How Porter Stansberry is preparing for the fiscal cliff
Wednesday, December 12, 2012
From The Gold Report:
With nary a glimmer of hope that economic sense will supplant political expedience, Stansberry & Associates Investment Research Founder Porter Stansberry expects rampant inflation to roar in once the cost of capital rises. How is he preparing himself? Stansberry tells The Gold Report he continues to buy and hold gold and also discusses how real estate can cushion against the fiscal cliff.
The Gold Report: Not a day goes by that we don't hear or read something about the fiscal cliff. To what extent are you worried about the fiscal cliff? Or do you foresee a resolution?
Porter Stansberry: You can be sure of a couple things from Washington. One is spending will not slow down. The increase to spending in 2013, 2014, 2015 will be the same kind of increases we have seen in previous years. We will continue to spend 24% of GDP at the federal level.
TGR: And what else can we be sure about?
PS: Some actions will be taken to increase the tax rates on some taxpayers, but they will produce no material change in revenue. The government will continue to take in far less than 20% of GDP in taxes, probably only 16% or 17% of GDP. Further, those changes also will narrow the tax base, which is to say that fewer people will be asked to pay more in taxes.
Those two things -- more spending and higher tax rates for some taxpayers -- will happen because they're the only politically expedient things that can happen. That's been driving politics and the budget since 30-40 years ago, and will continue to do so because voters demand more from the government and voters demand that they not pay. That will continue until the system completely collapses.
TGR: The fiscal cliff was set up a couple of years ago in theory to force Congress to do something. There's a lot of fear about it, but at what point will there be enough fear that voters say we can't proceed in this fashion anymore?
PS: People should fear not going over the cliff. If we go over the cliff...
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