Going over the fiscal cliff corrects the many budget imbalances created during the Bush/Greenspan years and exacerbated during the Obama/Bernanke years. It sounds like the prudent and conservative thing to do. BUT....
The budget imbalances, from my viewpoint, are showing up as a surplus in afew countries like China and Peru, and in many large corporations like Apple $AAPL, Google $GOOG, and Exxon $XOM. These fortunate instututions don't know what to do with their surplus so they lend it back to the US Treasury, ie purchase US Treasury Bonds. Interest on the US treasury bonds is historically low, and in fact paying more interest would only result in more accumulation of dollars in afew fortunate countries and large corporations. Best that interest rates remain low, or zero, for the forseeable future, or until employment picks-up.
Fortunately, the "Buck" does not stop at the US Treasury, the US government pays it out to the military complex, medicare, unemployment benefits, social security, ie. the circulation of money keeps going and the "Buck" is passed to the consumer. Stopping the flow of money would be the worst case for the US government. Most likely it would cause riots in the streets in addition to a collapse of the economy in general. There is already a lack of demand. We need more demand, not less!
Therefore, why abandon a fiscal strategy which appears to keep everything in place, a policy which keeps the flow of money intact and maintains a floor under consumer demand? That's my question.
As for my gold stocks, let's face it, Bernanke has changed course from supporting US Treasury bonds to supporting real estate mortgages and the real estate market. Gold stocks flourished during the first phase of Bernanke's strategy. Will they continue to flourish? Maybe so... as long as the gold companies invest their surplus dollars in the private sector and not US Treasury Bonds.
I hope we don't go over the fiscal cliff.
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