When the Biden administration took power – with the admiration of their supporters — they brought with them an extensive list of goals that they hope to implement during their time in office. The Biden “to do” in question is long and covers everything from tuition costs and infrastructure to border security and pandemic relief. Yet, as much as the administration’s supporters may praise the current agenda at hand, everyone must keep in mind the difference between wanting to do something and actually getting it done.
You see, in order to grant Biden’s long wish list, officials must first come up with ways to pay for their ambitious ideas. Unfortunately, that’s where we come in…
So far, the Biden administration has come up with at least 2 ways to pay for their long list of hopes and demands… They are as follows:
- Raise taxes (surprise, surprise)
- Print more money
Yes, these are potential ways to help fund the administration’s ambitious agenda, but are they in fact the correct ways or will they simply lead to more problems down the road?
You may have read in one of our previously posted articles this author’s belief in the dangers of the government continuing to print money to fund their agendas. In short, the endless printing of money could (and eventually would) lead to a heavy devaluation of the U.S. dollar. If anyone is interested in seeing what life could be like in the U.S. with valueless currency, take a look at the many impoverished countries around the globe currently facing this very issue. For historical context, take a look at the German depression following World War I. German currency was so devalued following the war that the country sunk into a deep depression which, not only hurt the German economy and its citizens, but eventually led to the uprising of the Nazi party and the beginnings of World War II.
While, admittedly, this may be a bit of a melodramatic comparison and, obviously, this is a “worst case scenario” type of situation, officials should still take preemptive steps to make sure those concerns stay as far away from our reality as possible. History does have a way of repeating itself and, as far-fetched as the idea may seem today, when the valued becomes valueless and people start to get hungry, many will do whatever is necessary to dig themselves out of that hole.
As noted above, however, a more short-term concern would of course be the administration’s plans to raise taxes on American citizens.
It’s not only average citizens that are on the tax chopping block this time, though… as America’s 1% could soon find themselves under a much larger financial guillotine. And while most agree that all citizens, despite their social status, should pay their fair share of taxes, many Republicans continue to fight the hike of taxes on, not just the country’s elite, but any and all Americans.
This approach has been met with criticism from the Democratic party, however, as officials point the finger at the Republican party and accuse them of taking steps to protect the many conservative members of America’s 1%, despite the fact that many of America’s 1% elite that Democrats complain about are members of their own political party, including some of America’s wealthiest citizens such as: Bill Gates, Mark Zuckerberg, Warren Buffett, Jeff Bezos, Elon Musk, and so on.
What Does It All Mean?
So, if you made it this far, you’re probably wondering what this article has to do with the stock market… You see, it’s the potential decline of the U.S. dollar and the Democratic threat of higher taxes that have many Wall Street investors currently concerned as the Biden administration contemplates the above-mentioned tax hike to allow them to move forward with their ambitious agenda.
And as for businesses, Biden stated during his campaign that his goal was to raise the corporate tax rate from its current level of 21% to the higher rate of 28% during his time in office. Some believe this raise in tax rates could undermine the progress made during the reign of the Trump administration where we saw markets and earnings rise as businesses began to move back to the United States.
Not to mention that a hike in taxes would lower overall profits for companies just as they were starting to rebound from the hard economy of 2020.
As well intended as the Biden agenda may be, one can’t help but wonder if higher taxes would be successful in easing the burdens of the average American or simply add to them?
When it comes to market concerns, as you can plainly see, there’s no end to the list of possibilities. And needless to say, the above-mentioned uncertainties coming out of Washington certainly don’t make it any easier on today’s investors to tackle these markets alone. That’s why we’re inviting you to join DTI Founder and Head Trader Tom Busby now so he can help you prepare for the days ahead.
Join Tom below as he dives into his predictions going into the new trading week by sharing his upcoming pivot number, his 7 Sisters Update, as well as discussions into which stocks he’s looking at that could lead him – and you – to a potential payday!
P.S. – If you’re interested in discovering the true story of how an everyday farmer from East Tennessee created an incredible trading break through which allowed him to achieve some extraordinary results, CLICK HERE!