The Fiscal Cliff and the Pot of Gold

Will America drive off The Fiscal Cliff or will a deal be worked out?  That is The $64 Trillion Question we are following as we head to the end of 2012 and the drop dead-line of 1-1-2013 when mandatory tax increases and draconian spending cuts automatically go into effect unless there is intervening legislation—even for simple postponement.  The outgoing congress will most-likely pass in a bipartisan fashion a six-month extension to allow the incoming congress (sworn in 1-3-2013) with virtually equal majority party structure to handle it.

Speaker John Boehner (R) is willing to reach across the aisle but will not budge on the Bush tax cuts for the wealthy.  President Obama made it clear it has to be a fair compromise.  Obama is not going to budge much on entitlements, especially since he added Obamacare to the list of entitlements.  As I have said before, (1) you cannot raise taxes on the unemployed, the underemployed, or those financially struggling; they cannot pay their current taxes and you simply cannot squeeze blood out of a rock.  (2) Raising taxes on the wealthy in the long run will worsen the situation as it will create more unemployment.  A majority of the rich, even the one percent, are the only real vehicle we have to create jobs.  Ideally, we should go after the one-third percent, the richest people who choose to do nothing but live off their money, and tax them the most, but that would require profiling which is unconstitutional and rightfully so.  (3) I have nothing against sacrifices; since the Revolutionary War and the formation of the American nation, no people on earth have made more sacrifices than the American people.  Ultimate sacrifice notwithstanding, we almost always get something in return.  If the grand prize in return were a balanced budget, I think both sides would be delighted to make the respective sacrifices they have been called upon to make.  But the likelihood is we are still going to be carrying massive debt and therefore getting nothing in return.  Like Tom Cruise said in Jerry McGuire, “Show me the money!”

There are three-hundred-seventy-one Billionaires in the world today.  The world has yet to see its first Trillionaire.  We have not yet even seen our first trillion dollar company albeit Apple Computer may reach that plateau by mid-2013.  The one percent are very, very rich; but not that rich.  Even if God forbid we implemented a form of Karl Marx’s vision and taxed billionaires to live like multi-millionaires, multi-millionaires to live like millionaires, and millionaires to live like hundred-thousandaires, American will still come up short of a balanced budget.  As for spending cuts and a reduction in entitlements, George Will (ABC News) is famous for saying; immortality is not a virtue with respect to what was never intended to exist in the first place.  Nonetheless, it is understandable for people who have no other means of support but the entitlements to feel and that the preamble of the Constitution says to promote the general welfare, hence, a Constitutional obligation not leave elderly, disabled, and the like out on the streets.  This is not to say such people are not willing to make some sacrifice; but again it’s show me the money!  The real tipping point is yet to come, in the decade of the early 2020s.  Realistically, the operative word in limited government will always be limited, which is a commodity greater than zero.  I am not that extreme, but this tipping point I am referring to is one in which government could be reduced all the way to what it in 1789, and America would remain deep in debt and continue to accrue debt.  Although The New Deal is responsible for a lot of inflation and stagflation, the absence of New Deal reforms would not have kept prices and wages in tune with 1789, some inflation would still be inevitable.  It would still cost a lot more to operate a 1789-esque government today than it did in 1789.  Neither the wealthy man is going to sacrifice one penny to higher taxes nor are the middle class and poor going to sacrifice one crumb of government entitlement if we do not get that balanced budget in return.  And one thing neither I nor any of my fellow Republicans, even moderate Republicans will ever tolerate is sacrificing fundamental freedoms—even for a balanced budget.  To quote the New Hampshire state motto, most Americans live to the creed: Live free or die.

While the Democrats want to operate on the first element to achieve fiscal responsibility, taxes, and my fellow Republicans want to operate on the second element, spending cuts, not enough attention is being paid to the third element; even my fellow Republicans have disappointed me on this one.  The third element is currency stability.  While Mitt Romney, Lindsay Graham, and Saxby Chambliss, have used the analogy America is headed toward Greece, referring to the bankruptcy of that nation, taxes and spending were not the primary reason Greece went under and Germany is not feeling well.  The collapse in the currency was the straw that broke the camel’s back.  The Euro, which is prototyped after America’s Federal Reserve dollar is not stable and its value is determined solely by amount in circulation and distribution.  Every time we print more Federal Reserve dollars we both increase the rate of inflation and increase the deficit.  You have to have $1700 disposable income to buy one ounce of gold.  As I have said before, we need to put some of our currency back on the gold standard.  If we hybridized our   currency to 60% Federal Reserve notes and 40% gold certificates.  You cannot certify more gold than that which is available so such currency always retains its value.  A gold certificate dollar bill is worth a full dollar no matter how government acts, and no matter what happens in the global (worldwide) economy.  And with the 60/40 hybridization, (1) you don’t certify every ounce of gold in Fort Knox—to do so would give us no margin of error in a free-trade world.  (2) If there is a need for the federal reserve to print more money, and the federal government stipulates this 60/40 ratio always be maintained, you print less new currency and you certify more gold in the process to maintain the ratio, resulting in little consequence to inflation and national debt.  So for all you liberals and moderates who want to redistribute the wealth, here is a way to do it without socialism or communism; as forty percent of your dollars shift from federal reserve notes to gold certificates, backed by a precious metal worth $1700 an ounce, you are getting wealthier.

My message to Boehner and Obama, for whom even when reaching across the aisle, cannot compromise on everything when it comes to taxes and spending cuts, is to consider the currency overhaul as common ground.  If we have to go over a cliff, let there at least be a pot of gold at the bottom to break our falls.

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