Wednesday, January 19, 2011

Obama to Eliminate “Just Plain Dumb” Regulations, Default as a Viable Strategy for the US!

1/19/2011 Portland, Oregon – Pop in your mints…
We awake today and sense that something is about to change, and change for the better.  We can't quite put our finger on it.  It is just a feeling we get from time to time.  We had this same type of feeling in mid 2009 about 2010.  It was going to be bad.  Not catastrophic, not even funny, but just plain bad.  In some ways we were right.  While all appeared to be well in the financial world, at least if you only look at the government sponsored numbers, one got this sinking feeling that something was amiss. 
Perhaps this may be the best way to sum up 2010.  It was the year that the feeling that something was amiss hit main street.
Let's face it.  When the fruits of over 30 years of monetary madness became evident in 2007 and 2008, the average person did not necessarily know what was going on.  On TV, the politicians and news anchors spoke of things going wrong and what was being done by the government to fix it.  By 2009, it was apparent that no matter how much the politicians said that all was well, all was not well.  By 2010, the full weight of the economic catastrophe was beginning to be felt by the general public.
This year we begin with hope.  We have a feeling that 2011 will be better, maybe much better, for the average Joe.  We have nothing to base this on, only a feeling.  It may be that 2011 will be better only by way of comparison with 2010, but better it will be.
The tax compromise reached near the end of 2010 gave credence to this feeling.  The average person's tax burden was being eased.  Today, another pillar of hope comes out of Washington.  In an Op-Ed piece published in the Wall Street Journal, it appears that President Obama is seeing the light.  He appears prepared to further ease the burdens of the people, even if it means less business for the government.  From the President:
"…As the executive order I am signing makes clear, we are seeking more affordable, less intrusive means to achieve the same ends—giving careful consideration to benefits and costs.

…We're also getting rid of absurd and unnecessary paperwork requirements that waste time and money. We're looking at the system as a whole to make sure we avoid excessive, inconsistent and redundant regulation. And finally, today I am directing federal agencies to do more to account for—and reduce—the burdens regulations may place on small businesses. Small firms drive growth and create most new jobs in this country. We need to make sure nothing stands in their way."
Whether or not this will amount to less regulation in practice remains to be seen.  In a way, the President is asking many Federal Employees to explain why their jobs should not exist.  While this exercise will be healthy for America, it is akin to ordering a bakery to find ways to reduce people's bread consumption.  Regulations keep bureaucrats employed.  Asking those same bureaucrats to eliminate or streamline them may not be the most efficient way to get the job done.
In any event, we commend the President for this action and offer it as evidence of better things on the horizon.

"Hey Tim, How do you pronounce 'Force Majeure'"?
Besides easing regulations, a more radical way to ease the burdens of the people would be for the US Government to default on its obligations.  Sound Crazy?  We are not alone.  Over at the Daily Reckoning, Bill Bonner recently wrote a piece giving this advice to Financial Authorities:
"…got too much debt? Default quickly. Make it clean. Make it fast. Make it work."
For the US Government, the charade is up.  The party is over.  The days of its citizens getting something for nothing are quickly coming to a close.  Why don't the politicians just admit it, announce that they are defaulting and begin the work of rebuilding with a clean slate?  Individuals and Corporations do it, why not the government?  

Seriously, fellow taxpayer, we would like to hear one sound argument as to why the US Government, given its current income, expenses, and accumulated liabilities, would not be better off defaulting on its obligations.  Our email address is below.  We want to know, specifically, why the country would be better off pretending that its current "debt is money" currency regime still works for the average citizen?  The answer escapes us but we are sure it exists.

If you work directly or indirectly for the government or a bank don't bother chiming in.  It is obvious that the current system greatly favors these two sectors.
In the real world, day after day, the imbalances in the current system continue to grow.  At this point they are growing exponentially.  The US is long past the point of no return.  It is time to move on.  Does a US Government default sound far fetched?  Is it unthinkable?  If anything, the past few years should have taught us to expect the unexpected.  Besides, the US is currently defaulting by printing money.  This is the dishonest way of going about it and will have many negative consequences.  Defaulting the honest way, however, may even cause a series of fortuitous events that we cannot even imagine.  Why not give a little honesty a try?
The day Geithner and Obama announce that the inevitable "Force Majeure" has occurred, signaling that the US is defaulting on its debt, will be a Liberating day indeed for the American Public.  Would they have the foresight to do in on the 4th of July?
With fewer useless rules to enforce, the US may have downsized to a Government it can afford by then!
Stay Fresh!
P.S.  If you enjoy or at least tolerate The Mint please share us with your friends, family, and associates!
Key Indicators for Wednesday, January 19th, 2011

*See FED Perceived Economic Effect Rate Chart at bottom of blog.  This rate is the FED Target rate with a 39 month lag, representing the time it takes for the FED Target rate changes to affect the real economy.  This is a 39 months head start that the FED member banks have on the rest of us on using the new money that is created.