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Guess What They Are Not Cutting In The Fiscal Cliff...
Submitted by Simon Black of Sovereign Man blog,
In his farewell address to Congress yesterday, Ron Paul blasted the dangers of what he called 'Economic Ignorance':
"Economic ignorance is commonplace. . . Believers in military Keynesianism and domestic Keynesianism continue to desperately promote their failed policies, as the economy languishes in a deep slumber."
He's dead right. Around the world, economic ignorance abounds. And perhaps nowhere is this more obvious today than in the senseless prattling over the US 'Fiscal Cliff'.
Here's the deal: You may remember the Debt Ceiling debacle of 2011. At the time, the US government was about to breach its debt ceiling, and there was an embarrassing standoff between Congress and President Obama.
As part of their eventual compromise, the debt ceiling increased by $400 billion in August 2011... then again by another $500 billion five weeks later... and finally by another $1.2 TRILLION twenty weeks after that.
In return, President Obama signed into law the Budget Control Act of 2011. The law stipulates that, unless another compromise is reached, a series of tax increases and budget cuts will automatically take place on January 1, 2013, including the expiration of the Bush tax cuts and the temporary 2% payroll tax holiday, plus new taxes related to Obamacare.
They call this the 'Fiscal Cliff' because everyone is terrified that all the budget cuts and new taxes will bring the US economy to its knees once again.
I've spent days analyzing the bill... and frankly, it's a joke. You can read the 200+ pages yourself if you like, but here are the important points--
As we've discussed before, US government spending falls into three categories.
- Discretionary spending is what we normally think of as 'government.' It funds everything from the military to Homeland Security to the national parks.
- Mandatory spending covers all the major entitlement programs like Social Security and Medicare.
- Then there's interest on the debt, which is so large they had to make it a special category.
The latter two categories are spent automatically, just like your mortgage payment that gets sucked out of the bank account before you have a chance to spend it. The only thing Congress has a say over is Discretionary Spending. Hence the name.
But here's the problem-- the US fiscal situation is so untenable that the government fails to collect enough tax revenue to cover mandatory spending and debt interest. In Fiscal Year 2011, for example, the US government spent $176 billion MORE on debt interest and mandatory spending than they generated in tax revenue.
In Fiscal Year 2012, which just ended 6 weeks ago, that shortfall increased to $251 billion. This means that they could cut the ENTIRE discretionary budget and still be in the hole by $251 billion.
This is why the Fiscal Cliff is irrelevant. The automatic cuts that are going to take place don't even begin to address the actual problem; they're cutting $110 billion from the discretionary budget... yet only $16.9 billion from the mandatory budget.
Given that the entire problem is with mandatory spending, slashing the discretionary budget is pointless. It's as if the US economy is a speeding train heading towards a ravine at 200 mph, and the conductors are arguing about whether they should slow down to 150 or 175.
Oh, and there's just one more problem.
The government thinks that they will collect a few hundred billion dollars more in tax revenue when all of these new taxes kick in. Again, wishful thinking.
In the six+ decades since the end of World War II, tax rates in the US have been all over the board. Yet during this time, the US government has only managed to collect roughly 17.7% of GDP in tax revenue.
Conclusion? Increasing taxes won't increase their total tax revenue. Politicians have tried this for decades. It doesn't work. The only way to increase tax revenue is for the economy to grow... and higher tax rates do not pave this path to prosperity.
Ron Paul was spot on. Economic ignorance abounds. And all the Talking Heads in the mainstream media blathering away about the Fiscal Cliff are only reinforcing his premise.
Bottom line-- the Fiscal Cliff doesn't matter. The US passed the point of no return a long time ago.
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Who needs economic sense when THE DEBT IS BEING MONETIZED. Ron Paul never ONCE argued against this...and the reason is simple: HE HAS AN AGENDA Why should Americans care if the Fed can simply "print debt" and there be no consequences other than "borrow more cuz the rates are cheaper?" As Keynes famously said...or is it Zero Hedge?..."in the long run we're all dead." In other words STOP LISTENING TO THIS GUY and START THINKING FOR YOURSELVES. We don't need Ron Paul to tell us "what we're missing here." Clearly the Fed is trying to inflate away the deficit (the JC Banker has already stated "banks need to lower mortgage standards"....really? more debt is the answer? "if only we had it like we did from 2005-2008"?) so the question is "what's the action plan to become richer than Croesus" here. http://en.wikipedia.org/wiki/Croesus aha! "the first to coin (fake as it turned out) gold coins." hence "you will not here disabledvet say bad things about gold EVER." but "unless it is in circulation it really doesn't produce any wealth effect." hence "Railroad stocks." that business is as GOOD AS GOLD. it is in effect "a land speculation on wheels"...still, even 150 years far more advanced than any wheeled or tracked vehicle made (direct drive engine technology)...which goes to show how NOT having the best tech is in the interests of "the greedy." simply put railroads "put actual money (gold, silver, copper...anything the Fed can't print and isn't phucking Jewish) in motion." in short "railroads create REAL credit." in order to have access to this credit however "you have to buy the equity." i would say to Ben Bernanke...and Ron Paul "all your mortgages are valueless" since all your Cities and their so called REAL estate "are based on a scheme." As such i prefer a PRICING mechanism...one that values...NOT YOUR WORTHLESS DEBT...but the actual LAND value of what it is you purport to sell. in this instance i would place the value at say "how much does an acre of Iowa farmland go for" and proceed from there since "once i mark to market the true value of your City (negative one trillion...WITH NO TAXES OR LIENS either) THEN i can start building it in a manner to which it will function." Then AND ONLY THEN i would add. Since I can only do that with a railroad...
Whoa dude, your new coke dealer must not cut his stuff as much as the last guy...
The switch from coke to meth for budgetary reasons can be jarring.
Media playbook.
#1 Give something a catchy name
#2 Hype it to death
#3 Give air time to politicians patting themselves on the back
#4 Repeat...repeat....repeat
What? No Wash or Rinse cycle?
So fly.
At least you stopped posting in all bold caps.
The media is all about entertainment, not about presenting the news. For them, the battle is the important part, not what the implications are.
the gubbermint can fix all problems. [/sarc.]
The only "solution", or scenario, where we are not past the point of no return is hyperinflation and a lot of dead people.
Not that I want to see that; it is just where the greed and folly of the bankers and politicians end up pushing a society.
"Not that I want to see that"
I do. Can't wait for the day all you gub'mint cheese-eating jack-wagons aren't stinkin' up the place any more.
Plus, it'll mean more cheese for yours truly.
Wow man. You're invincible.
the ex perts in astronomy agree there
are less than, catch that, less than
1 trillion stars in the galaxy called or
named by some... the milky way. for what
it is worth?
Don't blame me. I voted for Ross Perot in 1992, before the point of no return, which he correctly described as upon us back then.
Ditto!
Someone mentioned purging psychopaths rather any kind of secession of states...
Why not see things from stand point of view that INDIVIDUAL Human's RESPONSIBILITY to exercise one's Humanity, pursuit of Insight... Is an attribute of a people who's community can be referred to as Democratic in the REAL sense of the word? (not the freedomland world inc. ...)
http://www.facebook.com/pages/Humannotcitizen/111621355653427?ref=stream
Very good clear story about the fiscal cliff also to show to people who arn't involved in this stuff every day.
Please, if you are only reading Simon: don't. You'd do just as well reading TMZ or People.
And of course the best time to grow the economy is when energy prices are low, and there is certainty about it. We have none of the above, yet the only call to end the fiscal crisis always leads to more growth as the solution. We can't afford to maintain the growth we already have, moreless grow our way out of a fiscal crisis. It simply ain't gonna happen politicians, you need austerity, on top of tax collection increases, to make it all work.
Military Welfare Recipients on the chopping block? The Generals of WW2 were on the front lines, today the Brass clowns get their ___ caught in the zipper. They got to go.
They're calling it the "Fiscal Cliff" for a fking reason folks.
That terminology MAKES YOU....yes YOU...think in the wrong conceptual framework and focus on an arbitrary "deadline".
What the fiscal cliff really is amounts to a deal with the banks to implement AUSTERITY PROGRAMS in the US.
We're all Greek now.
Swandive
" The only thing Congress has a say over is Discretionary Spending."
Bullshit. Congress has a say over every single dime spent by the government. This is an extremely toxic piece of misinformation, as if the government runs itself by force of nature and human beings aren't particularly required for that to happen.
Thank fucking Christ! Please continue to keep reality in the face of Simon and every other dumb fuck who lets Congress of the hook about this.
The only thing that might (and I repeat, MIGHT) reverse this thing is the shale oil. If America does become the Saudi Arabia of tomorrow it will kick the can quite a few miles down the road. Other than that.......
No problem.
WE GOT DUCT TAPE.
Add my $784.00 refund to that "Mandatory List" [filed my return on October 13th following a 6-month extension.]
Pay me my money damnit!!!
Dont expect that anytime soon. My experience was about a year on a refile claim.
or there will be trouble.
This is what happens when a handful of, say, 500 very rich people take control of the worldwide financial levers of power. Money, unlike water, flows uphill. The masses are fed kabuki theater while the rich wallow in their wealth. This will all end in world war, probably nuclear, with those aforementioned 500 safe in their bunkers, ready to emerge with just enough of the population left to be their serfs.
All the rest, including whatever fungible crap you think you're invested in, is totally pointless. We're on the downhill slope as I write this.
If the pricks in DC would just freeze federal spending perhaps their naked financial repression might work -- that alone would mop up $9 trillion of the spending abyss of the US Kremlin's 10 year plans.
tick tock goes the Default clock
The federal government has been decreasing the tax load on the rich since 1996. Just bringing the tax rates on the rich up to early 90's levels would bring in hundreds of billions of dollars in new revenue.
This is a fact, not a guess.
However, hundreds of billions of dollars is still a drop in the bucket.
perhaps we could term or nominate the
debt in terms of light years? maybe
, well, since the velocity of "money" has
been slowed down as in financial terroristic stealing
through central systemic fraud and exercise of master
slave relationship dominance, resulting in "legal"
rape and pillage in broad daylight; where was i?
oh yea, we could maybe term the "wealth" of the few
recipients of the fed's grace(god like) in terms of the paucity,
exponentially potentialized into the generations that
may exist in the future, allowing for (god's )grace as
it does provide for the faithful. no? and there
is spin , the spin that generates the wave like
characteristics. the spin that spins at the speed of light transforming the mundane into the universal
pulse, call it emergent source mind? see miles mathis
then you tell me, waiting for the musical description
.
we may survive the generational frauds that dictate
systemic stupidity, resulting in our collective
stupidity, but then again we may be destroyed by
our obedience to said same. hmmm?
You're not gonna take my Social Security are you?? OMG What will I do?
/sarc
Fiscal cliff is a smoke and mirrors ruse designed by and for the bankers to divert the sheeple’s attention from the Fed in its final heist of America’s wealth, while a complicit Congress covers Bernanke’s back.
America has gone from sweet land of liberty, that created the greatest industrial miracle on earth capable of feeding the world and raising all boats, to bankruptcy and banker-controlled mob rule.
America... soon to be repossessed by the largest army on earth.
you need to go deeper than Ben Shalom. Rothschilds have had quite a hand in it all.
and what a fucking mess all us 'little people' are in.
When this happened in New Zealand in the 1980's they just slashed and burned every spending law and then cut like crazy and sold state assets.
I expect the same in the US. When it happens, no one (even the paracites) will argue because they knew the party couldn't last forever.
FYI I will be buying Texas btw and then declaring independance.
Just because I like Conquest of the Planet of the Apes doesn't mean I want to live through it.
The day after the elections, I had the opportuniaty to meet with one of the true fiscal conservatives in the US Senate. He reviewed the various alternatives to the debt crisis, including higher taxes, printing, a balanced budget amendment (his preference), and cutting spending. His last alternative was the one he said was the most LIKELY, though not preferential, alternative -- catastrophic financial collapse. I was stunned at his candor!
John Mauldin, who literally wrote the book on the debt (called Endgame), said the past spring that he expects this calamity in 2013 or 2014 at the latest.
Calamity is certainty. Plan and prepare accordingly!
Everyman for himself..... Bitchezz