For many in America – myself included – the “fiscal cliff” is a forgone conclusion. We are going over. Exit polls in November showed a substantial number of Obama voters still blame President Bush for economic troubles and America voted for more of Obama’s medicine. The GOP was wrecked by FDR for decades, even though the Great Depression ground on despite (or because of) the New Deal. Post-cliff deprivations might be worth it to the President for a new Progressive hegemony. It’s not like any of his friends will go hungry.
Right now, the progressive spending agenda is being funded by investors buying America’s debt. Eventually, nobody is going to be stupid enough to lend us money. We just do not know when they’ll stop, but stop it will. Inflation is already here, and it’s pretty bad – just the media does not harp on it like they did in the 70s. Billions that could be investment capital to create jobs is being soaked up in precious metals as a hedge against inflation, taking money out of circulation. Government policies are prompting a mis-allocation of capital – billions in successful investment have been traded for worthless government subsidised boondoggles like green batteries and solar energy.
People I depend upon for my livelihood – business owners – are vilified by the President as not doing their fair share, as if there is nothing special or valuable about providing jobs for others. They are afraid to spend money, anticipating a tax shock.
Jacking up taxes never works out like progressives say it will. We raise taxes on cigarettes to discourage smoking, why would we not expect raising taxes on business activity to have a similar discouraging effect? They only take a larger slice of a shrunken pie.
When our debt is no longer being bought, the Fed will begin printing it, which will make the dollar in your pocket worth less. A great deal less. In postwar Germany, currency bought half the goods in the afternoon as it did in the morning. How will the people respond to that?
My family has meaningful skills and is clever enough to barter. The millions of Americans whose lifestyle was supported by government checks will be in deep trouble. What will they do? To what extent will civil society crack up when food stops being shipped to cities because producers shut down, unable to keep pace with inflated costs?
I do not think our civil fabric is anywhere near as strong as it was in the 1920s. Then, bad government policy lead to both the economic collapse and agricultural catastrophe of the Great Depression. Then Americans had a much deeper reserve of faith and community. Still yet, only the global apocalypse of WW2 and the untold millions of lives lost broke the economic death spiral.
I look at America’s balance sheet, both fiscal and cultural, and I know that something has to give. When it gives, I fear it will bust ugly.