Markets Paintly Picture of a Crisis Unseen

The federal government's financial situation has been a topic of discussion for years, with some warning of an impending debt crisis. However, the latest numbers suggest that investors are more concerned about something else: the tax burden on the wealthy.

The Unseen Crisis

Despite the $40 trillion national debt being one of the largest in history, 30-year Treasury yields remain similar to those in 2007. This indicates investor confidence, not fear of default. The true crisis lies not in the debt itself, but in its impact on innovation and growth.

Experts argue that government spending stifles innovation, as resources are diverted towards wars, make-work programs, and economic contraction. Instead of boosting growth, it suffocates it.

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The Market's Verdict

The market has already priced in the national debt, with yields on the 30-year Treasury remaining stable despite a sixfold increase since 2007. This suggests that investors expect the wealthy to be heavily taxed, ensuring future government revenues even with stable tax rates.

So, what's driving growth and innovation? The answer lies in the fact that the rich are overtaxed now, and will be massively overtaxed in the future. This means that tax rates may remain steady or decline, but government tax revenues will soar nonetheless.

The Human Cost

But what about the impact on the economy? The lack of growth and innovation is evident in the absence of remarkable health, transportation, technological, and living standard advances. It's a crisis that can't be seen, but it's having a profound effect on the country's future.