Tags: Schiff | bad | fiscal | cliff

Schiff, on the Cliff: 'What Is So Terrible about That?'

Monday, 12 Nov 2012 08:54 PM

By Dan Weil

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Many experts believe that plunging off the fiscal cliff into automatic spending cuts and tax increases slated to begin Jan. 1 will bring untold ruin to the economy and financial markets.

Peter Schiff, CEO of Euro Pacific Capital, disagrees.

“Stripped of its rhetorically charged language, the fiscal cliff is simply a legal trigger that will trim the deficit in 2013 by automatically implementing spending cuts and tax increases,” he writes on Business Insider.

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

“In other words, the government will spend less, and more of what it does spend will be paid for with taxes rather than debt. Isn't this exactly what both parties, and the public, more or less want?”

The fiscal cliff would produce spending reductions and tax hikes totaling $607 billion next year, cutting the budget deficit more than 50 percent from $1.1 trillion in fiscal 2012.

“What is so terrible about that?” Schiff asks rhetorically. “I would argue that there is a greater danger in avoiding the cliff than driving over it.”

George Goncalves, a fixed-income strategist at Nomura Securities, sees little good coming out of our encounter with the cliff.

“With the economy and markets hostage to politics and external factors for years now, hope of a better outcome has proven not to be a good strategy,” he says, according to Reuters. “We are deeply skeptical that the issues facing the nation will be resolved cleanly in the lame-duck session.”

Editor's Note: How You Lost $85,000 During the Last Decade. See the Numbers.

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