Category Archives: Economy

The Fiscal Cliff: A Lemming’s Lunacy

Debt, Economy, Morality, Natural Law, Propaganda, Taxation

Here’s an excerpt from “The Fiscal Cliff: A Lemming’s Lunacy,” the current WND column. Receive the weekly column in your email. Scroll down the page to sign-up for it.

“Since the chicken-little metaphor is hackneyed, let us use the alleged lunacy of the lemming as a metaphor for the prattle that rises from the cattle that is America’s intelligentsia, in general, and on the fiscal cliff, in particular. ‘Alleged lunacy’ because the idea that the adorable fury critter plunges periodically to its death, en masse, is a figment of another intellectual powerhouse: the think tank known as the Walt Disney Company.

From the late-night talk show hosts and their guests to the daytime cable news comedians and their hangers-on: All are discussing the country’s impending and ‘horrifying’ collective tumble down the thing called the ‘fiscal cliff.’

As the fiscal-cliff chant goes, the country is headed for an economic precipice due to a bundle of laws that will take effect at the bewitching hour of midnight, Dec. 31, 2012. Only a compromise between our factioned overlords in D.C., who enacted the law in the first place, will avert mass suicide.

Let us unpack this linguistic construct.

At least some of the noisy nomenclature refers to a package of spending cuts, ‘deep, automatic cuts,’ by Barron’s telling, bundled in the Budget Control Act of 2011.

‘The federal budget deficit will be immediately cut in half, shrinking to approximately $641 billion in 2013 from the approximately $1.1 trillion in 2012,’ estimates financier Peter Schiff. I’m inclined to think of this ‘budget sequestration’ Wikipedia describes as ‘broad and shallow’ as nothing more than cuts to designated increases in spending.

However you slice it, why, pray tell, is this a bad thing?” …

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Death-Spiral States

Debt, Economy, Government, Political Economy, Private Property, Socialism, Taxation, The State

A death spiral state is one in which the parasites outnumber the hosts. In these states, the taker-(public sector workers)-to-maker (private sector workers) ratio is unsustainable.

William Baldwin of Forbes magazine defines a death-spiral state as one that has “more takers than makers,” where “a taker is someone who draws money from the government, as an employee, pensioner or welfare recipient. A maker is someone gainfully employed in the private sector.”

Charitably, Forbes counts only “11 death spiral states, rang[ing] from New Mexico, with 1.53 takers for every maker, down to Ohio, with a 1-to-1 ratio.”

Consider (or don’t):

Let’s say you are a software entrepreneur with 100 on your payroll. If you stay in San Francisco, your crew will support 139 takers. In Texas, they would support only 82. Austin looks very attractive.

In Fiscal Free-Fall

Debt, Democrats, Economy, Federal Reserve Bank, Republicans, Taxation

We’ve been in fiscal free-fall for a long time. Right now, we’re just trying to determine how to land, says Michael Maloney, founder of Gold-Silver.com, on… RT. (Where else?) There is no way of avoiding the “fiscal cliff.” More pain now or a whole lot of if later.

I’ve categorized and transcribed Mr. Maloney below (not verbatim).

DEFICITS SPENDING & THE SHRUB. It all came to a head with Bush, as this column pointed out in … 2002 and 2003. Bush accelerated deficit spending, initiated the production known as the War on Terror, on Afghanistan, Iraq, Medicare Part D, etc. Genghis Bush set in motion the deficit-spending orgy, and the trajectory of government growth.

Government accounts for 50 percent of the economy, says Maloney, when you take into account the trickle down effect of deficit spending that must be sustained if the effect is to be sustained. All jobs created via deficit spending do not add value to the economy but drain energy from it.

The fiscal cliff and the wall of debt that accounts for it has been with us for … ever. Well, at least for a decade, starting with the rule of the Republican George Bush.

THE POLS VS. THE PAUL. Among Maloney’s pearls of wisdom: Ron Paul was the only candidate who understands economics. We run a popularity contest every 4 years, during which we elect telegenic empty suits, en masse, whom we send to D.C. to run the economy by taxing us and redistributing our wealth. These clowns know nothing about economics or the economic consequences of what they do.

MONETARY POLICY. We do not have a free-market economy, chiefly because the currency is manipulated: the quantity of money in the economy and the price of the currency (interest rates). Currency is 50 percent of every transaction. This portion is manipulated by a group of central planners who’re bereft of the information that the market holds.

TAXING THE RICH: GOLD FINGER OR STICKY FINGERS?. The 1 percent employ the 99 percent. What happens to money removed from its rightful owner? Take $1000 away from the producer. The sticky-fingered IRS employees get some of it. Some of the money sticks to Congress’ mitts; as members pass laws that redistribute it. But these are all “frictional jobs.” No new products or new services have been created that go directly into the economy.

MORE of Mr. Maloney, on RT.

Fiscal Cliff Farce

Debt, Economy

“So what exactly is this looming menace, and why is it so dangerous?,” asks Peter Schiff. It is nothing of the sort, replies the financier. The fiscal cliff song-and-dance is aimed at undoing a previous, meager legislative commitment (Budget Control Act of 2011) to reduce some spending increases. “[G]oing over the fiscal cliff is not the problem, it is part of the solution. Our leaders should construct a cliff that is actually large enough to restore fiscal balance before a real disaster occurs. That disaster will take the form of a dollar and/or sovereign debt crisis that will make this fiscal cliff look like an ant hill”:

“Stripped of its rhetorically charged language the fiscal cliff is simply a legal trigger that will trim the deficit in 2013 by automatically implementing spending cuts and tax increases. In other words, the government will spend less, and more of what it does spend will be paid for with taxes rather than debt. Isn’t this exactly what both parties, and the public, more or less want?

The fiscal cliff means that the federal budget deficit will be immediately cut in half, shrinking to approximately $641 billion in 2013 from the approximately $1.1 trillion in 2012. What is so terrible about that? I would argue that there is a greater danger in avoiding the cliff than driving over it.

If you recall, the cliff was created by a deal last year when Congress couldn’t find ways to trim the deficit in exchange for raising the debt ceiling. When they failed to reach an agreement, Congress knew they had to raise the debt ceiling anyway. The resulting Budget Control Act of 2011, signed in August of that year, offered the pretense that they were dealing with our long-term fiscal crisis and not simply raising the debt ceiling with no strings attached. This was done not only to appease some House Republicans, who had threatened to vote against a debt ceiling increase, but to satisfy the bond rating agencies that had threatened (I would choose a different word or provide a source to back this up)a down-grade if Congress failed to act.

Now the focus turns to how Congress will dismantle the structure it created just 16 months ago. There can be little doubt that they will as economists are assuring politicians that driving over the fiscal cliff will immediately bring on a recession. The expiration of the Bush era tax cuts for all taxpayers will cost Americans an estimated $423 billion in 2013 alone. Hundreds of billions of across the board spending cuts, including the military, have been delineated. No politician would allow that to happen.”

MORE.