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We Need a “Good Shutdown” to Fix Government

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Last week, President Donald Trump mentioned in a tweet that the “our country needs a good shutdown” to fix the “mess” in Washington. Urging Republicans to force a shutdown in September, Trump calls for changes in Senate rules so that funding for his key policies--including the Mexican border wall--can be approved.

Why is the political class so afraid of a shutdown?

For many Washington politicians, the mere thought of a government shutdown has evoked highly negative, albeit uncritical, responses. Apparently, it’s a terrifying prospect. And so many Americans on either side of the political spectrum support any quick fix that politicians come up with to avert the dreaded outcome, should a shutdown occur.

But can the short-term cure be the actual illness? President Trump thinks so.

Just look back at our recent history--the failed Obama years--and pay attention to what had actually happened. In December of 2014, the political class averted a government shutdown, passing a $1.1 trillion omnibus spending bill rife with special interest deals and other hidden spending increases. The bill was voted on before members could find the time to thoroughly read what was in it!

In other words, most House and Senate members preferred the consequences of blind government expansion over the risk of a one- or two-day shutdown!

But what if a shutdown hadn’t been averted? How bad would that have been?  If you go back to 2013, you’ll realize a shutdown closes no more than 20% of governmental operations. The US can survive with 20% less government. As a general principle, we can all use less government!

Fortunately for Americans, Trump demonstrates not only the clear vision but also the gumption to move past this irrational fear.

 A shutdown is not something to be feared. It’s one effective cure for the “mess” that government has become.

Just last week, a spending bill had been passed to which Trump expressed a degree of frustration. Trump’s border wall received no funding. His proposals for major cuts to the EPA and State Department were not included. However, he achieved a $21 billion increase in military spending; what he considers an “under the radar” victory for Republicans. Viewing the level of compromise, anyone could have read the agreement as a victory for Democrats. Nevertheless, it will keep the government running, up until at least this coming September.

Mick Mulvaney, the White House budget director, is right in saying that come September, a government shutdown would be justified to drive home the point that Washington needs a fix. We need that fix. And kudos to President Trump for courageously bringing to the fore a reality that American government has been too afraid to face.

Trump’s sudden firing of FBI chief James Comey is yet another step toward draining the swamp of corruption and incompetency that plagues our government. Fellow Americans will be prudent to note the impact of this firing on markets. US stocks and the dollar slipped on uncertainties that such an act would make it harder for Trump to advance his tax reforms. Spot gold rose 0.2% to $1,223.30 an ounce while US gold futures (June delivery) increased by $7.20 an ounce.

The market response to this single act indicates that there’s more market uncertainty to come as Trump moves forward with his plans to fix government. And as the Trump administration works to implement these much needed changes, it would be prudent for all Americans to protect their assets from market risk by increasing their holdings in gold, which happens to be one of the few sound assets that increase value during times of political and economic turmoil.

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All articles are provided as a third party analysis and do not necessarily reflect the explicit views of GSI Exchange and should not be construed as financial advice.

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