And the masses are still believing the Marxist Obama lie that everything is getting better. The 'Pied Piper' of the White House will his mouth full of lies 24/7.
Dr. James P. Wickstrom
Schiff: Much Larger Fiscal Cliff Looms Over U.S. Economy
Wednesday, 10 Oct 2012
At the end of this year, tax breaks are scheduled to expire at the same time automatic cuts to government spending kick in, a combination known as a fiscal cliff that could send the country into a recession next year if left unchecked by Congress.
The nonpartisan Congressional Budget Office estimates that the economy could contract by 0.5 percent next year if the economy rolls over the cliff, while the International Monetary Fund has said such an event threatens the global economy.
Even if Congress pulls through with short-term solutions that may spark sighs of relief, kicking the can down the road does nothing to address massive debts, liabilities and gaping deficits ailing the U.S. economy.
“It’s not because we go over this phony fiscal cliff, it’s probably because we don’t go over that one because the government cancels the spending cuts, cancels the tax hikes, and instead we end up going over the real fiscal cliff further down the road,” Schiff told Yahoo.
Federal Reserve stimulus measures that flood the economy with liquidity must halt, while Congress must cut budgets, overhaul taxes and narrow deficits if the U.S. economy is to avoid a doomsday fate.
The Fed plans to buy $40 billion in mortgage-backed securities from banks every month until the economy and labor market improve, a monetary policy tool known as quantitative easing (QE) that works by pumping liquidity into the financial system in a way that pushes down interest rates to encourage investing and hiring.
Critics say the Fed’s QE program, the third one since the downturn, is merely printing money out of thin air, plants the seeds for inflation down the road and does nothing to end regulatory and tax uncertainties that are worrying businesses.
Too much debt needs attention now, even if it means pain today.
“If we address these imbalances and let the economy restructure, people are going to lose their jobs in some sectors, some investors are going to lose money, it’s going to feel bad for a lot of people for a short period of time, but it will be very constructive pain,” Schiff said.
“The only way around this is to stop the presses, let interest rates go up, and they’re going to have to go way up, and let the chips fall where they may.”
Stocks, meanwhile, have risen in recent months, in part due to the Fed stimulus measures. Yet some warn that investors need to brace for the inbound fiscal adjustment, as even a political compromise could still involve changes to taxes and public spending.
“Markets have not priced in the fiscal cliff and assume QE Infinity [the third round of quantitative easing] will drown out other factors,” BlackRock analysts write in a report.
uncertainty alone could roil markets, and investors need to be prepared.
“Markets appear to underestimate the potential for panic in the run-up to the cliff, the possibility of the nation falling off the edge and the cliff’s impact on economic growth.”
Editor's Note: The Truth About the Economy — Government Documents Lead to Eerie Conclusion
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