Fiscal Cliff Is A Hoax

Source of image from http://www.motherjones.com/politics/2012/11/whats-happening-fiscal-cliff-explained

Happy Holidays all, I hope you had a wonderful time spending time with your families.  Lately the media has been pounding the public with such negative news.  First it was the end of the world predicted by Mayans to occur on December 21, 2012.  As you know that didn't come true because I wrote this blog and you are reading it after the fact.  The fiscal cliff in my opinion is merely the same thing as the Mayan prediction, another hoax.  Here is why!

The media has been broadcasting doom and gloom if an agreement cannot by President Barrack Obama and Speaker of The House John Boehner be reached to avoid the fiscal cliff.  I say this too is a hoax, the US economy will be fine in the long run.   Is it true taxes will go up for every citizen, government spending will fall  which impact the government and private citizen side of consumption component of GDP.  The US may even  go into recession for 2 quarters.  However, I say that will be an opportunity for savers and corporations who have over  a trillion dollars in cash to put to use.  Prices on average will come down causing the value investor (including corporations) to buy assets at a discount relative to prices pre fiscal cliff.

Secondly, companies and individuals will know with certainty what their tax liabilities will be.  These entities can now plan investment spending and investment in projects.   Third, humans are horrible at predicting the future.  I will not give specific example you can do your own research.  Just look at the Mayans.  Fourth, psychology of marco economic news appears to be driven by the media.  The more negative the news, the more papers, website hits and higher ratings the media companies will get.  This drive their profit margins because they can charge higher fees for advertisers.  This is more of a theory, I never did a study to prove this however, I will to bet this is true.  The media plays on our fears as we think to ourselves what if this is true and how do I prepare myself.   Finally, the fiscal cliff is a joke when comparing to the credit crisis/real estate crash of 2008.  The nation survived that event which was far worse abeit the Federal Reserve printed trillions of dollars but that is another subject for another day.  In conclusion, ignore the analysis from the media and listening the reporting.  Learn the facts about the fiscal cliff which are taxes rates go up and government spending goes down. Really is that such a bad thing?  Happy New Year's.