March 20, 2021
How will the passage of Biden’s sweeping COVID relief bill affect our futures and those of our children? What does $1.9 trillion mean for the national economy and your investments?
In a word, inflation.
And trust me, the government is just getting started.
The Fed is engaged in a dangerous bit of fiscal table-setting, creating an environment where asset prices will surge at a rate that’s inconsistent with our economy’s fundamentals.
Cue the bubble bursting… Ready yourself for the likes of the dot-com implosion or 2008’s financial crisis.
Plus, as many are getting vaccinated and heading back to work, this stimulus spending appears to be too much, too late — what sort of economic hangover should we expect in the coming year?
On the American Consequences podcast this week, I sat down with famed publisher Steve Forbes, chairman and editor-in-chief of Forbes Media, who thinks we’re poised for a real comeback in the American economy… if only the government would get out the way.
Washington In Its Own Way
Steve believes the American economy could right itself organically if given a chance. Even California’s looking like it could rebound, as the threat of a recall seems to have pushed Gavin Newson into action.
But Washington’s putting barriers in the way of our recovery… The government hasn’t even spent the money from the past two relief bills. And then another almost $2 trillion on top of that, along with chatter about trillions more in spending bills down the pike.
All of this spending will only dampen an economy trying to thrive. We have six million job openings, yet we’re giving people a reason not to work.
Steve says, “If the government took a six-month vacation, the economy would boom.”
And all of this is compounded with Biden’s new aggressive taxation. We’re talking hiked income and business taxes, a capital gains tax up to 44%, and even carbon taxes (thereby raising the cost of energy).
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From Steve: “Jerome Powell, head chair of the Fed, is Titanic’s captain right now — and we have an inflation iceberg straight ahead.”
The Fed thinks prosperity causes inflation… No, weak monetary policy as summoning trillions from the ether causes inflation. Click here to see how Steve Forbes would fix the Fed.
And it’s going to be a wave of destruction when the Fed suddenly raises interest rates. Remember, due to these low rates and high debt, a 1% increase in interest rates would cost the economy $280 billion annually, putting real pressure on government finances and businesses. And Steve has no confidence that the Fed will navigate this properly.
An Endangered Dollar
While central banks and the Fed flail around the marketplace and the U.S. dollar potentially flounders, other currency options will be even more appealing — from blockchain to Swiss francs.
Steve thinks bitcoin believers will wake up and realize how to leverage their cryptocurrency for daily transactions or long-term investments. Forbes finds the flaw of crypto in that it’s finite, as he suggests that suppressing supply isn’t the best use of a currency — it’s value stability.
And Steve lauds the Swiss franc as the best national currency for maintaining value for the past century. Then there’s that other 5,000-year-old store of value, gold. Cryptos could back themselves with either gold or the Swiss franc in a fiscal shotgun wedding of the analog and digital — folding in the former’s gravitas with the ease-of-use of the latter.
In terms of the inevitable digitization of money, the U.S. government has mismanaged paper currencies, and it’ll do the same with digital currencies — and China’s well more aware of this than the Fed.
A Plea for Economic Peace
Biden says we’re at war with COVID and that we need these trillions of dollars to combat the virus — but guess what?
The battle is nearly over, everyone… This is D-Day, and we’re storming the beaches of Normandy armed with pharmaceuticals. We have not one but three vaccines between Moderna, Pfizer, and Johnson & Johnson, and so far, more than 100 million Americans are vaccinated.
With spring and summer upon us, new life blooms, and fresh opportunities beckon. From Connecticut to even California (I know), the country and its businesses are reopening — even DisneyWorld is back in action. It’s time for something approaching hope, America.
But the Biden administration doesn’t want to hear it. They seem bent on convincing the American people that we’re far worse off than reality would suggest.
The Dems continue to leverage the pandemic for their political agenda, thereby deterring the economic freedom that’s intrinsic for Americans. We have to ensure prosperity for our children… And unfortunately, taxation, inflation, and regulation won’t get us there.
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Publisher, American Consequences
With Editorial Staff
March 20, 2021