The Grizzly Bearish, No Bull Plan, for the Future of United States of America:

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The Federal Reserve’s current two-fold mandate to pursue low inflation and job creation is rescinded and replaced with the goal of providing a strong dollar as the primary basis of national financial security. A gold standard is totally unworkable in the modern world; a strong dollar standard only requires responsible, consistent monetary policy.

Our Federal government’s portion of national GDP will be reduced to 14 percent over a period of ten years. During that period the national defense portion will be reduced to 2 percent of GDP, through the dismantling of the military-industrial-Keynesian-complex. This will very likely produce another recession, but will reset a solid foundation, for future economic growth that looks optimistically forward.

The current progressive income tax will be replaced with a standard flat tax rate on individuals and corporations of 20 percent, with the only exception and exemption for the poorest Americans. This rate will continue until such time as the nation is again established on a sound financial debt-reduction basis. Then and only then can that rate be reduced.

Social Security and Medicare withholdings from individuals will be maintained at current levels, but the cap of total contributions on a yearly basis will be removed. In pursuit of a sound dollar financial monetary policy, those funds will go into a true lock box concept, with no ability of the legislative and executive branches to use those funds; except as truly marketable and repayable investment bond securities.

National catastrophic healthcare coverage will be instituted for all citizens and documented workers, being funded through a national sales tax on goods and services. This tax can be used for no other purposes. That rate will be determined by actuarial data. Within that program every individual will be responsible for the first $50,000 of the defined catastrophic illness or other healthcare event, except for what is currently defined as long-term care, where the maximum individual liability will be $100,000. Individuals will be able to buy insurance to cover those minimums through market-driven insurance options. Over time this national tax will be reduced as current Medicare and Medicaid are gradually phased out over a period of twenty-five years.

The original Grizzly USA post is now found in the Wonder Springs Chronicle Archives.

Tags: Grizzly USA, economics

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This is econ 101: when a family is richer, its older workers demand higher wages to stay in work and its younger workers demand higher wages to take a first job. The dynamic contracts available jobs unless offset by an equal or greater rise in productivity.
— Edmund Phelps, Financial Times 11 January 2012, 2006 Nobel Laureate in Economics

Late in last week’s article I used an archaic word, which at the time I had not noticed. But shortly thereafter, I wondered if any American still understood what I was writing about and even if they had an inkling of its meaning, if they could at all grasp the implications of what that word, if really put into practice, would actually do to the economic muddle we now find ourselves. Dear readers that word we don’t hear anywhere anymore is: decentralization.

In my lifetime the United States of America, has become really the federal government unitasker of the world and its current and potential prosperity. There was some talk within the early days of the Tea Party and the talking points of Republican candidates for the presidency, about states rights; and of course Ron Paul and his libertarian base speak of smaller government and in favor of individual rights, sometimes bordering on anarchy. The word decentralization however is to be found nowhere in anybody’s conservative lexicon.

As far as Barack Obama, the liberal-progressive-left and the Democrat Party, it seems that they think there is no problem that more government spending will not cure, particularly if it originates within the federal government unitasker, an then forces the un-sovereign states to fund what the federal government doesn’t have the political will or the constitutional power to implement.

Furthermore, like all elitists of their persuasion, they believe that new wealth can be created, as do most Republicans, through tax incentives to crony capitalists, which through mergers and acquisitions, will provide the economic basis for the continuing growth of government programs, including entitlement programs and wealth redistribution.

Late Sunday we posted a short video from CNBC last Friday with Edmund Phelps, whose quotation above, from a recent article in the Financial Times, begins our discussion this week. In that video he speaks of the role of particularly southern European governments who sponsored wealth creation for their citizens through entitlement programs, yet through unintended consequences are linked to both a decline in national productivity as well as a significant cause of the euro crisis.

Tags: economics, Edmund Phelps, productivity, wealth, efficiency, USA, liquidity, Business Ecology, Great Depression, Collectivist Elitists, Laissez Faire Scoundrels

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If you don’t fundamentally change structure and culture, you are doomed to repeat history.
— Diane Vaughn, Columbia University; Author: The Challenger Launch Decision

We begin this year and this week with a quotation from Diane Vaughn that we used in our introduction to our September 7, 2011 article on Climax Entrepreneurs & Entrepreneurial Pioneer Areas. Diane’s work was again brought to my attention by an article by Gillian Tett in the Financial Times that appeared late last year and widely reported in many sources about the potential for another Flash crash threatens to return with a vengeance. This refers to an episode that happened on May 6, 2010 when US equity markets froze because of unexpected high volumes.

In the flash crash article “Normalcy of Deviance” appears, referencing the Challenger spacecraft disaster and how NASA scientists and engineers truly believed that such an occurrence was impossible because they assumed they were essentially too good to allow the impossible to happen.

I spent some time looking for more information on the normalcy of deviance and found outside the Challenger incident and the flash crash reporting, “normalcy” and “deviance” were seldom if ever linked. I assume that means that “normal” is sort of by definition never “deviant.” Or perhaps more to the point, we just don’t have the guts to look for such a stupendous reality.

As we begin 2012, it occurs to me that our new normal is totally deviant from historical standards, at least for a half a century and perhaps a whole lot longer. For example never before in history, will the Mayan end of the world prophesy come into play at the winter solstice on December 21, 2012.

In that perspective, a potential equity flash crash is the least of our worries. Furthermore it doesn’t take long to come up with a whole list of potential economic catastrophes that could basically destroy the world we have all too long taken for granted. When you get right down to the basics, in the context of human history, for virtually all of our lifetimes, we have had it pretty squishy.

Tags: normalcy of deviance, economics, capitalism, Eurozone, USA, Entrepreneurial Pioneer Area, Grizzly USA

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She named the boy Ichabod, saying, “The Glory has departed from Israel”—because of the capture of the ark of God and the deaths of her father-in-law and her husband.
— 1 Samuel 4:21, Daughter-in-law of Eli, Israel’s High Priest

The glory has departed – the whole world.

“What’s up Doc?” said Bugs Bunny.

“Bugs, sad to say, things ain’t that peachy keen, all over the globe, it has simply become Ichabod’s world!” replied Elmer Fudd.

Sadly, we are forced to live in a real world; the cartoon financial fantasies of the twentieth century have forced us to look at the twenty-first. To take off the rose colored glasses and not only look at a real three dimensional world, but for the first time, in a very long time, to question some of the assumptions that have guided our make-believe world of that epoch.

I realize that this rather a stark way to look at the world and the nation, especially this week when the nation celebrates its Thanksgiving Holiday. But when you seriously look at what is happening Ichabod seems like a just description. This week besides tomorrows thanksgiving feast, we are marketed the hype that this will be “Turkey Day and Professional Football,” the nation’s pseudo religion. That followed by Black Friday when it has become the practice of feeding the god of consumer gluttony.

Lest we forget today was the day when the American Congress, Democrats and Republicans, were supposed to begin to act like adults and make a true token gesture in beginning to reign in some of the federal government’s excessive spending, in a somewhat controlled environment.

The $1.2 trillion in savings, however was really way less than a token, the real work would have been to make those savings on an annual basis. A real functioning republic would have seen it within reason, to make those cut to one percent of GDP, so that we could have seriously begun to restructure and rethink the role of government, so that it represented the vast majority of our people; not those just on the conservative and liberal extremes of their political parties.

Tags: Ichabod, Thanksgiving, economics, finance, compound interest, Laissez Faire Scoundrels, Collectivist Elitists, Babylon