The US fiscal cliff - would it really be a bad thing?

[Gerald McGrew]

Here's a good example of what's wrong with the political discourse over this issue...

Angry with Obama, GOP threatens political war next year

http://www.cnn.com/2012/12/11/politics/ ... ?hpt=hp_t2

Washington (CNN) -- They are losing the battle over higher taxes on the wealthy, so now Republicans are threatening a political war next year when it comes time to raise the nation's debt ceiling...

..."In February or March, you have to raise the debt ceiling," Graham noted Monday on Fox News. "And I can tell you this: there's a hardening on the Republican side. We're not going to raise the debt ceiling. We're not going to let Obama borrow any more money or any American Congress any more money until we fix this country from becoming Greece."

You get that? "We're not going to allow the exec. branch the authority to sell bonds to finance the level of deficit spending that we approved." Does that make any sense at all, other than as a pure hostage taking maneuver?

And no Mr. Graham, we cannot "become Greece". Greece is saddled with debt in a currency it does not control. Our debt is in a currency that we do control, thus it is currently impossible for us to default or even be at risk of defaulting on our debt.

So that begs the question: Are our politicians ignorant of these facts, or are they deliberately misrepresenting them?

[Seth]

Here's a good example of what's wrong with the political discourse over this issue...

Angry with Obama, GOP threatens political war next year

http://www.cnn.com/2012/12/11/politics/ ... ?hpt=hp_t2

Washington (CNN) -- They are losing the battle over higher taxes on the wealthy, so now Republicans are threatening a political war next year when it comes time to raise the nation's debt ceiling...

..."In February or March, you have to raise the debt ceiling," Graham noted Monday on Fox News. "And I can tell you this: there's a hardening on the Republican side. We're not going to raise the debt ceiling. We're not going to let Obama borrow any more money or any American Congress any more money until we fix this country from becoming Greece."

You get that? "We're not going to allow the exec. branch the authority to sell bonds to finance the level of deficit spending that we approved." Does that make any sense at all, other than as a pure hostage taking maneuver?

Of course it make sense. With the debt ceiling Obama cannot spend our nation any further into bankruptcy.

And no Mr. Graham, we cannot "become Greece". Greece is saddled with debt in a currency it does not control. Our debt is in a currency that we do control, thus it is currently impossible for us to default or even be at risk of defaulting on our debt.

Nonsense. Any currency is only as strong as the reputation of the nation that creates it for paying back foreign debt. We would go into default if our creditors refuse to take US currency as the medium of repayment of debts because it's as worthless as Zimbabwe currency...or German currency during the Weimar Republic collapse.

We can print all the bills we like, but if nobody will accept them as legal tender, we're fucked. That's why going off the gold standard was such a bad idea.

We're now saddled with a century's worth of unpayable debt created by Obama that our children's children's children will be paying off when they have children...unless we default, repudiate all foreign debt, and reset the currency so it's linked to gold or silver as a standard.

So that begs the question: Are our politicians ignorant of these facts, or are they deliberately misrepresenting them?

False dilemma fallacy. The correct answer is "You don't know what you're talking about."

[Gerald McGrew]

Of course it make sense. With the debt ceiling Obama cannot spend our nation any further into bankruptcy.

No dumb ass, raising the ceiling is merely Congress allowing the exec. branch to sell bonds in order to get the money Congress has already authorized to be spent.

See that last part in bold and italics? If you don't understand that point, you don't understand the entire issue.

Nonsense. Any currency is only as strong as the reputation of the nation that creates it for paying back foreign debt. We would go into default if our creditors refuse to take US currency as the medium of repayment of debts because it's as worthless as Zimbabwe currency...or German currency during the Weimar Republic collapse.

No dumb ass...our debt is already issued in US dollars, thus can only be paid back in US dollars. No one is going to buy a US gov't bond and then ask for it to be paid back in Euros. You can't do that.

False dilemma fallacy. The correct answer is "You don't know what you're talking about."

Classic Dunning-Kruger effect (look it up).

[Seth]

Of course it make sense. With the debt ceiling Obama cannot spend our nation any further into bankruptcy.

No dumb ass, raising the ceiling is merely Congress allowing the exec. branch to sell bonds in order to get the money Congress has already authorized to be spent.

See that last part in bold and italics? If you don't understand that point, you don't understand the entire issue.

So what? With the debt ceiling it's irrelevant that Congress authorizes the expenditures (and most of the expenditures are unfunded mandatory entitlement payments and interest on the national debt to begin with, not new spending) the point is that by preserving the debt ceiling, Obama CANNOT SPEND more money than he's been authorized to spend, no matter who approves it.

The debt ceiling is a last-ditch fail-safe protection against spendthrifts in Washington running the tab too high.

And guess who's buying the bonds? It's called "monetizing the debt," (something the Federal Reserve promised never to do) which means the government is selling paper to itself and solemnly promising to pay itself the debt it owes itself which it cannot possibly ever pay back to itself. In the meantime, it's printing money like there's no tomorrow, devaluing our currency with every press run just so it can keep up with debt service to other countries who have bought our bonds.

[Cormac]

Your cash won't be worth a damn, Seth, if the Fed keeps printing 400 billion a month in new, baseless "money" and the debt ceiling is raised to "infinity". Ain't gonna be worth the paper it's printed on.

That's probably true. Still, in the short term, having cash on hand is a good idea. At least they can't just suck it out of your bank account. My backup investment is not gold, it's guns and especially ammunition, which will be more valuable than gold if the balloon goes up, and can always be sold for about what I paid (or much more if Obama does his expected gun control thing) if things don't go south.

What a spectacle, eh? The (formerly) Greatest Republic On The Planet down on it's collective knees, sucking China's cock for enough money to keep the havenots in free cellphones and birth control pills and the corporate haves in Mercedes and Beluga. It would be funny if it wasn't so goddamned tragic. All the while patting ourselves on the back for being so fair and compassionate, and saving penguins by driving our Prius down to Starbucks for a cup of overpriced pumpkin latte. Time for an asteroid strike, it's the only solution.

Couldn't agree more. If I were in charge, I'd ban any and all trading with China or any other Marxist/communist regime (including the EU and UK) and I'd repudiate all foreign debts held by our Marxist/Socialist/Communist enemies.

Then I'd bring the troops and ships home to defend the homeland and nuke the ever-living fuck out of anyone who gets uppity or aggressive with us.

With whom would you trade?

Non-Marxists or nobody at all. The US is perfectly capable of surviving without international trade.

It would be a smaller economy with more expensive goods, less variety in jobs, and less money in circulation overall. Protectionism and isolationism is not very efficient, from the point of view of efficiency, cost, and opportunity to sell excess production. The last point is particularly important because it allows an expansion of scale such that prices at home can be reduced.

[FBM]

Gerald McGrew, staff would like to issue you a reminder that this post contains a personal attack on another member, which is contrary to forum rules. Please remember to address the idea rather than the person. Thanks.

[Tyrannical]

And guess who's buying the bonds? It's called "monetizing the debt," (something the Federal Reserve promised never to do) which means the government is selling paper to itself and solemnly promising to pay itself the debt it owes itself which it cannot possibly ever pay back to itself. In the meantime, it's printing money like there's no tomorrow, devaluing our currency with every press run just so it can keep up with debt service to other countries who have bought our bonds.

I wish I could lend money to myself, pay interest to myself for the loan, and somehow come out ahead

Though I suppose with runaway inflation and paying on a lower fixed interest rate loan might work.......

[Coito ergo sum]

Remember when all the Obama supporters were lambasting Romney for not having a plan with numbers that add up to balance the budget.

Why don't they require the same of Obama? How do his numbers add up? He wants more taxes "on the rich" (even though it's not just on the rich -- he's already raised taxes on the middle class), and the tax revenue generated doesn't come close to even reducing the deficit given all the spending that they don't want to cut. Raise taxes and raise the debt ceiling. Tax and spend. Tax and spend. Tax and spend. Same old story.

[Tyrannical]

Remember when all the Obama supporters were lambasting Romney for not having a plan with numbers that add up to balance the budget.

Why don't they require the same of Obama? How do his numbers add up? He wants more taxes "on the rich" (even though it's not just on the rich -- he's already raised taxes on the middle class), and the tax revenue generated doesn't come close to even reducing the deficit given all the spending that they don't want to cut. Raise taxes and raise the debt ceiling. Tax and spend. Tax and spend. Tax and spend. Same old story.

What would the point of asking Obama be? We already know he struggles with seventh grade math.

[FBM]

1% of what some of those rich guys pull in a year is more than I'd make in a lifetime. It's a significant amount to most of us, but a petty footnote to them. Except that they're so intense on comparing bottom lines with each other, they think a dropped dime is another Fukushima. I say this because I have a very rich Republican friend back home who, despite all his wealth, has stomach ulcers and chronic insomnia because he's always thinking about how he's going to protect his money from the tax man and other moochers. He has an airplane, several hundred homes that he rents out, many thousands of acres of prime real estate, and yet he's the only person I've ever seen go through a McD's drive-thru and order only a hamburger. I mean the 50-cent kind. No drink, no fries, nothing but a 3-bite, 50-cent burger. I'm not shitting you, he once bragged to me that his polyester slacks were over 20 years old and that he bought his nylon socks in bulk years ago and was still wearing them. We were riding around in his 20-year-old rustbucket Chevrolet pickup at the time. And he loves to tell me how I should pull my head out of my ass and start making some "real money." So I can be happy? Just like him? No thanks. Oh, and he once generously offered to pay me $5/hr to help him clear some brush. On my vacation. His whole worldview is based on the assumption that if you're not rich, you're desperately trying to be. Fuck that. I'd rather be happy than rich.

Erm. Sorry for the rant. I may have had a point when I started it, but I forgot what it was half-way through.

[Tero]

This is horrible! Rich people won't ne able to eat ready made hamburgers, and will need to invest in yard tools to clear their own brush. And put it on the driveway the day county bureaucrats decided to collect yard waste.

If Obama gets his way.

[Tero]

senators and congressment want hardware that Pentagon does not want
http://www.cnn.com/2012/12/12/opinion/g ... ?hpt=hp_t2
grandma's Medicaid brings fewer high paying jobs to the state. So cut
Medicaid they say.

[Gerald McGrew]

So what? With the debt ceiling it's irrelevant that Congress authorizes the expenditures (and most of the expenditures are unfunded mandatory entitlement payments and interest on the national debt to begin with, not new spending) the point is that by preserving the debt ceiling, Obama CANNOT SPEND more money than he's been authorized to spend, no matter who approves it.

Ok, we're done.

[Gerald McGrew]

Remember when all the Obama supporters were lambasting Romney for not having a plan with numbers that add up to balance the budget.

Yes, and it wasn't just Obama supporters, it was independent analysts, some of whom the Romney campaign had previously cited (e.g. the Tax Policy Center).

Why don't they require the same of Obama? How do his numbers add up?

Is Obama saying, "My plan will balance the budget"?

He wants more taxes "on the rich" (even though it's not just on the rich -- he's already raised taxes on the middle class),

Still sticking with that misrepresentation, eh? Typical.

and the tax revenue generated doesn't come close to even reducing the deficit given all the spending that they don't want to cut. Raise taxes and raise the debt ceiling. Tax and spend. Tax and spend. Tax and spend. Same old story.

Well let's take a look...

http://www.cbsnews.com/8301-250_162-575 ... -business/

"Mr. Obama's most recent proposal to stave off the "fiscal cliff" calls for $1.6 trillion in new revenues, achieved in part by letting the Bush-era tax cuts expire for the wealthiest Americans, as well as $600 billion in spending cuts and a handful of other measures. "

If that's accurate, is it your position it will have no effect on the federal budget deficit? None at all?

[Gerald McGrew]

1% of what some of those rich guys pull in a year is more than I'd make in a lifetime. It's a significant amount to most of us, but a petty footnote to them. Except that they're so intense on comparing bottom lines with each other, they think a dropped dime is another Fukushima. I say this because I have a very rich Republican friend back home who, despite all his wealth, has stomach ulcers and chronic insomnia because he's always thinking about how he's going to protect his money from the tax man and other moochers. He has an airplane, several hundred homes that he rents out, many thousands of acres of prime real estate, and yet he's the only person I've ever seen go through a McD's drive-thru and order only a hamburger. I mean the 50-cent kind. No drink, no fries, nothing but a 3-bite, 50-cent burger. I'm not shitting you, he once bragged to me that his polyester slacks were over 20 years old and that he bought his nylon socks in bulk years ago and was still wearing them. We were riding around in his 20-year-old rustbucket Chevrolet pickup at the time. And he loves to tell me how I should pull my head out of my ass and start making some "real money." So I can be happy? Just like him? No thanks. Oh, and he once generously offered to pay me $5/hr to help him clear some brush. On my vacation. His whole worldview is based on the assumption that if you're not rich, you're desperately trying to be. Fuck that. I'd rather be happy than rich.

When people obsessively hoard newspapers, clothes, or food, we pity them and try and get them help because we figure there's something wrong with them.

When people obsessively hoard money, the GOP holds them up as role models and crafts policies in their favor.