The Best Explanation Of The Fiscal Cliff
Simply explained and very clear.
Via @reasonpolicy and @lewrockwell, Doug Casey explains during an interview with Louis James:
L: Okay; let's start with a definition, as usual. What is the fiscal cliff anyway?Doug: Well, of course, fiscal cliff is really a misnomer. Part of it's good, and part is bad for the economy. The term refers to the simultaneous expiration of the Bush tax cuts and automatic spending cuts mandated by the Budget Control Act of 2011 that go into effect next year. Many pundits say this will cause the US to go into a recession. Well, we're already in the Greater Depression. But here's what would happen. The higher taxes would suck more capital out of the productive economy and divert it to the government - that's very bad. And lower government spending would help unravel distortions and misallocations of capital that spending was causing - which is good. In the process, some people would have to find new jobs, and some businesses dealing with government handouts would go bust. Painful, but necessary, and we need to see lots more of both.
However, it's not the US economy that's facing this alleged cliff; it's the US government. It just goes to show how hopeless the situation is, when people equate the government with the economy. They're two entirely different things. The only way to revitalize the US economy is a vast reduction in taxes and a vast reduction in government spending. Instead, these idiots are arguing over how much to raise taxes and how little they can cut spending. Of course it will be a disaster.
[...] The economy would be just fine if the government disappeared. The problem is the US dollar, which has no intrinsic value and is backed by nothing but confidence. The dollar is a complete fiat currency, and its accelerating debasement has the potential to destroy the economy. The economy itself is the aggregate of all the people, businesses, inventory, manufacturing plants, mines, farms, transportation networks, research facilities, and accumulated capital of all the participants.
The economy grows when people produce more than they consume, and save the difference. They then have capital to put into new ventures, create new jobs, develop new technologies, and so forth. No government is needed to make this happen - rather the opposite.
But the average American, who is completely ignorant of economics, thinks the government is a magic cornucopia. As proof of that statement, I offer the fact that Obama is president, Romney was offered as an alternative, and dingbats like Boehner, Pelosi, and Ried control the Congress.
Read the whole thing at the link.
We are so screwed.
I'm just waiting for the collapse at this point and buying canned goods and seeing about good seeds.
Jim P. at December 22, 2012 11:31 PM
Good seeds?
All about the good seed right here.
http://www.youtube.com/watch?v=Gi6b5dLTAPE
Gog_Magog_Carpet_Reclaimers at December 23, 2012 12:11 AM
We are quite screwed. I used to wonder WHEN everyone would wake up and realize what is happening. Now, I wonder IF everyone will.
It's quite possible the Mayans were in the neighborhood. The end doesn't necessarily have to involve meteors and fire.
Joe at December 23, 2012 6:27 AM
This isn't true, whatsoever. Look at Britain as a recent example. Spending must increase, in a targeted way for stimulus. It's clear the author has no formal understanding of economics.
Paul Krugman at December 23, 2012 7:27 AM
The clarity and concision is reminds me of Milton Friedman. I really miss Friedman.
I too have concluded we are in decline. The question is how rapid and deep the decline. The other question is will we ever experience a renaissance. Western civilization is pretty unique in world history.
Bill O Rights at December 23, 2012 7:38 AM
Amy Alkon
http://www.advicegoddess.com/archives/2012/12/23/the_best_explan.html#comment-3528302">comment from Paul Krugman"Paul Krugman" -- don't post here in a real person's name unless it's yours. Weenie.
Amy Alkon
at December 23, 2012 8:21 AM
Amy Alkon
http://www.advicegoddess.com/archives/2012/12/23/the_best_explan.html#comment-3528303">comment from Amy AlkonAnd feel free to, you know, actually support your contention.
Amy Alkon
at December 23, 2012 8:22 AM
Did you notice the American Recovery and Reinvestment Act of 2009[1] known as the stimulus bill? Congress and the president spent over $831,000,000,000 and we got absolutely shit for it.
Did you even bother googling Doug Casey?
Your whole post says that you believe in the truly failed, government-driven, Keynesian economics[2].
We need a small limited federal government that is following the U.S. Constitution. There are only THREE crimes that permit constitutional police action on the part of the Federal government - treason, counterfeiting and piracy.[3] How do you get to 80K+ of laws and regulations? By not following the Constitution
Until you can come up with an intelligent argument on why he is wrong, I'm going to consider opinion absolutely worthless.
[1] - en.wikipedia.org/wiki/American_Recovery_and_Reinvestment_Act_of_2009
[2] - en.wikipedia.org/wiki/Keynesian_economics
[3] - blog.tenthamendmentcenter.com/2011/12/treason-counterfeiting-and-piracy/
Jim P. at December 23, 2012 8:32 AM
If Britian is doing s o great how do you explain the student riots and the lack of care from the healthcare system?
lujlp at December 23, 2012 8:33 AM
Keynsian stimulus is discredited by all the non-Keynsian applications by people who either intentionally or not, call it by what it isn't.
That is: Obviously, government spending can have a stimulating effect. If the stimulus leads to increased wealth production.
According to Keynes, the "stimulus" has to be short term, paid back by the increased wealth quickly, and production must be stimulated. IOW: small, directed, government spending.
The "Obama Stimulus", for a good example, was nothing Keynsian. It was just money handed to cronies.
Unix-Jedi at December 23, 2012 8:58 AM
If gridlock were real, we wouldn't be saddled with this.
Republicans and Democrats love each other like you wouldn't believe.
Crid [Cridcomment at Gmail] at December 23, 2012 4:27 PM
Congress and the president spent over $831,000,000,000 and we got absolutely shit for it.
We? yes we got a nice, steaming shit sammich.
Obama's buddies, bundlers and folks like the UAW he owed favors to made out like bandits. Oh, wait.
And the real Paul Krugman has argued that the original Spendulus wasn't big enough.
I R A Darth Aggie at December 23, 2012 8:42 PM
It is going to be a race to see whose economy crashes first. The dollar is in a dead heat with the euro to see which can lose value the fastest.
Isab at December 23, 2012 11:25 PM
"The problem is the US dollar, which has no intrinsic value and is backed by nothing but confidence. The dollar is a complete fiat currency, and its accelerating debasement has the potential to destroy the economy."
Print this out and hand it to friends. Be prepared for utterly blank looks or outright hostility that you are making them think, and about unpleasant things.
Seal the deal with a question: "What do you do when no one will take this?"
Because they don't know the above. Ask, as I have, and you will find out.
Some actually think that gold is becoming more valuable, when it is actually the dollar which is worth less.
Others believe that the minimum wage only makes things better for the little guy, when in fact it devalues the dollar - by making it worth less per unit of productivity.
Radwaste at December 24, 2012 10:02 AM
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