Stop worrying about the ‘fiscal cliff.’ Spending cuts would feel therapeutic after watching Standard & Poor's and Egan-Jones downgrade our credit rating and seeing President Obama add $6 trillion to the national debt. The way to avert another recession and massive inflation is to eliminate the unconstitutional Federal Reserve.
There are two ways for politicians to “pay” for their spending. They can be transparent and raise taxes extremely high across all income levels. (This is not happening because politicians know Americans would riot.) Or, they can be sneaky and “monetize the debt,” which means allowing the Federal Reserve to print money and inflate the currency.
As former Rep. Ron Paul points out in his book End the Fed, “…the Fed has one power that is unique to it alone: it enables the creation of money out of thin air. …through techniques such as open-market operations, changing reserve ratios, and manipulating interest rates, operations that all result in money creation.”
Think of our economy as ill with a superbug; the Federal Reserve is the cause of this virus and we must eliminate it before it wipes out America’s prosperity.
Peter Schiff, CEO and Chief Global Strategist of Euro Pacific Capital Inc. told CNBC this month: “Ben Bernanke is a much bigger threat to the U.S. economy than the fiscal cliff. In fact, if it wasn’t for his accommodation, all the QEs, we wouldn’t have to go over the fiscal cliff. In fact, ultimately because of what the Fed has done, we’re gonna have to go over a much bigger cliff, as part of the solution to solve the problems that the Fed helped create by allowing the government to get so big. But I think if we avoid this cliff—which is a mistake, we actually need a bigger cliff that has a lot more government spending cuts—but if we get a deal, which I think likely we will do because politicians want to pretend that they saved us from this phony crisis so they set us up for a bigger one… it means that trillion-dollar-plus deficits will perpetuate and these big deficits are what is undermining the dollar because the Fed has to print money to finance them… all the ‘fiscal cliff’ means is that we have to start paying for all this government… so if the politicians want to spare us from this fiscal cliff, then cut government spending so we don’t have to pay for it.”
Founders like Thomas Jefferson were concerned that central control over the money supply would lead to tyranny. This is why, early on, the Constitution explicitly banned paper money and only allowed gold and silver coinage.