Are millionaires too lazy to write a check to Uncle Sam? Do they not have the desire and energy to set up charities to help a cause that matters to them in this economy? Do the affluent need to be forced to give money away? The answer to all three questions might be a resounding "yes."
"Tax Us, tax us, tax us.”
Once again, dozens of millionaires and billionaires are pleading with the government to "raise taxes on people like us. Immediately. Substantially. Permanently." Walt Disney heiress Abigail Disney, Ben & Jerry’s co-founder Jerry Greenfield, and filmmaker Richard Curtis are a part of "Millionaires for Humanity" and have signed a letter demanding to "Tax us. Tax us. Tax us."
The millionaires wrote:
"Unlike tens of millions of people around the world, we do not have to worry about losing our jobs, our homes, or our ability to support our families. We are not fighting on the frontlines of this emergency and we are much less likely to be its victims. But we do have money, lots of it. Money that is desperately needed now and will continue to be needed in the years ahead, as our world recovers from this crisis.”
Where is a $100 banknote to cry into when you need one?
The first thing, as many have pointed out already, these millionaires can send a check to the following:
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, D.C. 20220
Just be sure to write on the check: "Donation to the United States Treasury." With enough donations, politicians will pass legislation to use the money to fund some progressive cause du jour and make these affluent progressives feel better about themselves. Nobody wants to upset a wealthy leftist.
Perhaps they are too naive. Or maybe they have too much faith in government. But to suggest that giving the state more money could magically solve the world's problems is foolish. Without question, providing the Leviathan more of their capital would be wasteful. They would be better off donating to a non-profit organization or a private enterprise that can better tackle pressing issues of the day. Or even random people on the street. Why not pool their money together with other left-leaning millionaires and billionaires and combat poverty or health care?
In the end, it might be too cynical to maintain that these millionaires are only embarking upon this artificial crusade for more significant wealth confiscation to virtue signal and appear to be benevolent creatures. The next time they visit an opulent dinner party, they can be championed as heroes.
Are Subzero Interest Rates Coming?
U.S. financial markets might be bracing for subzero interest rates. The Federal Reserve has repeatedly channeled the spirit of The Mikado in reference to predictions that the central bank will institute negative rates. "Your notions, though many, are not worth a penny." But market opinion suggests otherwise.
Fed funds futures are giving us a glimpse into 2021. These are financial contracts that highlight market sentiment of where the benchmark overnight lending rate will be at the time of the contract's expiry date. They show that negative rates could be the norm beginning spring 2021 and last until June 2023.
Does the market know something the Fed does not? Or are investors hedging their bets?
A handful of central banks, including the European Central Bank (ECB) and the Bank of Japan (BoJ), have adopted subzero rates. But several Fed officials have dismissed the idea, arguing that it would not be a worthwhile directive for U.S. monetary policy. Of course, the U.S. is one rate cut away from making it happen. If the national economy does not recover as many would hope, then this could be one of the ultimate tools it utilizes to resuscitate America.
That said, traders pricing negative rates does send the message that the broader market anticipated a prolonged downturn, one that would be serious enough to force the Eccles Building to go NIRP or nothin'. The early data indicators highlight that the U.S. is on track for a V-shaped recovery. Still, if much of the country returns to a Coronavirus-induced lockdown, it might be a W-shaped recovery.
Foreigners Love American Stocks
Foreigners love U.S. stocks, but not U.S. debt, at least according to the latest Treasury report on international capital flows. What did they buy, and what did they ditch? Here is a summary of what occurred in May:
They bought $79.7 billion in equities.
Foreigners purchased $13.6 billion in corporate debt.
Outside investors acquired $2.4 billion in agency debt.
Foreign markets sold $27.7 billion in bonds, down from $176.5 billion in April.
The final point did not matter as much, however, since the central banks scooped up billions in Treasurys as part of the foreign exchange swap lines. Who were the countries to add to their U.S. debt holdings? The leaders:
Ireland: $23.2 billion
United Kingdom: $19.7 billion
India: $12.5 billion
Hong Kong: $11.4 billion
China: $10.9 billion (gasp!)
Surprisingly, it was Japan that reduced its holdings by nearly $6 billion. France also shed about $7 billion in May. Despite leftists claiming how the U.S. is a wasteland because of President Donald Trump, it seems like the rest of the world remains bullish on America, even in the pandemiconomy.
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Read more from Andrew Moran.
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