Rathbun: No coin, more debt and lots of brinkmanshipWritten by Gary Rathbun | | GaryRathbun@PrivateWealthConsultants.com
In a few weeks we will be neck deep in the latest manufactured drama over increasing the national debt. As I write this I’m convinced that the different actors are rehearsing their roles and running their lines for the upcoming show.
After sending up the trial balloon of minting a trillion dollar coin to give the Federal Reserve in exchange for covering the debt, and getting a slew of negative feedback, the U.S. Treasury has temporarily given up on the idea. So, without the platinum coin solution, what are we going to do and what is going to happen to our economy?
Bottom line is that Congress is going to extend the debt ceiling and spending will continue to increase at an alarming rate. Nothing the Republicans in Congress have shown us would indicate otherwise. House Speaker John Boehner is saying that there will be no increase in the debt limit without equal spending cuts but I have heard this song too many times to believe it. It simply won’t happen. Sure, they may pretend that they are cutting something but like I’ve said in the past, their definition of a cut is simply a decrease in the increase, which they will reinstate later.
What the difference between a default and a technical default is, I am not sure. I am sure that the market will not like the playacting and certainly the dollar will have some negative days. Because we know that this is going to happen, it will create opportunities in the foreign exchange market and in the stock market.
White House Press Secretary Jay Carney came out and said “there are only two options to deal with the debt limit: Congress can pay its bills or they can fail to act and put the nation into default.”
Sounds like a balanced approach to me. We all know that the nation will not “default” on its debt. Technical or otherwise.
Will the government shut down? Maybe. Not necessarily a bad thing if you ask me. (I know … nobody asked.) Interest will continue to be paid and essential services will still be in place but no matter who wins the political game in D.C., you and I will lose.
I don’t know what it will take for the people of this great country to stand up and boldly speak the truth. None of these elected officials have the best interest of the nation at heart. They want to hold onto their jobs so badly that they will do or say anything for the right headline that will keep them in office.
I have often said that we must return to the basic principles that made America great: individual rights, limited government and free markets. The human mind is the only true natural resource and the more government we have in our lives the less the mind is free to create and produce.
The only hope we have for the future is if entrepreneurs are allowed to create new products and procedures and keep the fruits of those efforts. Inevitably, bad things are going to happen in the world and wanting the government to assure us that it can prevent these events is not only futile but very damaging to ourselves and our future. The more government regulates to protect us, the more harm it actually does to us.
John Allison, in his new book “The Financial Crisis and the Free Market Cure,” illustrates that all of the financial crises that have taken place in the country are the direct result of government regulation. The more government interferes, the greater the unintended consequences.
2013 will be the year of unintended consequences. The arrogance coming out of Washington is beyond measure. The good news is that the more they try to control things, the easier it is to take advantage of the situation and make money. The individual will always be able to benefit from the stupidity of the collective. At this level, the scope of the unintended consequences is so large it will be hard to miss.
Gary L. Rathbun is the president and CEO of Private Wealth Consultants, LTD. He can be heard every day on 1370 WSPD at 4:06 p.m. on “After the Bell” on the Afternoon Drive, and every Tuesday, Wednesday and Thursday evening at 6 p.m. throughout Northern Ohio on “Eye on Your Money.” He can be reached at (419) 842-0334 or email him at firstname.lastname@example.org.