April 10, 2021
I’ve heard a lot of dumb economic ideas in my time… But they all pale to Treasury Secretary Janet Yellen’s latest call for a mandatory, minimum corporate global tax.
If this were to happen, rates here would go from 21% to 28%, in a not-so-sly bit of socialist reworking. The sheer ego to think the rest of the world would go along with this. Ireland’s at 13% right now. And you think China will go along with this? Please.
Look, we need a competitive marketplace – it bolsters the economy here and abroad. If you try to legislate out corporate competitiveness, you’re hindering capitalism (and promoting socialism).
And then there’s this unsustainably bullish market where the S&P’s trading at 30 times earnings, the Fed’s endless spending, our ever-growing $20-plus trillion in national debt… a rational investor looks at all this and wonders: Don’t we have to pay this all back at some point?
On the American Consequences podcast this week, I spoke with Neil Grossman, a former senior executive at the Central Bank of Norway, who notes the following: you can’t ignore the laws of physics, gravity, or economics – and America right now is spending itself into oblivion.
Drowning in Debt
There’s no core marketplace equilibrium or acknowledgment of economic risk in this country anymore – it seems there’s no accountability left in Washington, D.C. and no rationality remaining at the Fed.
Neil reminds us that from 2010 to 2019, cumulative GDP growth was roughly the same we’ve spent in the past year in COVID relief. And now our debt overshadows our GDP, with Neil projecting that it will hit $40 trillion by 2022.
Meaning in three years, we will have doubled the outstanding national debt.
But when it comes to Biden’s new $2 trillion “infrastructure plan,” Neil has a softer take than mine. He says if you take a step back, ignoring the $5.8 trillion already spent in COVID relief, the U.S. has underinvested in infrastructure for the past half-century. And some investments need to be made for quality-of-life upgrades and international competitiveness.
Twelve-term Congressman. Air Force surgeon. Presidential candidate. Ron Paul reveals the secret to “opt-out” of our bankrupt, increasingly socialist system right here.
But the problem is that this spending isn’t happening in a vacuum, with the inevitable fiscal consequences hanging over us like the sword of Damocles (made in China).
The trillions in spending right now and unfunded liabilities like Social Security may lead to hyperinflation, with our economic landscape resembling that of Germany in the 1920s. Meanwhile, the Fed is artificially holding interest rates down… As soon they move them up, every percentage increase will be a veritable death blow. If these rates moved to 3% to 5%, you’re talking a trillion over more per annum in debt-related costs.
The Fed is the enemy of reason.
From 1987’s Black Monday to the Tech Bubble of 2000 and 2008’s Great Recession, many of America’s historical financial crises link back to the Fed. What you have is a central bank that’s making money both cost- and risk-free – and with this excess equity, overleveraging becomes even more hazardous (think Archegos Capital). Click here to hear how Neil would fix the Fed.
We’re inarguably in an asset bubble now… What or who will pop it?
Neil believes that the current excess leverage curdling the American economy is poised to destabilize the market and take us crashing into a fiscal 9/11.
A Socialist Agenda
When it comes to Secretary Yellen’s latest proposed global corporate tax, Neil agrees that it smacks of socialist reengineering. Economic repercussions are secondary while reimplementing social policies is paramount… It’s ESG as the new bottom line.
The U.S government’s elected to serve the American people – not the globe at the expense of the American people.
While Neil thinks egregious tax haven loopholes warrant inspection, he says you need to create an environment where businesses thrive and companies can supply reasonable compensation and benefits for their employees.
America seems hell-bent on attacking our capitalist institutions. The margin disparity of 21% to 28% is potent enough to repel corporations and entrepreneurs out of the states (health tip: no one wants death by taxes).
Ford’s already looking to relocate to Mexico – Biden and his team have to know these measures will push American companies to set up shop elsewhere, right?
Neil says that D.C. wants to reallocate liability streams to the American taxpayer, whether it’s the situation on the border or international vaccine rollouts. He would like the American economy to serve as an engine to spur growth globally but doesn’t think the average American should be responsible for the tab.
The Dems think we’re rectifying a perceived unfair playing field economically. But is it the business of American businesses to subsidize the world?
America in Denial
How do we manage our way out of this mess, and how will history remember Biden?
He’s stumbling around like an FDR zombie, plunging us deeper into economic uncertainty and embedding us further into a globalist socialist agenda.
Neil says we’re practicing Ostrich Economics, burying our heads and waiting in denial – unable to deal with the reality and stressors of what we’ve created.
But when that reality comes, it’s going to be overwhelming.
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Publisher, American Consequences
With Editorial Staff
April 10, 2021