate prices will continue their slow recovery.
in the 1920's an attempt to tighten monetary policy was undertaken. It ended up crashing the markets.
the austerity measures are similar, and throw in partisanship and you have the makings of something out of history books.
its the killing blow to the recovery.
the austerity measures are similar, and throw in partisanship and you have the makings of something out of history books.
its the killing blow to the recovery.
forcing spain greece portugal italy into austerity at a low point is suicide for the EU. They should be freely throwing money at all these countries till the tide turns.
The economy is going to be sluggish in 2013 because of the euro weakening relative to the dollar, but the Fed will be able to keep dollar strength under control and prevent a relapse back into recession. Most of the bailout and Tarp money is going to be recovered overtime, and this will be a major help in extracting the country from excessive debt. Some debt will have to be monetized and that means inflation, but there will be no "hyperinflation".
Two long term problems must be addressed, excessive health care and military spending. Over time, these must be brought into line with what other industrialized nations spend, but cuts have to be focused and phased in very gradually. Further health care reform is needed. The ACA is just a first step and will have to be improved over time. Cost shifting from government to the private sector, as the Republicans propose, is absurd when medical costs are already double those in other nations and the number one cause of personal bankruptcies in the U.S. Shifting more cost to the government is not a reasonable alternative either. Regardless, the cost is still ultimately born by the private sector either in higher taxes or higher deficits and inflation. This leaves only one reasonable solution to the problem. Cost must be brought down, and that of course means that some sector(s) of the economy is(are) going to see lower profits from health care. But there is no alternative.
Military cuts are much more easily handled. Money spent now on wars and unneeded military hardware is simply shifted to investment in infrastructure with many of the same contractors involved. It's a trivial problem compared to the challenges of reforming health care.
Once these problems in the discretionary budget are fixed, the credit risk problems<sup>*</sup> looming on the horizon for Social Security will solve themselves. Then it is just a matter of Congress following the actuaries recommendations in a timely manner. There are some problems with the separate disability Trust, but compared to the medical cost problem they are trivial.
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<SUP>*</sup>There is no risk of default on the bonds held by the Trust, but the risk is equivalent to that. Since currently the government must borrow the money it owes to the Trust, the bonds will be paid back in deflated dollars to the extent the debt is monetized. This is the equivalent of either reducing the interest paid to the Trust or defaulting on a portion of the bonds. Consequently there is a call for changes in Social Security that would have the effect of reducing the rate at which the Trust would have to redeem the bonds. In the Trust, there is currently approximately a 3 trillion surplus in the form of special Treasury bonds.
Two long term problems must be addressed, excessive health care and military spending. Over time, these must be brought into line with what other industrialized nations spend, but cuts have to be focused and phased in very gradually. Further health care reform is needed. The ACA is just a first step and will have to be improved over time. Cost shifting from government to the private sector, as the Republicans propose, is absurd when medical costs are already double those in other nations and the number one cause of personal bankruptcies in the U.S. Shifting more cost to the government is not a reasonable alternative either. Regardless, the cost is still ultimately born by the private sector either in higher taxes or higher deficits and inflation. This leaves only one reasonable solution to the problem. Cost must be brought down, and that of course means that some sector(s) of the economy is(are) going to see lower profits from health care. But there is no alternative.
Military cuts are much more easily handled. Money spent now on wars and unneeded military hardware is simply shifted to investment in infrastructure with many of the same contractors involved. It's a trivial problem compared to the challenges of reforming health care.
Once these problems in the discretionary budget are fixed, the credit risk problems<sup>*</sup> looming on the horizon for Social Security will solve themselves. Then it is just a matter of Congress following the actuaries recommendations in a timely manner. There are some problems with the separate disability Trust, but compared to the medical cost problem they are trivial.
______________________
<SUP>*</sup>There is no risk of default on the bonds held by the Trust, but the risk is equivalent to that. Since currently the government must borrow the money it owes to the Trust, the bonds will be paid back in deflated dollars to the extent the debt is monetized. This is the equivalent of either reducing the interest paid to the Trust or defaulting on a portion of the bonds. Consequently there is a call for changes in Social Security that would have the effect of reducing the rate at which the Trust would have to redeem the bonds. In the Trust, there is currently approximately a 3 trillion surplus in the form of special Treasury bonds.