Regulatory Monstrosity

~~ Lau Vegys, Doug Casey’s Crisis Investing

The federal government is out of control.

If you’ve been with us for a while, that’s not exactly news to you. But if you ever needed a visual to show someone who doesn’t get it, here’s one. Take a look at this week’s chart below—it shows the relentless growth of federal regulations over the past 70+ years.

This monstrosity has ballooned from under 10,000 pages in 1950 to a staggering 190,260 pages by 2023. That’s thousands upon thousands of pages of rules, dictates, and mandates, crafted by unelected bureaucrats, cramming their tentacles into every nook and cranny of American life and business.

And the costs are staggering. According to a report by the Competitive Enterprise Institute, federal regulations cost the U.S. economy $2.1 trillion per year. That’s an invisible tax of about $15,000 per household. And guess who shoulders this burden? That’s right—the American consumer, worker, and entrepreneur.

Now, if you remember, $2 trillion also happens to be the amount needed to balance the budget today—and it’s the same figure Musk himself claimed he could cut from federal spending through his DOGE initiative (the Department of Government Efficiency).

Of course, as I mentioned in a piece last month, DOGE isn’t an actual government department. It’s just a Federal Advisory Committee with no real power to act directly (except to provide recommendations and advice to the President and federal agencies).

So, as much as I’d love to see a smaller government, a reduced deficit, and a less expensive foreign policy (all desperately needed given the state of U.S. finances), I’m not holding my breath for DOGE to deliver these changes.

Still, whether it succeeds or not, the goal is undeniably noble.

Because this regulatory explosion you see above isn’t just about the economic toll. It’s about lost freedoms, crushed innovation, and the constant distortions it forces on the market. Every new page added to this monster is another blow to liberty, another barrier for hard-working Americans, and another chain on the invisible hand.

Have a great rest of the weekend!

Lau Vegys

~~ Lau Vegys, Doug Casey’s Crisis Investing

The federal government is out of control.

Still, whether it succeeds or not, the goal is undeniably noble.

Have a great rest of the weekend!

Lau Vegys

CNBC analysts are debating it.

Twitter threads are dissecting it.

Portfolio managers are losing sleep over it.

One question is dominating financial news right now:

“Are we in a bubble?”

We noticed yesterday, Michael Burry, of Big Short fame, just set up a Substack page to help understand the proper depreciation values of the “Nvidia Model.”

The simple fact is that longevity estimates determine the entire profit picture for Mag 7 companies, whose earnings have been beating expectations.

The current numbers don’t reflect reality. Model sizes grow faster than chip cycles. Performance requirements leapfrog hardware before the ink dries on the purchase orders. Depreciation schedules assume years of usefulness that, in practice, last months.

If that mismatch becomes undeniable, or even a popular meme, the bubble doesn’t burst spectacularly — it simply deflates through balance sheets. Slowly. Silently. Just enough to take the glow off the entire narrative.

When the Fed began hiking rates to combat inflation, bond holdings tanked. Banks have been sweating it out, anticipating a rate cut cycle.

If the Fed cuts rates in December — odds now 80% — bond prices will continue to rise. Banks will be in better shape as unrealized losses decline. Hopefully, before a crisis breaks out.

But banks are not out of the woods, yet. And increased competition from digital assets (Dollar 2.0) will further squeeze the traditional banking business model.

I’m happy to say I feel better about the second half of my life than the first. My advice: Don’t beat yourself up over past mistakes—learn at least a little from them and move on. It is never too late to improve. Get the right heroes and copy them.

Remember Alfred Nobel, later of Nobel Prize fame, who—reportedly—read his own obituary that was mistakenly printed when his brother died and a newspaper got mixed up. He was horrified at what he read and realized he should change his behavior.

Don’t count on a newsroom mix-up: Decide what you would like your obituary to say and live the life to deserve it.

Greatness does not come about through accumulating great amounts of money, great amounts of publicity, or great power in government. When you help someone in any one of thousands of ways, you help the world. Kindness is costless but also priceless. Whether you are religious or not, it’s hard to beat the Golden Rule as a guide to behavior.