A Real Shut-Down
by Jim Davies, 2/22/2011
On March 4th, they tell us, it will "run out of money" so "the government will shut down." I wish.
What will really happen, as it did last time in 1995, is that some museums and parks will close along with a few departments like the passport office without which it's hard to get along, until the public cries out for the alleged squabblers to take more of its money and get back to normal. It's just a way to shake us down for some extra, while pretending to wish the opposite. This time, it's also a way for the old-line Republicans to marginalize the Tea Partygoers.
So this warning is just a charade, another government swindle. It made me wonder, though, what it would be like if it were real - if the FedGov truly shut down at midnight on March 4th. Notice: when it does finally close its doors because nobody will work for it any longer, that process will be relatively gradual; markets will see it coming for a few years, and prepare to perform those few of its functions that are actually useful, like mending highways and guiding aircraft; I've visualized that process in my Transition to Liberty. But if the closure is sudden, with a mere week's warning, there won't be time for that, so the disruption will be enormous. Here's some of what would happen.
"Shut down" means that the off-switch is flipped. After the clock strikes twelve, no Federal employee gets paid a wage. Therefore, on and after the morning of March 5th, none of them will show up for work.
So every IRS office in the country will stay closed; nobody will collect federal taxes or enforce the alleged tax laws. The US Treasury won't open, including the department that creates T-Bills for sale to lenders, such as the Fed with its printing presses poised. So will its other office down the corridor, where such bills are redeemed when mature. Word of that failure will flash to financial markets worldwide, the price of T-Bills will plunge to zero and nobody will ever buy another. At five minutes past nine o'clock, therefore, the US Government will have lost all three of its ways to obtain money: it won't be able to steal it, print it, or borrow it. The shut-down will become permanent.
As the world's reserve currency crashes, international trade will enter chaos, until the Renminbi or the Euro takes its place. All US aircraft will be grounded for want of a functioning FAA, so passengers will go nowhere even without TSA gropers to block their way. Federal prison wardens will open the doors when they leave, rather than commit mass murder by starvation, and some of those released will be actual criminals ready to cause havoc.
At the Empire's periphery no soldier will continue killing Uncle's enemies when Uncle fails to pay him, so more than a quarter million of them will head home. Some will make use of aircraft and Navy transport ships, others may hitch-hike, others may sell off equipment that nobody "owns" any longer so as to buy a ticket; but one way or another, the Empire will end; no longer will money flow to foreign governments, and no longer will the military camp on their front lawn to enforce its intended use. Sic transit gloria mundi. It's what "shut down" means.
Meanwhile, back at imperial headquarters, no regulator will be at work, so bankers and businessmen and broadcasters will figure out how to operate without benefit of government oversight. They'll learn fast to satisfy market demand, or go under - because the rules that preserved their cartel status will no longer be enforced; anyone wishing to run a bank, for example, will hang out his shingle. Some might even offer to store and transfer real money, for the first time in a century.
No border guards will impede the free flow of labor, whose price will therefore drop until equilibrium is reached. Physicians will prescribe whatever they think will help their patients, regardless of now-unenforcible FDA limits. State and local governments will survive, unfortunately, so even after the earthquake the result will hardly be a free society. But it will be a good start.