Sequestration, Mayan Apocalypse, Fiscal Cliff, and other hysterics

The media manufactures hysteria.  Instead of about encouraging panic, how about proposing a solution or two? Photo: Associated Press

WASHINGTON, D.C., March 1, 2013 ― The Maya Apocalypse, the fiscal cliff, sequestration, even Y2K: What do these hysterical events have in common?

They were all manufactured by a few people, and hyped beyond any reality by the press.

If you’re reading this, it’s because the Maya Apocalypse failed to meet the hype. The Y2K and fiscal cliff hype didn’t match reality, either. This latest man-made disaster, sequestration, may even prove useful; it will stand as another example of why we don’t need all the government we have, and why we don’t want – and can’t even use – more.

It’s bad enough that the President stops work on aircraft carriers rather than canceling the 100-city campaign tour designed to shift blame from himself. It’s bad enough that he sets free thousands of illegal immigrant detainees (including some violent criminal suspects), instead of canceling lunches for diplomats at the UN, or instead of Michelle’s Academy Awards dress and military honor guard.

There is good that will come of this, assuming anyone notices. First, we’ll see how our politicians prefer to spend our money. When the President puts vacations, White House parties and his wife’s Oscar appearance above aircraft carrier maintenance, that tells us something. Of course these don’t cost the same – but one is important and the others … aren’t. When you’re saving up for something that’s important, you must forego the unimportant, or you’ll never get there. The President doesn’t want to get there. Or maybe he just doen’t think the USS Abraham Lincoln’s mission is as important as an Oscar-night appearance.

Additional eye-openers will appear when our over-staffed bureaucracies are forced to do with less – with fewer days of work from bureaucrats. When the (soon-to-be) part-time bureaucrats see how little they mean to their bosses and the public relative to other wasteful spending, they will have a new appreciation for their place in American life.

When Americans see how little difference these cuts make (even though the President is doing his best to make them as painful as possible), they may reconcile themselves to further cuts and even demand some new cuts, along with general de-bloating of federal employment rolls.

Tax increases cannot solve the problem. No matter how much tax is extracted from the productive people of America, Congress and the president find ways to spend more.

Griping without offering solutions is just griping. What might solve the problem?

We could shut down the IRS. Since the collection of more taxes won’t help, why not collect less? That would be a real stimulus to the economy and would rekindle incentive to work. It would save us the pay of those IRS trolls, and our tax accountants and lawyers could find productive work. People could keep what they earned. Government spending, unaffected by debt ceilings and deficits in any event, could simply carry on.

Another idea comes from the financial world: How about a 2:1 reverse “stock” split, where the “stock” is our money? With the stroke of a pen (and some help from the Fed), President Obama could declare that every one of your dollars is now worth two. Your money would be twice as valuable.

Preposterous? Perhaps, but why? Fiat money has no real value – it is backed by nothing more than the government’s promise to pay us with more fiat dollars. A “double-value deal” would make everyone who holds cash a lot better off, with no effort from the government at all, wouldn’t it?

If you think this idea won’t work, what makes you think our money system does? There is no difference in a 2:1 reverse split and a 1:10 inflation buildup, except in “who gets the money first.” In the 2:1 scenario, it’s savers and lenders; in the more-typical 1:10 case, the inflation aids those who spend what they don’t have.

Now a question: Why do we call our chronic deficit spending “borrowing?” Doesn’t “borrowing” imply an intent to repay, and a plan on how to do it? That’s not what our national “borrowing” is. It’s something else, entirely.

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Tim Kern

Tim Kern taught economics for fifteen years, and discovered that understanding life is easy; it’s recognizing reality that takes practice. He holds a music degree, and later earned an MBA in finance from Northwestern University. He has lived across the US, and now makes his home in Anderson, Indiana.

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