Unweaving the Regulatory Noose

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This chart, from ZeroHedge, sums up some of the points I’ve been making recently:

 

 

Note that the “Reagan Dip” isn’t a reduction in the number of pages of regulation, it’s just a reduction in the rate of growth.  The summary of the economic growth of the Reagan era was that the federal government kept up its creation of money in the present through debt while cutting taxes and slowing the growth of regulation, thus allowing the debt-driven cash to flow into productive activity.

This collection of policies revved the economy, and what should have happened in the ’90s was a reduction of debt along with further reductions in taxes and real reductions in regulations.  The economy’s growth may have slowed, but the country would have been on a stronger footing, with new digital technologies having already begun to emerge.

Instead, regulations kicked back into high gear, and the Clinton Administration transferred the burden of creating fake money onto the stock market and housing debt.

Regulation helps lock wealth in where it exists, so it’s good for the powerful.  But when things begin to fall apart in earnest (as they probably will soon), turning the above chart into negative territory, by actually eliminating regulations, would provide a boost to the economy that would actually help the working and middle classes and shift resources more efficiently.



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