Guest Post: The Definition Of Insanity

Tyler Durden's picture

Via Lance Roberts of StreetTalk Live,

By now there is likely not a single individual who is not aware of the impending "fiscal cliff" and the economic impact that it represents.  (For a thorough discussing of the taxes involved you can find a complete listing here.)  Then there is the debt ceiling issue.  Both of these issues will be topics of hot debate in the coming days ahead with implications to the stock market in the short term that could be potentially damaging as investors scramble avoid a hike in tax rates.

Obama, and the Democratic controlled Senate, have already lined up on raising taxes on the "rich" while the Republican controlled House has firmly asserted that they are amenable to closing tax loopholes in conjunction with spending cuts.  The two sides could not currently be farther apart from reaching a deal - yet, as Yoda would say: "Reach a deal we must."

Logic says that both sides will come to the negotiating table with compromises to resolve the fiscal cliff issues.  The Republicans could concede to following without a tremendous backlash from conservative right:

  • Increased taxes on individuals making $500,000 or more rather than the $250,000 level current proposed.
  • Closing of tax loopholes and deductions (i.e. capping deductions at $50,000 and getting rid of Carried Interest)
  • Letting the payroll tax cut expire at the end of the year.
  • A reset of the Alternative Minimum Tax with an inflation adjustment.
  • A modified bump in the capital gains and dividend tax rates to 25% from the current level of 15%.
  • A repeal of the automatic spending cuts which were imposed during the previous debt ceiling debate.  

However, such deep concessions by the Republicans should be readily met by the Democrats agreeing to actual significant spending cuts including:

  • Start entitlement reform by raising the eligibility age to 70 for those currently under the age of 55.
  • Means testing of entitlements for all individuals below the age of 55.
  • Elimination of extended unemployment benefits
  • Cuts in discretionary spending which will include further cuts in defense spending.
  • Elimination of the Presidential Campaign Fund
  • End funding for new federal office space
  • Repeal of the Davis-Bacon Act
  • Eliminate funding for the National and Community Services Act
  • Eliminate duplicate education programs
  • Cut the Federal travel budget
  • Privatize Fannie Mae and Freddie Mac....again.

It is likely that such a bipartisan compromise could be quickly agreed upon and executed before the end of the year deadline.  I realize that there are many other levels of cuts that could be made that could effectively save billions each year in government waste, however, this would at least be a significant start and lay the foundation for further compromise in the future.

Yet, this is an unrealistic expectation.

The Democrats have given no indication that they will compromise on any front and that tax hikes are all that is available for discussion.  Likewise, the stance by the Republicans is just as firm as they stand behind their pledge of no tax increases.  However, in the end, it will be the Republican led house that will again define "insanity" by repeating the same mistakes of their past.

In the next few days as the "fiscal cliff" draws nearer that media pressure from the White House will intensify to a fevered pitch with threats of economic recession due to Republican's unwillingness to compromise.  Make no mistake - the blame for what ails this economy will be squarely pointed at the "evil and selfish" Republican's who are keeping Obama from being able to achieve the greater good for the economy.  

This is the same tactic that was used during the debt ceiling debate in 2011.  Then the threat was a default on U.S. debt due to the inability to raise the debt ceiling which culminated in a debt rating downgrade by Standard & Poors.  Of course, a simple look at the U.S. Treasury market, as yields touched historic lows at the time, would have told any astute individual that a default was of no concern.  Yet, the Republican's caved to the pressure and raised the debt ceiling in exchange for a committee to come up with spending cuts later.  The committee failed, automatic spending cuts were implemented and immediately postponed.   Those automatic spending cuts are coming back January 1st, 2013.  

Like George H.W. Bush who caved on his pledge of "No New Taxes" in exchange for future significant spending cuts which never materialized, the Republican's also caved and raised the debt ceiling in exchange for empty promises.  That is the reality that Republican's again face in the current debate and the mistake that they are likely to repeat. 

In the coming days ahead, as the White House intensifies the pressure, the Republicans will once again crater to demands.  They will agree to higher taxes with a "promise" of future spending cuts.  The problem, of course, is that once tax hikes are in place there will be no need for future negotiations.  The government will continue to run without a budget and spending will continue to spiral higher.

The sad reality that escapes our current Administration is that the long term solution to economic stability is a balanced approach to both increasing revenue and cutting spending.  A serious amount of work and compromise will be required, with an understanding that increasing revenue through taxation while cutting spending means slower economic growth, in the short term.  Yet, it is the understanding that slower economic growth is the "short term pain" required to establish the stable economic foundation from which "long term gains" may be achieved.  

We will see what happens in the days ahead.  While hope in the market abounds for a successful compromise - it may pay to remain hedged against the risk of failure of our elected officials to come to a moment of clarity and act like adults.

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Mr Lennon Hendrix's picture


I can't believe people don't understand how orchestrated the fiscal cliff and other such talking points are.  They are there to keep the discussion away from discussing fractional reserve lending, fiat based debt, peak oil, and other big issues.

Politics is all a game.....

NotApplicable's picture

Merely more refreshments from the Kool-Aid Corps.
That anyone can be this dumb...

cossack55's picture

....and exactly how many sheeple pulled the lever with a R or a D after it?

TwoShortPlanks's picture

I'm afraid, we're it!

Just posted a series of threads on a completely neutral website....nobody has a clue about any of this stuff....nobody understands any of it....nobody has Gold or Silver....nobody even cares.

We're it folks. Less than 1/10th of 1% own physical.

ebworthen's picture

"We're it folks. Less than 1/10th of 1% own physical."

I hope that means they aren't going to attempt to confiscate it FDR style.

Mr Lennon Hendrix's picture


And that is the reason they won't.

Imagine FEMA going door to door asking for gold, being met with guns, and coming up empty handed everytime.

derek_vineyard's picture

definition of insanity = having an election where obama / romney are the only candidates with a chance of victory

Michaelwiseguy's picture

Total distraction and scare tactics Mr Hendrix. TV reporters are part of the problem and refuse to deal with reality.


You can't have job creation in the USA because factories that produce consumer products were removed from the country.

The Money Math for Job Creation doesn't work due to Globalization and the Federal Reserve Corporation.

Globalization = American Wage Arbitrage = Lower Worker Pay

Federal Reserve Corporation = Private Company that Manufactures Paper Money and Sets its Value, and continually reduces the value of money by printing more and more of it out of thin air.

poor fella's picture


we knew them well... 



GMadScientist's picture

Imagine trying to stop people from growing and smoking particular plants.

Only complete fools would...oh.

TwoShortPlanks's picture

There's no point in confiscating that which [almost] nobody owns.

All the Gold swindled out of Central banks has gone to the LBMA and out onto the market, and scooped up by the wealthiest of people/families. Price has been suppressed for decades via certificates and shorts.

The scramble for physical by China, Russia, Russian and Chinese Mafia, some Central Banks and a few hundred thousand of us blog-folk, is merely the race for then scraps and crumbs (I'm fine with a few scraps and crumbs though).

Gold is a 'Back Stage Pass', it will buy you access to the next system...or not.

Michaelwiseguy's picture

This is the definition of public employee insanity. Public employees who don't have the mental comprehension skills to understand the laws of the land should not be given the job. We have a public employee insanity problem, where public employees don't know or understand their role and how to apply their job description according to the law.

Derrick Broze and Adam Kokesh #OptOut

We should have required "Presumption of Freedom, Presumption of Innocence of American Citizens Sensitivity Training", administered through human resource departments of all government agencies.

These classes will include the citing of law that backs up and reinforces the training topics covered in the lessons.

I'll have more on this subject as I develop my new realm of education for government employees. 

I'm starting this New Entrepreneurial business today and invite you to participate and join me in this endeavor. 


WhiteNight123129's picture

Yup we are it. It the shit hits the fan we will have to help the rebuilding folks.

Bills of Exchange cleared by Gold will be the first thing to set-up to make the economy reboot. Bills of Exchange cleared by Bitcoin, Bills of Exchange cleared by Silver so that small business can get working capital... 150 years backwards....



bentaxle's picture

Most of Wisconsin - guilty!

They did elect the C. Koch "puppet" Walker.

GMadScientist's picture

And confirmed they like being bitches for the Koch brothers too!

ACP's picture

Hey look on the bright side, at least Obongwater and Boned each found their ultimate golf buddy. They probably work better together than when Cray-zee Eyez Pelosi was speaker.

Atomizer's picture

Geopolitic's funnel monies to compliment the ponzi scheme fraud. Read that again, memorize it.


Atomizer just scanned documents for his 5th home purchase. With regards to the fiscal cliff anxieties, fuck’em. I don’t intend to purchase any impulsive buying shit to help the crony capitalist shitheads. The Telly ads will slowly reconstituted product obsolescence once other corporate bailouts will be granted. The actual system of growth is going to be exposed for what it really is. Repeating words to alienate the old system will become the creme brulee of all lies spoken.

Best of luck. Always differentiate yourself from fear tactics, Downjones hopes you buy straight into the apocalypse government shutdown media plan. Wash, rinse and repeat!


ExpendableOne's picture

Insanity is relying on income taxes.  They are too easy to manipulate.  Switch over to a federal sales tax (right after firing 60% of the federal workforce) and the problem will just about solve itself.

Bindar Dundat's picture


To my American friends.  Here is how to sleep well next year.

1) Buy some gold.

2)Buy a vacation  house in Canada with a safe in the basement.

3) Put your gold in the safe.

4) visit often.

Go Tribe's picture

What's the mystery?

"By now there is likely not a single individual who is not aware of the impending "fiscal cliff" and the economic impact that it represents."

I don't think the obamaphone lady is aware of the cliff. They live for the soft handjob of federal support and don't think beyond the moment.

stinkhammer's picture

“You will win when you are ready to pronounce the oath I have taken at the start of my battle-and for those who wish to know the day of my return, I shall now repeat it to the hearing of the world:

“I swear-by my life and my love of it-that I will never live for the sake of another man, nor ask another man to live for mine."

LMAOLORI's picture



This Debt is Insanity!!!!

When President Barack Obama first took office on Jan. 20, 2009, the national debt stood at $10,626,877,048,913.08. Since then, it has increased by $5,680,611,894,651.15.

That means that since Obama has been president, the national debt has increased by about $49,432.73 per household.


CH1's picture

Rombama, O'Romney, Tweedle-dee, Tweedle-dum?

It's about the structure, not the puppets.

As long as you give a shit about parties, the structure owns you.

GMadScientist's picture

If I pay mine in cash right now, can I forego taxes in perpetuity?

LetThemEatRand's picture

"with an understanding that increasing revenue through taxation while cutting spending means slower economic growth, in the short term."

Based on what facts?  The very top of the food chain has increased its wealth to many, many times the total U.S. debt, not to mention the annual deficit which is a small fraction of the increase in wealth enjoyed by the oligarchs over the last 40 years while the middle class shrinks.  I have yet to see any valid argument that taking back what the .01% has "tapped" (translation per John Corzine = stolen) from the bottom 99.99% would in any way negatively impact short-term of long-term economic growth.  Quite the opposite, in fact.

Jack Burton's picture

If a person was willing to scrap their political bias for just a few minutes, and then use the internet to research income growth in the USA for just the last 30 years, I suspect they would see that the winner take all system is now in full bloom. It is often claimed that the top 1% have earned their complete dominance of income growth by hard work, productivity and wealth creation. In some few cases this could be true.

Then I would ask the same people to do a quick research on USA tax rates from the same 30 years. Again you will see tax cut after tax cut going to the top income earners. With huge cuts in taxes on non earned income from dividends and capital gains.

In short, the top 10% has done well, the top 1% have done much better.

Now we are told that any return to a more progress tax system and a more general division of income growth based on productivity growth would punish the productive job creators, or as some would call them "The Winners". I do not think a return to some revision of their gains via progressive taxation and a bit more paid out in wages to workers is going to tank the economy. As you say "LetThemEatRand" it could lead to MORE economic growth and prosperity. Customers are needed by ALL business, especially SMALL business. Working folks with a decent wage are the BEST customers for the economy.

But many maintain that any changes to income distribution are unfair and socialistic. Then I assume those that say that think today's US economy is GREAT and a MODEL for the future. Good luck with that theory.

LetThemEatRand's picture

It is truly ironic that those who have redistributed wealth to themselves via their control of the government, have convinced most of humanity that government redistribution of wealth is the great enemy of the common man.

Jack Burton's picture

Again you nail the point "Rand". There is a good reson ALL income gains have been going to the top at the same time the top gets one after another tax cut. They have purchased the political system. This is also why the US has gotten a new police state. The elites are safer in a police state nation. Also, with s global war machine doing their corporations bidding around the globe, the elites can prosper even more behind the cloak of tax payer funded Miliatry might.

The 1% have won big time, yet they whine and complain MORE than the destroyed middle class. Not to mention the hopeless poor folk whom we all ignore anyways.

LetThemEatRand's picture

And the elite have a convenient thing called television, newspapers, radio and internet (Drudge -- the biggest internet news site by far, who nonetheless complains perpetually about "liberal media"), which constantly reinforces the idea that the police state is necessary for the protection of Oceania from the terrorists in Eurasia.   Who would have guessed that Big Brother would be personified best by a gay Republican who masquerades as a libertarian who hates "Big Sis"?

nmewn's picture

It's a little hard to do that (by law) when it's the lawmakers themselves who allowed it in the first place.

Now think this through before you go off half keep expecting those who permitted what you describe, to rectify it. Jon Corzine is still free as a bird, as is Johnson, Fwank, Mozilo...pick one or any other.

It's infested with cronies from top to bottom and you're expecting a white knight to show up and fix it...the white knights are sitting on the sidelines watching it burn ;-)

LetThemEatRand's picture

The "white knight" is a system of elected government not controlled and purchased by oligarchs.  I don't expect a single human being to come along and fix things.  Rather, it is my hope that the People will take back a system of checks and balances that is imperfect, but that worked overall in practice in the past until the sheep fell asleep and allowed the oligarchs to take control.  Your proposed solution is to blame elected government and allow the oligarchs free reign, which history teaches benefits only the oligarchs.  

nmewn's picture

The wihite knights are the People...some are not only watching it burn, some are actually feeding the bonfire...this government was elected by the People wasn't it?

Checks & balances you say? mean like forcing the People to purchase a product or service under the Commerce Clause? You mean forcing the People in cars to wear a seat belt but not on a motorcycle? You mean like forcing the People to place their children into financial bondage for "shovel ready" roads & bridges? You mean like forcing the People with a different belief system to prostrate themselves before the state and it's belief system?

Those kinds of checks and balances?

No LTER, let it burn.

LetThemEatRand's picture

You think like a child, nmewn.  If it burns, what is left is the Phoenix of oligarchy.  The same one (ones) who controlled humanity for the last few thousand years.  Every King that ever lived was against the concept of the People ruling themselves through free elections.   The same Kings told us that too much power among the People would be the death of us all.

nmewn's picture

lol...I have never voted based on what someone promised to GIVE me in return for that some spoiled, petulant little child who has to be bribed with a cookie to behave.

From all of our past conversations, I doubt the same can be said of you.

GMadScientist's picture

I've definitely voted against what they can take from me say my civil liberties.

Follow the money: where do all those entitlements end up? the 1%'s corporate coffers in every case.

There's nothing on this planet as petulant and corrupt as the 1%. If you don't believe me, take away their tilted playing field and see how long you can hold out before grabbing earplugs.


nmewn's picture

Well, you do have a point there G.

My problem is, being stuck in the middle...I'm sick of constantly having to wear earplugs. If it ain't politicians and socio-economic whackademics screaming at me to spend (when I'd rather not) it's the "less fortunate" screaming at me that I'm not taxed enough to please them.

Time for me to do a little screaming myself ;-)

NeedtoSecede's picture

LTER, I usually don't agree with much of what you say, but I do not have much to dispute tonight (ZH has been getting hammered by trolls of all types lately, but it is still a good place to exchange ideas and learn a little, for those with even a little humility and an open mind).  I would say that before the sheeple fell asleep they were swindled and then lulled to sleep with the oldest trick in the book.  The promise of free stuff.  It was packaged with slick talk and promises, but it was all a lie.  And now they have been on the drug so long it sure looks like sleep, but a self-induced coma is probably a better description.  Meanwhile, the house is getting robbed, their daughters and wives are being violated, and everything including the future is being stolen.  And they dont see it....

boogiedown's picture

NeedtoSecede, would you agree that "sheep" has become kind of an abstraction? Kind of a caricature of a thin swath of Americans? Do you actually have conversations with people like that, who are completely unaware that they have been robbed?

Personally, I don't know anybody personally who is unaware of the pillage. Even the people I know who are working for minimum wage are not fooled by the WWF election, I mean selection. They may not know what credit default swap means, but they sure are angry about the bailouts, the schools ripping off their students, the MTA here in NY ripping off the entire city with the mayor's blessing, etc. I decided to quit using "sheep" and "sheeple" because it is a way to dismiss people instead of take responsibility to awaken them as our fellow beings. (If they are willfully ignorant after repeated attempts, that's a case of mental retardation to be pitied, not insulted) I think we should be grateful to have survived the disinfo and cognitive dissonance barrage, and help the casualties of that attack, not sit on the side of the battlefield pointing and laughing at them.

 I WILL say that on the subway in NYC every day, I hear THE most vapid conversations, mostly from dumb girls but also from guys, about shoes, clothes, celebrities, idiotic drinking at parties, etc. Many times I am seriously at a loss to distinguish real conversations from those guerilla marketing fake conversations where brand names are intentionally dropped by paid shills. That's how bad it's gotten.

boogiedown's picture


 You wish the People would take back the system -- "Rather, it is my hope that the People will take back a system of checks and balances that is imperfect, but that worked overall in practice in the past"

 but then you call them "the sheep" who fell asleep -- I submit that this whole "sheeple" meme has gotten out of hand and is another divisive kind of class warfare tool, pitting the "awake" against those "asleep." It is kind of dehumanizing and dividing and negative, not to mention insulting to sheep

knukles's picture

Well, here's an example of the hypocrisy of the elite (or at least implied) from The Daily Bell, dealing with the wifie of the BoE's new Governor.

And we wonder why the wolrd seems to have gone mad.
Aside form Einstein's repetition definition, I prefer the definition of sanity being "Clarity of Thought"
So insanity by any other consideration might just be (Mayhaps?) our continued devolution into the unarguably unattainable imaginary well begins of the Elite, leading us to their promised land.

Shit like this that wakes one up at night.

fonzannoon's picture

That agreement laid out above would still be a drop in the bucket. We walked to the edge of default last year and look at the result. Borrowing costs dropped.  That was all both sides needed to see. They will never agree to anything substantial now that the saw what happened. They will hike that debt ceiling without a word. This won't change until the rest of the world pulls the rug out and everything goes to shit in an instant. Everyone is convinced it won't ever come to that.

LetThemEatRand's picture

All part of the plan, if you assume (as I do) that a few thousand hundred-millionaires and billionaires who control the Red and Blue teams could give a flying fuck what happens to the goose that laid their golden eggs.   They already have more eggs than they could ever need in well secured accounts, commodities, productive land, etc., not to mention a growing internationally controlled system that will allow them to move to the next productive goose farms when the Western one runs out of feed.  

fonzannoon's picture

i believe every single word of Carlin's big club rant.

Bicycle Repairman's picture

You mean the one where George says were getting fucked in the ass with a red, white an blue dildo by a system that threw us overboard 30 fucking years ago?

fonzannoon's picture

I do believe that was in there.

LetThemEatRand's picture

Borowing from Carlin, perhaps the Earth made Man simply because she wanted Red, White and Blue (plastic) dildos.  

GMadScientist's picture

Definitely going around your head to scratch your...well, you get the idea.

Slightly Insane's picture

May I suggest that they have a "gun battle" in the House and the Senate.  Winner takes all.  No prisoners.