What is the Fiscal Cliff? What is the fiscal cliff?

The term fiscal cliff was first proposed by Ben Bernanke, chairman of the Federal Reserve of the United States, which means that by the end of 2012, the preferential tax cuts in the United States will expire, and Congress will also start the deficit reduction mechanism, which will cause a sharp contraction in fiscal spending, and the US fiscal deficit will plummet like a cliff in 2013, which is called a fiscal cliff.

There are four main types of fiscal policy related to the fiscal cliff: George W. Bush Jrbush) expired at the end of 2012, the 2% income tax reduction and unemployment compensation policy extension expired, the new health tax bill (DOC fix) expired, and the deficit reduction mechanism was put on the road.

If the U.S. fiscal deficit falls sharply, it will sharply reduce the employment and investment power of companies, personal consumption will also fall, and the burden of private taxes and health care will rise.

The fiscal cliff is seen by the market as the trigger for the next economic crisis after the European debt crisis. International Monetary Fund (IMF) Chair Christine Lagarde, Bernanke and US Treasury Secretary Timothy Geithner have all warned about this.

The fiscal cliff is chaired by the Federal Reserve"Bernanke"It is proposed that at the end of 2012, the expiration of the US tax cut policy and the activation of the congressional deficit reduction mechanism will cause a sudden contraction in fiscal spending, reduce the amount of employment and investment in enterprises, and increase the taxes to be paid by the people. At that time, there were four fiscal policies for the fiscal cliff master: 1

The tax cuts enacted during the Bush administration expired; 2.Expiration of the 2% payroll tax relief measure & expiration of the extension period of the unemployment compensation measure; 3.The New Medical Tax (DOC FIX) Act expires; 4.

Initiation of measures to automatically reduce fiscal expenditures (deficit reduction mechanism). Because of the impact of the above four fiscal policies, especially due to the activation of the automatic deficit reduction mechanism, the 2013 deficit chart will fall like a cliff, hence the name fiscal cliff.

Reference: Qifu Zao Late Arrival Webpage.

1. The fiscal cliff refers to the financial situation coming to an end.

2. The term "fiscal cliff" was first proposed by Federal Reserve Chairman Ben Bernanke at a congressional hearing on February 7, 2012, to describe that at the "time node" on January 1, 2013, the activation of the automatic deficit reduction mechanism will force the ** fiscal expenditure to be reduced suddenly, making the expenditure curve look like a cliff, so it is named "fiscal cliff".

3. On December 31, 2012, the Democratic and Republican parties reached a compromise bill to resolve the "fiscal cliff", which was voted on by the Senate and House of Representatives on January 1, 2013. The main contents include raising the personal income tax rate for wealthy families with an annual income of more than $450,000 in the United States starting in 2013, extending the unemployment benefits policy for one year in 2013, and delaying the implementation of the spending cut plan of about $110 billion** that will be launched in early 2013 for two months.

What is the U.S. Fiscal Cliff? A detailed description of the U.S. fiscal cliff. The fiscal cliff in the United States is not a problem, and if it is a false proposition, it will really surprise the market. The reason is simple, the psychology of market speculation is too much compared to risk assessment.

We know that the market is widely expecting a high probability event of the fiscal cliff, but no one can deny that it will not happen. It is no exaggeration to say that no authoritative assessment agency or financial bank can estimate the risks it brings to the world. At that time, the world financial trading market showed a trend for several consecutive days, and it could not be eased for several weeks and months.

This is not dangerous language, but is determined by the position of the United States as a political and economic hegemon in the world, with unimaginable risk implications. Therefore, from the perspective of the trading principles of international investment, the risk evaluation of any trading variety is the first, due to the huge amount of funds, all transactions cannot be completed in a short period of time, and when immeasurable risk events occur, the loss and damage caused by this risk can only be minimized. On the other hand, the speculative psychology of the market fully manifests the gambling trading behavior among large and small traders, who want to take advantage of this opportunity to take away the cake of the market because there are optimistic expectations.

There are two possible types of market trends. One is a wide range of vibrations, large **, its trading behavior can not withstand any wind and grass. The most typical example is the market movement in the United States before and after the elections in early November, which I clearly remember for gold and the dollar at the same time.

The other is the ** trend, the former is dominated by speculative factors, and the latter is dominated by risk avoidance. However, due to the disproportionate nature of speculation and risk, the market is the first to exit the outlook as it reaches the tipping point of the fiscal cliff. The risk is too great, and the final choice is to avoid the risky trading action, even if the probability of occurrence is low.

Between rationality and madness, I believe that international crocodiles will choose the former. Because this is a market investment, not a play!

Observing the development trend of various trading varieties in the past two days, everyone feels strange, the US dollar**, the euro**, oil**, **and** did not follow up, on the contrary, the US dollar**, my opinion is that the market is worried about the risk of the fiscal cliff, and actively avoiding the risk is a short-term behavior, not a long-term **. Conversely, why is the euro rising in price now? Among other factors, because he does not have a fiscal cliff problem, it is relatively safe for speculative trading in the market in the short term.

The European debt crisis has emerged, and the fiscal cliff is not known to have occurred. If the European debt crisis slowly cuts the flesh with a knife and suffers in pain, once the US fiscal cliff occurs, it instantly breaks its arms and legs, and dies unconsciously, now think about why the dollar is so large for no reason that it is not a disaster caused by the fiscal cliff? It is believed that once the US fiscal cliff problem is resolved, the phenomenon of the dollar and **simultaneously** is likely to reappear.

The so-called "fiscal cliff" is actually an increase in tax revenue and a sharp reduction in fiscal spending.

For example, our country will have a national debt balance management, in fact, every country is the same. At that time, for example, in the United States, fiscal expenditure far exceeded fiscal revenue, and it had to rely on deficits to issue bonds, but its debt scale was close to the upper limit, and it would exceed it if it borrowed again. This situation is called the fiscal cliff.

Many people mistakenly think that the fiscal cliff is a huge fiscal deficit, but this is not the case.

The fiscal cliff, generally referring to the U.S. fiscal cliff, refers to the end of fiscal spending. Because on January 1, 2013, a series of policies in the United States** will expire, including tax increases and sharp cuts in fiscal spending. When economists comment on the U.S. fiscal cliff, they generally include four things:

George W. Bush's tax cut plan is about to expire, the 2% personal income tax "holiday" is coming to an end, the extended time for unemployment benefits is coming to an end, and if Congress does not meet the "super committee's deficit reduction target, the United States will start an automatic deficit reduction mechanism in 2013 under the Budget Control Act — that is, cut defense and other security spending and other domestic programs for about a trillion dollars over a decade."

Fiscal spending is critical to U.S. economic growth, and the expiration of these policies amounts to tax increases and cuts. Contractionary fiscal policy, while helping the United States reduce its fiscal deficit, is likely to stifle the economic recovery.

In short, the fiscal cliff is a series of policies that have led to a significant reduction in US fiscal spending, and a hard deficit reduction will be detrimental to economic growth.

U.S. finances hang.

In fact, the Bai cliff is the result of the superposition of two types of domestic policies. The fiscal DAO cliff, the two policies of tax increase and spending reduction are superimposed, so that the ** fiscal situation is facing collapse, and the debt problem is closely linked to the US fiscal deficit.

The U.S. is facing a "fiscal cliff" where multiple fiscal challenges converge, and the two parties are engaged in intensive behind-the-scenes negotiations and back-to-head confrontation over the issue. Bush Jr.** The large-scale personal income tax and capital gains tax cuts of 2001 and 2003 will expire at the end of 2012. In exchange for negotiations with Republicans in 2011, the two percentage point payroll tax cuts pushed by the Democratic camp will expire at the end of the year.

In addition, according to the bipartisan agreement reached in the summer of 2011 on the debt ceiling, the automatic deficit reduction mechanism will be launched in 2013 if the "super committee" fails to come up with a coherent plan, and unless the two parties enter into a separate "gentleman's agreement", a total of trillions of dollars in federal spending will be cut over 10 years.

In addition, the U.S. federal ** public debt ceiling is a "chess piece" in the hands of the two major political parties that can constrain debt negotiations, and theoretically the scale of bond issuance by the U.S. Treasury cannot exceed the public debt ceiling. According to the bipartisan negotiations in 2011, the public debt ceiling was raised by about a trillion dollars to about a trillion dollars, which can support the federal ** operation until early next year.

The so-called "fiscal cliff" refers to the huge fiscal gap that may be caused by the expiration of the new spending plan and tax cuts in the United States by the end of this year and the beginning of next year. International Monetary Fund (IMF) Managing Director Christine Lagarde has said that the US "fiscal cliff" is the number one risk to global markets, and that the US fiscal deficit and debt as a percentage of GDP are actually worse than the eurozone.

This means that the United States is now seriously out of balance in fiscal revenue and expenditure, spending more and earning less, and it has also issued a lot of national bonds, and once the dollar system collapses, that is to say, the dollar continues to depreciate, then there will be a worldwide economic crisis, and the subprime mortgage crisis in the United States has already manifested.

For China, since the renminbi is not an international currency, no matter how much you print the renminbi, it will not interfere with the international exchange rate, and you can only follow the dollar. This is why China has been buying US Treasury bonds to support the dollar, otherwise it will affect exports!