The bottom line of Paul Krugman’s piece  Class Wars of 2012 is:

So keep your eyes open as the fiscal game of chicken continues. It’s an uncomfortable but real truth that we are not all in this together; America’s top-down class warriors lost big in the election, but now they’re trying to use the pretense of concern about the deficit to snatch victory from the jaws of defeat. Let’s not let them pull it off.

This blog is trying to do its part to keep our eyes open.  I hope no one was naive enough to think that the recent election meant we had won and we could all ignore politics for the next few years.  In fact, with the election we just staved off disaster for another few weeks.  Now the same forces that some of us may have thought we defeated are back at it just as if nothing happened.

So now we wait for the answer to the question that President Obama refused to answer in the campaign.  What is going to be different now from what it was in the previous four years of his administration?

The Wall Street Cheat Sheet has the article Is Bernanke Right About the Fiscal Cliff?.

The article starts with a comment by Dallas Fed President Richard Fisher:

Fisher has requested more governmental action because there are limits to what monetary policy can accomplish, Reuters reported. “We at the central bank have been carrying the load and this is a very dangerous predicament,” Fisher said during a lecture in Frankfurt.

This is a point that I have been trying to get across to people ever since the economic downturn started.

The article ends with the comments by Fed Chairman Ben Bernanke:

As Bloomberg reported, the report also “bolster[ed] Fed Chairman Ben S. Bernanke’s view that an agreement on reducing long-term federal budget deficits without abrupt tax increases and spending cuts would remove a barrier to growth.”

I agree with the comment about the spending cuts not being abrupt. I do find it hard to believe that the barrier to growth doesn’t have something to do with doubts about future consumer spending. That might be a minor quibble as the reduction of future consumer spending would be as a result of abrupt spending cuts and abrupt increases to taxes on the consumer.

Somehow, I don’t believe that the consumer is making decisions based on the long term federal budget deficits. If people were really worried about impending inflation, they would be spending now rather than saving dollars that are going to become worthless.