What is the Fiscal Cliff?

10/29/2012 08:25:00 PM
The Fiscal Cliff everyone is worried about is a massive decrease in the federal deficit beginning on January 1st. Everyone trying to "avoid" the fiscal cliff is pushing to increase the deficit relative to current law.

That's why I'm so shocked to see that a group of CEO's claiming that the main risk from decreasing the deficit is...spiking interest rates?!

As Krugman says, the risk from the fiscal cliff is all 100% Keynesian demand side stuff. If you don't think the government should be increasing deficits right now, or if you think that Keynesian theory is all wrong, then you should be applauding the fiscal cliff.