May 24, 2021

There is a confluence of potentially disastrous financial events ahead, and we seem to be barreling head-first into the storm without regard.

Let’s start with business taxes. U.S. Treasury Secretary Janet Yellen’s call for a minimum global corporate tax rate could be considered noble. But in practical terms, it’s almost laughable.

If enacted, American corporate tax rates would go from 21% to 28%. Would the rest of the world go along with a similar rate? Ireland is at 13% right now. And how likely is China to cooperate with such a plan? If anything, it will push firms to leave the U.S.

We need competition bolstering economies here and abroad. But coercing corporate competitiveness through legislation hinders free market capitalism.

Negatively compounding potentially higher taxes are unsustainably high price-to-earnings ratios (e.g., the S&P 500 is trading at 30 times earnings), the Federal Reserve’s endless spending, and of course, our ever-growing debt. A rational investor sees all this and scratches their head. After all, laws can’t be ignored, including those of physics, gravity, and economics.

Looking around, some things seem clear. First, America is spending itself into oblivion. There’s also hardly any accountability in politics. And then over at the Fed, rationality seems to have exited the building.

From 2010-19, cumulative gross domestic product (GDP) growth was roughly equivalent to last year’s pandemic relief spending. And now our debt overshadows GDP, with some projecting it will hit $40 trillion by 2022. So, in three years, we will have doubled the national debt.

This may be a slightly aggressive opinion, but there’s ample supporting evidence to suggest the president and other policymakers are fumbling us deeper into economic uncertainty in the name of globalism. Where will it leave us? My fear is America will subsidize other nations at the expense of itself.