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Sunday, November 18, 2012

Get ready for the fiscal slope

So much talk about the fiscal "cliff."  Very dramatic, like the "ticking clock," in a trite action movie.  Of course, as the second hand ticks towards zero the Hero (Our Government) will close its eyes and pull the green wire, just in time to avert the nuclear meltdown.


Only in real life all that means is no debt will actually be paid down.   No meaningful spending cuts will be made.  And not significant tax reform will be offered.


There is no fiscal cliff.  There is just a fiscal slope, heading slowly downward, toward the depths of gradual global depression.

Along the way, governments will print money like crazy and throw it to the Banks who will gobble it up and use it to buy risk assets.

And as they do, real goods: food, energy, rents, schooling, health care, heat, water (Everything excluded from Government inflation statistics) will get ever more expensive.

And if it's managed properly, the Fiscal Slope will be gradual enough so that nobody really notices - except those who slip below the poverty line and slowly freeze and starve.  But they will be few enough - at first - that nobody else will care.

And then - much much farther down the slope - there will be enough of them. 

And then we will see something much more resembling a cliff.

Until then, protect yourself against the inevitable.  No matter how slowly it creeps.

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