The Fed - A Novel Idea

Jul. 17, 2017 9:09 AM ET4 Comments

6.42K Followers

One of the joys, of writing "Out of the Box," is that I get to hear back from people. Most of the comments are complimentary and, on occasion, one takes issue with my thoughts. Both are fine, as the center of my commentary, is to enliven your little gray cells.

It is the brain, the little gray cells on which one must rely. One must seek the truth within--not without.
- Hercule Poirot, Agatha Christie

Maybe you thought of it already but maybe not. Maybe you placed the right emphasis on an issue, but maybe not. I warn, you may have noticed, much more frequently than I offer an idea because staying out of trouble is often what separates the men from the boys or the women from the girls. I try, my very best, to protect your capital.

Stepping in a pothole, and wrenching your ankle, is not a fun experience.

Over the weekend, I got an email with something that is a particular rarity. This was an idea, from a reader, that was just exemplary. With his permission, I include, today, a comment from Larry Seligman, that was one of the best ideas that I have heard in some time. My congratulations to Mr. Seligman for his brilliant reasoning. Here is what he said:

Thanks for an excellent article.
Did any of the people you interviewed for your article consider having the Fed simply transfer the $4 trillion or so of assets to the Social Security or Medicare Trust Funds rather than unwinding its position?
The assets will mature slowly over the next 10+ years and would push out the critical dates for those trust funds depletion. We are 10 years past whatever risk was inherent in creating all that new money and now were concerned about the risks inherent in destroying it.

"Bravo, Bravo," I applaud the thinking. The money would not be gone, just housed in a different drawer. No need to unravel the Gordian Knot at all, just use it for different and, in fact, better purposes. No wind-down needed.

Inferior minds seek convoluted scenarios; it takes a brilliant one to achieve simplicity.
- The Wizard

I have suggested, and continue to suggest, another novel idea, for the American shale oil and natural gas industries. Tax the use of imported oil and natural gas and have no taxes for the use of American oil and natural gas. The taxes, initially, would be so large that they would go a long way to balancing the budget, if not reducing the deficit. Then, eventually, with the increase in American oil production and revenues and profits, the taxes would increase from the additional production. That problem would be solved.

Additionally, we would bankrupt many of the nations of OPEC, some of whom who are hostile to our country and Western civilization. We could adjust the taxes, if politically necessary, to the friendly and not friendly nations which would have the instant effect of encouraging them to be co-operative with our government. Remember, also, that the economic downturn for them would probably have a very positive impact on their use of capital for terrorist organizations. The American hammer would reverberate loudly.

The quicker that we increase our own shale oil and natural gas production, the better off we are, without question, in my opinion. I would also suggest providing tax credits to any company, in these industries, that increases production and to all kinds of research and development to achieve a lower cost basis for American oil and natural gas.

We win, in so many ways, with these ideas, that the government should step-in immediately and be part of this solution that also curtails, if not ends, many other problems. For more than fifty years we have been held hostage by OPEC and her cartel members and her hangers-on and we can now stop the madness.

Let's stop the madness!!!

It's better to face madness with a plan than to sit still and let it take you in pieces.
- Josh Malerman

If you think my proposition through, it also has additional benefits. Mr. Trump wants to grow the economy, which would provide additional taxes horizontally. This means more revenues and more profits from growth, which equates to more gross taxes from a larger tax base, while lowering the tax rates because of the additional revenues. Taxing imported oil and natural gas, while, at the same time, exporting American oil and natural gas, means that OPEC is going to, in effect, pay our American taxes as we receive the oil and natural gas revenues, and not them.

So good for us, and so bad for them.

Hallelujah!

This article was written by

Mark J. Grant

6.42K Followers

Mark J. Grant is the Chief Global Strategist at Colliers Securities, LLC. The highlights of a 48-year career in the financial services industry include positions as President of an investment bank, head of Capital Markets for four investment banks, and serving on the Board of Directors of four investment banks. He has been designated as a Bloomberg Prophet, one of only 15 globally. Mark is one of the longest serving guests on CNBC’s “Squawk Box”, is frequently interviewed on Fox Business and Bloomberg TV, and is regularly quoted in the Wall Street Journal, Barron’s, MarketWatch and other business publications. His commentary, “Out of the Box,” is subscribed to by over 5,000 money managers and financial institutions in more than 46 countries. He is also the author of a book titled “Out of the Box and onto Wall Street.” While Mark’s institutional clients include some of the largest money managers in the world, he also works with high-net worth individual investors. His unique investment strategy is especially useful for people who need yield and monthly cash flows. He employs carefully chosen closed-end funds and exchange traded funds and notes to produce monthly income for his clients, currently he is able to provide yields are 10%+, however current performance is no guarantee of future results. For additional information, email Mark at Markjgrant@Bloomberg.net.

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