Wednesday, July 18, 2012

Bernanke's fiscal cliff.

 Bernanke is America's fiscal genius . Are his warnings worth for Congress to act?

Time for more stimulus money . Recently   Bernanke said to the Senate Banking Committee that if Congress didn't reach a compromise, a "fiscal cliff" could occur. That is, the combination of tax increases and spending cuts that are scheduled to begin at the end of the year could inhibit economic growth. "The reduction in the unemployment rate seems likely to be frustratingly slow," and "Congress is in charge here, not the Federal Reserve," he said.  My view the Nation is already fiscally off a cliff. First of all the drought that is sweeping the American bread basket is alarming , soon it's going to drive the price for food and fuel up the cliff . While every thing else going down . Perhaps we need another round of cash to flow back into the system. Years back I made a comment that sounded like this . 'Why won't the Feds just print more money'. Yikes . I did not know that  ( the Feds )  have for the last decade printing more money because the Dollar (U.S.) was loosing it's value world wide . Bernanke has been hailed as Obama's genius . The Man who saved the American economy . So much his approach for Congress to act has been regrettably late in coming . For much of the year, economists worried about the impact of the slowdown in Europe on the U.S. economy. Now, analysts say anxiety about the impact of the fast-approaching fiscal cliff — the series of federal spending cuts and tax hikes set to take effect at the beginning of 2013 if Congress and the Obama administration do not act — is displacing Europe as the primary threat to the nation’s sputtering economy. As far Jobs , and creating Jobs in America I do not want to sound pessimistic, but yesterday there was an article in Washington Post linked from the liberal Slate that predicted (and quite convincingly) that the manufacturing jobs are simply NOT coming back. You just cannot tell a business owner to be patriotic and lose money by manufacturing here inside USA. The jobs will be in China and India - cheap labor. No matter what happens, and how much mindless rantings continue on this and other blogs, jobs that are gone are gone forever. In such times, which is inevitably very painful, the issue is what holds in the future ? Like it or not, technology is also a major but silent, unnoticed culprit. The Slate article made the claim that automation has reduced the need for human capital. Where it was necessary to have 10 people, you can now get by with 2 people. Thus, you can surely blame advancements in technology and wireless technology for loss of jobs. On top of that jobs which can now be done inside USA thus need more skills that we can ever imagine. So, it is not all Obama's fault to be fair.

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