We’ve Already Passed The Fiscal Cliff

I am totally sick and tired of hearing about the so-called lack of progress in Washington on avoiding the fiscal cliff.  The activity that media outlets are passing off as initial posturing prior to serious negotiations is probably nothing more than each political party pandering to its base.  Politicians want to go on record with campaign-ready soundbites favoring more unsustainable promises just before they quietly vote to do pretty much nothing.

This past election cycle revealed that neither major party is serious about cutting spending on unfunded middle class entitlements.  The leaders of both parties in Washington have sufficient political skill to engineer a legislative solution to the fiscal cliff that does nothing more than continue the status quo indefinitely.  In practical terms, I would not be surprised to learn that Congress’ leaders already have a draft bill ready for voting that does nothing more than raise the debt ceiling and extend any spending sequesters for a few more months.

The euro’s weakness enables temporary U.S. dollar strength, which in turn enables the Fed’s unlimited U.S. government securities buying in support of unlimited deficit spending.  That’s why politicians think they can get away with business as usual.  The end of the euro, whenever that happens, will begin the countdown to the end of the dollar as the world’s reserve currency.  Then it will be business as unusual when Washington will have to force financial repression on America’s middle class.

The United States government passed its point of no return when its debt/GDP ratio breached 100% in 2011.  We’ve already passed the fiscal cliff and are now in a Wile E. Coyote midair suspension, willfully unaware of our situation until gravity turns our forward momentum into a downward parabola.

About Anthony Alfidi 128 Articles

Affiliation: Alfidi Capital LLC

Anthony Alfidi is the Founder and CEO of Alfidi Capital. His firm publishes free investment research with honesty and humor.

Mr. Alfidi holds a Bachelor's degree in human resource management from the University of Notre Dame (cum laude) and an MBA in finance from the University of San Francisco. He is a life member of Beta Gamma Sigma, the academic honor society for business majors. He has been a private investor since the 1990s.

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