"Why do people think the Fiscal Cliff and Debt Ceiling will weaken the Dollar and push up precious metals? Its the exact opposite. The Fiscal Cliff is higher taxes, significant budget cuts (including Defense), and elimination of stimulus (unemployment back to 26 from 100 weeks, FICA back to 8% vs 6%). That means more money being taken out of the economy and less going in. And much less borrowing by the Treasury. This will decrease the budget deficit by $350 Billion in the first year and actually make the Dollar stronger (PMs weaker). This combination will take atleast 2.0% off GDP and push us into recession. Recession means lower annual Dollar turns and higher Dollar valuations. The best Congress can possibly do is cut that in half ... but is still makes for a significantly stronger Dollar."
Posted by Enor1960
Either way the government has built in obligations and, because they can, will continue printing money out of thin air to meet them. Especially with Obama as president. they will not cut the programs that get them reelected even when they don't deserve to be reelected. In fact in difficult times they will expand those programs rather than take the political hit. Obama left the Americans in Benghazi to die without adequate security forces and a not up to specs compound because Obama didn't want to backtrack on his statement that Al Qaeda is on the run. Obama is adverse to taking responsibility for any politically negative occurrence.Speed up the presses will be the rally cry from the White House.