Freedom Discussions

The Fiscal Cliff: The Choice is Not “Recession or No Recession” but “Recession Now or Recession Later”! Here’s Why

by Lorimer Wilson

The warnings that the fiscal cliff will cause a recession are delivered as if the government can decide whether or not we have a recession. In fact, the government does not have that power, or we would never have recessions. At the most, the government can influence when, not if, we have a recession. We will most likely undergo a recession when we wean ourselves off the unsustainable deficit spending of the last four years. The choice is not recession or no recession. The choice is recession now or recession later. [Let me explain.] Words: 542

So says Jeffrey Dorfman  in edited excerpts from his original article* as posted on Real Clear Markets (www.realclearmarkets.com) entitled The Fiscal Cliff? Let’s Rush Off Of It.

Dorfman goes on to say, in part:

The reality that many political and opinion leaders seem unable to grasp is that the government cannot create jobs or economic growth. All the government can do is to borrow jobs or growth from the future. Think about it: if the government could create growth, jobs, or wealth, why do we still have unemployment and poverty? Government’s effect on the economy is temporary at best; eventually the price must be paid.

If you believe that government deficit spending is good for the economy, then you must admit that when the government pays back the money it will be bad for the economy. Paying the debt means some government spending is going toward something that does not help the economy.

Since the government cannot run a trillion dollar deficit forever…every job created by deficit spending now is a job that the government is costing the economy later, when it must instead use revenues to make debt payments. Even paying just the interest on the debt means that a fraction of the jobs created now are lost forever based on the interest rate on the government bonds. [As such,] twenty jobs gained this year with deficit spending may be one job lost forever once the deficit is normalized.

Read more here.

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