What is the fiscal cliff of US?

Discussion in 'Business & Economics' started by Saint, Nov 7, 2012.

  1. Saint Valued Senior Member

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    What is fiscal cliff of US?

    Is it about the debt ceiling?

    QE3 does not solve it?

    To overcome fiscal cliff, is it the job of FEB or Treasury?
     
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  3. joepistole Deacon Blues Valued Senior Member

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    It is a combination of things, raising the debt ceiling and creating a realistic budget that promotes economic growth and addresses the long term fiscal issues (debt). If congress does nothing, taxes will increase across the board in January and that will impede economic growth. There are automatic spending cuts, that kick in if congress does nothing, and those spending cuts will hurt economic growth and employment.

    Yes

    No, it has nothing to do with QE period. QE only affects monetary policy, how much money is in the economy. Fiscal policy is the realm of congress, how much money is spent and on what.

    Congress is responsible for the fiscal cliff. They created it and congress and only congress can fix it.
     
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  5. Saint Valued Senior Member

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    Congress is still controlled by GOP, so what would happen to fiscal cliff?
     
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  7. Carcano Valued Senior Member

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    The Federal Reserve alters the angle of the cliff by purchasing more debt from the Treasury at a lower interest rate than the open market...so the cliff becomes less steep, but continues to grow higher.

    It also helps by re-mitting almost all of that interest back to the treasury, which it must do by law.

    Eventually, Congress must raise taxes on the wealthy AND cut military spending drastically.
     
    Last edited: Nov 8, 2012
  8. joepistole Deacon Blues Valued Senior Member

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  9. joepistole Deacon Blues Valued Senior Member

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    http://www.sciforums.com/showthread...-Second-Term&p=3008301&viewfull=1#post3008301

    It remains to be seen what Republicans will do. But my bet is Republicans will be much more amenable to averting the fiscal cliff now the election is over and they took a shellacking in this election. But it won’t be easy for Republicans. Republicans will try to save some face, disguising tax increases as tax reforms. But in reality there will be little if any tax reform. Republicans will increase taxes and call it tax reform and hope no one notices.
     
  10. eyeswideshut Registered Senior Member

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    The moment that revenues do not cover the interest of the debt ?
     
  11. joepistole Deacon Blues Valued Senior Member

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    No that is you making stuff up. Currently interest on the national debt is about 6% of federal expenditures.
     
  12. Carcano Valued Senior Member

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    He said 'revenues'...not 'expenditures'.
     
  13. Saint Valued Senior Member

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    Can the banks write off all the debt?

    Please Register or Log in to view the hidden image!

     
  14. Carcano Valued Senior Member

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    Private banks write off debt that is declared non-collectible...and it's removed from the books.

    The US central bank, the Federal Reserve would never write off money owned by the government.
     
  15. eyeswideshut Registered Senior Member

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    Sorry but I like my defination better than yours.

    How many fiscal cliffs can one have ?
     
  16. joepistole Deacon Blues Valued Senior Member

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    I don’t know what you mean by the question. Banks have nothing to do with it. If you mean can the owners of US debt write off the US debt they hold on their balance sheets, in the US, only if it becomes nonperforming like any other debt they would hold on their balance sheets.

    However there is no good reason why US debt would ever become nonperforming. Because the US government can always increase taxes and/or print more money to pay its debts. That is something individuals cannot do. The only way the US could default is if the congress chooses to default on its debt (e.g. failure to raise the debt ceiling). US taxes are at historic lows, US tax rates have not been at these low levels since before The Great Depression. So the US has plenty of room to raise taxes.
     
  17. joepistole Deacon Blues Valued Senior Member

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    Yeah, I am sure you do. It just doesn't have anything to do with reality.
     
  18. eyeswideshut Registered Senior Member

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    I think you are missing the point...

    There is not going to be fiscal cliff type of event until the scenario which I presented is in hand because I know and you know that the debt ceiling is going to be raised once again, that is the reality.
     
  19. Cowboy My Aim Is True Valued Senior Member

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    It's the debt ceiling and our budget deficit. Personally, I think we went over the cliff quite some time ago. We're just building up speed on our way down at this point.
     
  20. eyeswideshut Registered Senior Member

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    That is the another way to look it, to which I agree
     
  21. joepistole Deacon Blues Valued Senior Member

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    No I am not missing the point. The fiscal cliff is not what you are representing it to be. Additionally the senario you are using is not a believable one for reasons already explained.
     
  22. eyeswideshut Registered Senior Member

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    Ok, so, how many fiscal cliffs one can have ?

    Or are you trying to say that the fiscal cliff has been, is, and will be, in other words, it is the permanent state of the State ?
     
  23. Saint Valued Senior Member

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    How possible US can settle its debt, at least 50%?
     

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