Now that the US election is over, I can safely check the news periodically. The latest buzz story I’ve noticed is talk of a “fiscal cliff” that is supposedly facing the US in the new year. See story on CBC here.
All the arm waving seems to be about some expiring tax breaks along with some additional tax burden coinciding with some spending cuts. It is imagined that decreasing spending will have a negative effect on the economy. But since the government is broke, that spending comes from printing new money. It’s hard to see reducing spending when you have no money as anything but a good thing! Only mainstream media and the university economics professors they interview could imagine that printing money and spending it somehow helps the economy! Wealth and a standard of living doesn’t come from spending money. It comes from producing things. Yet somehow every economics expert that advises government and journalists has this backwards!
In any case, this is an imagined crisis as the US has been falling off the cliff for a few years now.Above: The US has been falling off the “fiscal cliff” for a while now as the graph shows. This is the US money supply. Stare in disbelief at this for a second! In the last couple years, the US has been creating the appearance solvency by printing money at a truly remarkable rate. Of course this dilutes savings through inflation and is making the dollar a worthless currency. Increased prices for food and fuel are the early results of this. The media seems to have given the government a free pass on this and only now is getting itself worked up about a 3% tax hike that is somehow America’s Waterloo. The cliff is plain to see.
Above: Here is the other aspect of the cliff they’ve been falling off, deficits without precedent. Apparently the political choices in this election were so bad that steering the economy off this double dose cliff isn’t enough to get removed from office with pitchforks and torches.
At the time, Americans were told that if they didn’t spend trillions of dollars they didn’t have, things were going to be awful. Well, they spent the money they didn’t have, what did they get? Above: This graph is from Obama’s first term where it was outlined how borrowing trillions of dollars would get the economy rolling faster. Superimposed on this chart is the actual official unemployment rate. The arrow is where they are at today. The best and brightest minds in America put together Obama’s economic plan. The results speak for themselves. A 16 trillion dollar official debt, trillion dollar annual deficits, indefinite money printing causing consumer prices to rise and a clueless cabal of economics experts who are worse than idiots.
Fiscal Cliff in January? I suspect the only cliff that people are about to fall off is the one where many suddenly realize they’ve been falling for years. But since America seemed incapable of understanding how the suppressed interest rates and increased monetary supply caused the last bubble, they are likely to hit the ground while discussing the future dangers of “falling off the cliff.”
sources: Federal Reserve Economic Data
note: For this entry I have used official data but for many metrics, ShadowStats is much more accurate as they are not gamed to produce more pleasing results. Unemployment and CPI stats are especially problematic from official government agencies. Much of that site is paywalled but there are many free materials as well.
and yes, the first picture is from S01E27 Star Trek TOS “The Alternative Factor”