Fiscal Cliff - is as real as Santa Claus

Discussion in 'Politics & Religion' started by jem, Dec 27, 2012.

  1. jem

    jem

    At least with respect to the debt ceiling.

    The Federal Reserve can and does create Federal Reserve notes ex nihilo or out of thin air.

    The Fed can just pay our bills without the treasury issuing new debt.
     
  2. pspr

    pspr

    First, that won't happen. If the Fed started pumping an additional $150 B a month to the government and that fact was announced, inflation would immediately skyrocket.

    Second, the treasury has places to borrow money that will stave off the debt limit effects into February or March.

    The fiscal cliff mostly refers to the Sequestration cuts to defense and other government programs and the end of the Bush tax cuts. The end of the tax cuts only raises a little over $500 B but maybe if people see what they are going to have to pay to raise this 1/2 trillion dollars they will realize how far out of whack government spending is. Below are the effects this will have on taxpayers. It does NOT include the end to the FICA tax cut which is also coming Jan. 1st nor some ObamaCare taxes.

    Annual income: $20,000 to $30,000.
    Average tax increase: $1,064.
    ___
    Annual income: $40,000 to $50,000.
    Average tax increase: $1,729.
    ___
    Annual income: $50,000 to $75,000.
    Average tax increase: $2,399.
    ___
    Annual income: $75,000 to $100,000.
    Average tax increase: $3,688.
    ___
    Annual income: $100,000 to $200,000.
    Average tax increase: $6,662.
    ___
    Annual income: $200,000 to $500,000.
    Average tax increase: $14,643.
    ___
    Annual income: $500,000 to $1 million.
    Average tax increase: $38,969.
    ___
    Annual income: More than $1 million.
    Average tax increase: $254,637.
     
  3. Tsing Tao

    Tsing Tao

    What? Please explain how this is possible.
     
  4. jem

    jem

    when I read timmy taxes writing about the ways they have to gain headroom.

    I did a little thinking.
    Since the Federal Reserve makes Fed notes of its own accord.
    Those notes are not tied to the treasury issuing bonds.
    So the Fed can just give the Fed Notes to the Govt or pay them out on behalf of the U.S.
     
  5. pspr

    pspr

    Besides, don't scare IQ 47 and Stu with that Santa Claus talk.
     
  6. Where do you thnk the Fed is getting the tens of billions it is using for QE whatever number we're up to now?

    The "we're going to default" talk is just nonsense to scare low information voters.

    The government could...gasp...prioritize spending. Maybe shutter soem of the more useless agencies for a few weeks, although theywould rhhter default on the debt and close the Washington Monument. People might not notice these supposedly essential departments and agencies were closed. No telling where that might lead. Voters might actually get the crazy idea the government is wasting a lot of money and doesn't need so much.

    Somebody got to pay for yo bamaphone.
     
  7. Just my opinion but I can't see this going on for too long. The goal of politicians is to get reelected, regardless of party affiliation. Once they see that this could cost them their jobs they'll come to agreement on something.
     
  8. You should change this statement to, "Fear over the fiscal Cliff IS Santa Claus"

    Atleast if your a trader.

    Had my best day this year on friday, from the panic set off by the lack of a deal, made 75k on the day, Mondnay was good too, but not as good, Nice little year end bonus, thx to incompetent governance, and ginned up fear from the media.

    When Obama caused our credit to get downgraded, that august was also the best trading for the whole year, i had 2 weeks of trading where you could bank on 5 figures every single day, so here is to hoping these idiots cant get anything done, and more carnage ensues, i no longer give a shit about the people who get hurt by it, since they were mostly obama supporters anyways. I tried voting for a more sane government, but my vote was rejected.

    [​IMG]
     
  9. Tsing Tao

    Tsing Tao

    The debt ceiling debacle is about the law - about being able to legally raise the debt limit. The Fed already is the majority purchaser of Treasury debt. One thing has nothing to do with the other.
     
  10. jem

    jem

    correct. that is my point. the debt ceiling does not have to constrain spending or paying our creditors.

    you don't go over the debt ceiling if you are just issuing federal reserve notes (printing and spending the money).

    The borrowing part is really just a way to pay off the owners of the privately held central bank.

    Lets just stop the borrowing. Lets just say No to new debt... no new bonds and treasuries.
     
    #10     Dec 27, 2012