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Posts Tagged ‘fiscal cliff’

Fiscal cliffThe mass media misled Americans, and the world, about the phony U.S. debt fiscal cliff non-crisis in at least two big ways:

1) There was never any threat of defaulting on the U.S. debt as a result of not raising the debt limit, as federal revenues still exceed interest and principal payments on the federal debt. The consequence would be that the federal government would have to return more closely to its constitutional boundaries, in cutting back the >40% of every dollar spent that it is currently financing by borrowing.

2) The U.S. doesn’t depend on borrowing from any country or individuals — the Federal Reserve could buy up as many Treasury Bonds as it wants, and return most of the money back to the U.S. Treasury, as it is required to do by law, after paying its expenses, and shareholders. This is what the government’s been relying on since 2008 anyway. This will result in the eventual destruction of the USD, as this borrowing isn’t subject to the same kind of scrutiny by big lending countries like China and Japan.

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