FUCKING FISCAL CLIFF

[Veritas]

What about it?

What's all the bitching about?

We are fucked regardless, now or later, we are printing money we don't have. It's one of those rap videos.

 

[jryan21]

What they're really talking about is insolvency. Like when the interest on a debt is so high, you can't even pay that. And it's been known for years, they just now put a fancy name on it and act like they want to do something about it.

 

[Rage9]

It's like the government can't understand spending more than you have is an issue, yet everyone jumps on anyone proposing defense spending cuts or similar. Shits gotta come from some place.

 

[yoyomango]

It's like the government can't understand spending more than you have is an issue, yet everyone jumps on anyone proposing defense spending cuts or similar. Shits gotta come from some place.

Except you can if you own the printing press. The money comes from thin air. The problem is you've allowed a private group to do the printing rather than the government and now you have to pay them interest. Compounded.

 

[barman]

What they're really talking about is insolvency. Like when the interest on a debt is so high, you can't even pay that. And it's been known for years, they just now put a fancy name on it and act like they want to do something about it.

No i think the fiscal cliff is an agreement that if a budget is not reached, cuts and tax increases automatically go into play at the end of this year.

i think

 

[WickedJoe]

No i think the fiscal cliff is an agreement that if a budget is not reached, cuts and tax increases automatically go into play at the end of this year.

This is correct. Funny all the people that don't even know what the 'fiscal cliff' is but have lots to say about it.

 

[Cygnus]

Barman is right; the fiscal cliff there to prevent technical default. It'll likely get avoided by a small amount of agreement between parties that kicks the can down the 2 years and then again with a 1 year extension, putting the onus on the next election so Dems can say Repubs are playing dirty politics and Repubs can say Dems didn't take care of the issue as promised...in other words, business as usual.

 

[guerilla]

The "fiscal cliff" is a small collection of cuts (less than $200 billion) for almost $600 billion in tax increases.

Fiscal cliff is just more melodrama and hyperbole, like people crying that reforming an insolvent SS system is tantamount to starving old people.

That sort of language is political, and serves no useful purpose except to divide and create fear. It certainly does nothing to help address issues.

 

[Benji49]

No i think the fiscal cliff is an agreement that if a budget is not reached, cuts and tax increases automatically go into play at the end of this year.

i think

No, you are correct.

With regard to insolvency, you can't go insolvent as long as you own the printing. Or to be more specific, as long as you can sell bonds that are denominated in the currency that you own.

Now you can trigger hyper-inflation by printing too much money, but we are not seeing that here. As a matter of fact, right now return on US bonds have been excellent over the last three years.

Now before everybody jumps in with the political commentary, at a certain level this is a math game. If the US treasury can sell a trillion dollars worth of bonds at 1%, then the carrying cost is $10 billion a year. That's fuck-all. If they can do that year after year for 4 years, then total cost of financing the deficit for Obie's second term is $100 billion.

And finally, if you can sell those bonds with a 10/20 years maturity date, then the shit doesn't hit the fan until 2025. Or never.

If you can finance your debt at under 1%, you can get away with a LOT...
(note: not I'm saying you should do that..)

 

[r3p1v]

They have to make a deal with the house republicans and they they avoid the fiscal cliff.

Who is this guy? Idk. It showed up when i searched lets make a deal in google images

 

[guerilla]

Benji, you're a bright guy, but you don't have this correct.

With regard to insolvency, you can't go insolvent as long as you own the printing.

They are insolvent. The fact they can print money means they can avoid insolvency until they cannot print anymore. There is a point at which no one wants the 100 trillionth US dollar and then printing becomes futile.

Or to be more specific, as long as you can sell bonds that are denominated in the currency that you own.

The US is already buying its own bonds, which is indicative of a soft market.

Now you can trigger hyper-inflation by printing too much money, but we are not seeing that here.

You're not seeing that yet. Yet is the operative word.

Now before everybody jumps in with the political commentary, at a certain level this is a math game. If the US treasury can sell a trillion dollars worth of bonds at 1%, then the carrying cost is $10 billion a year. That's fuck-all. If they can do that year after year for 4 years, then total cost of financing the deficit for Obie's second term is $100 billion.

And finally, if you can sell those bonds with a 10/20 years maturity date, then the shit doesn't hit the fan until 2025. Or never.

If you can finance your debt at under 1%, you can get away with a LOT...
(note: not I'm saying you should do that..)

That is only true if interest rates stay low. They can't stay low forever without completely destroying the economy and certainly, interest rates are manipulated by, but not totally set by the FED.

No one expects 1% interest rates to continue for any amount of time. Once the rate rises to 4 or 5%, shit starts to get real.

I suspect you're old enough to remember the 18% interest rates we had in the 80s that cleaned up the profligate spending and money printing of the 60s and 70s.

When that happened, the US was the world's largest creditor. Today, the US is the world's largest debtor. It will be a very different outcome.

What goes up, must come down.

 

[Benji49]

Benji, you're a bright guy, but you don't have this correct.


They are insolvent. The fact they can print money means they can avoid insolvency until they cannot print anymore. There is a point at which no one wants the 100 trillionth US dollar and then printing becomes futile.


The US is already buying its own bonds, which is indicative of a soft market.


You're not seeing that yet. Yet is the operative word.



That is only true if interest rates stay low. They can't stay low forever without completely destroying the economy and certainly, interest rates are manipulated by, but not totally set by the FED.

No one expects 1% interest rates to continue for any amount of time. Once the rate rises to 4 or 5%, shit starts to get real.

I suspect you're old enough to remember the 18% interest rates we had in the 80s that cleaned up the profligate spending and money printing of the 60s and 70s.

When that happened, the US was the world's largest creditor. Today, the US is the world's largest debtor. It will be a very different outcome.

What goes up, must come down.

Japan has been getting away with running huge deficits and keeping interest rates low for years, if not decades. But don't ask me how the fuck they manage to do that.

I don't think we are in disagreement over the shit hitting the fan one day. The entitlement/pension nuke is still ticking away in the US, as well as a lot (most) of the western countries

But when the nuke explodes, or what is going to be the trigger, now that is literally the trillion dollar question? Do we go gentle into the night like Japan or blow up like Greece? Or does Bernanke get away with dumping $10 trillion of US debt into the world economy over the next decade?

So far, he is getting away with. Qe2 was a $600 billion dump, and if you exclude the price of gold and silver, the contribution to the inflation rate that year was about the same as wet fart.

Forecasting the future over a beer is great fun. Forecasting the future when you have capital that needs to grow/be protected is less so.

And oh in case you wondering what the fuck is the point of my post, let me summarize: I don't fucking know. I don't know what the future will bring. The crystal ball is very cloudy right now.

 

[HKSEO Jonbones]

No i think the fiscal cliff is an agreement that if a budget is not reached, cuts and tax increases automatically go into play at the end of this year.

i think

Dead on

 

[guerilla]

So far, he is getting away with. Qe2 was a $600 billion dump, and if you exclude the price of gold and silver, the contribution to the inflation rate that year was about the same as wet fart.

First, I don't trust the inflation rate (see shadow stats). Second, the inflation rate isn't flying high because the inflation into the system is offsetting necessary deflation.

So instead of seeing sky high inflation, or severe deflation, we're seeing moderate inflation.

Remove the money printing and asset prices would be (naturally) collapsing across the board. I hope we can agree on that.

And oh in case you wondering what the fuck is the point of my post, let me summarize: I don't fucking know. I don't know what the future will bring. The crystal ball is very cloudy right now.

I don't know either. Not specifically, and certainly not the timing. But the best part of my last post was, what goes up must come down.

For every action, there is a consequence.

 

[cassius]

What is the fiscal cliff? An opportunity for me to make a bunch of money.

 

[VinBed]

Maybe this means that bitcoin has a bright future, after all.

 

[Unarmed Gunman]

OBAMA 2012!!!!!!!!!!!!

 

[WickedJoe]

Why doesn't anyone ever talk about the worst tax of all.. the bitch-tax. Got a bitch? You're paying through the fucking nose. And worst of all.. it's taxing money already taxed! Got a big savings account? Not for fucking long!

<Guerilla, no need to make a serious reply to this post>

 

[cassius]

 

[BlokBlok]