Our Simple Solution to Save America… by 4:00 P.M.

Andy Snyder|June 1, 2022

America is in an economic stranglehold.

We said it was coming. We showed you why it would happen. And now that it’s here… we figure it’s only right to offer the solution.

It’s a way out of this mess that ensures everybody wins.

With this solution, inflation slows. Investors are made whole again. And the economy pulls back from the brink of a nasty recession.

Even the Federal Reserve could save face.

The solution is simple…

Slash the tax bills of companies willing to buy back their own shares.

It’s an off-center idea that will beat inflation…without crashing the economy.

Enact it… and by the day’s closing bell, the economy would be zooming down the right path.

The Fear Trade

We’ve written about share buybacks many times. The idea behind them is simple. Companies with excess cash simply go into the free market and buy their own shares. The shares are permanently removed from the market, boosting the value of each remaining share.

Despite the fact that it has been the No. 1 driver of stock market wealth for the last decade, the idea is hated by many.

Companies should give that “extra” money to employees, they say. Spend the money on building the business, they plead.

But alas, in 2021, some $900 billion was spun through the market in the form of share buybacks.

If we were in charge… we’d incentivize companies to double that figure this year.

Here’s why…

Like we said, our economy is in a tight spot. In fact, the situation is quite dangerous.

On the one hand, inflation is raging at its fastest clip in 40 years. The price of living in America has never been higher.

On the other hand, the economy is shrinking. After two years of a stimulus-induced sugar high, consumers are cutting back. They’re too scared to spend.

Perhaps the biggest destroyer of wealth is the $7 trillion in market value that’s been wiped from the S&P 500 so far this year.

Few folks are eager to buy a new boat… build a new house… or pay a bit extra for a car… after having their 401(k)s sliced and diced.

That’s why we need even more share buybacks.

Best Use of Cash

Remember, companies can do just a few things with their cash. They can hand it to shareholders in the form of dividends (a good idea, but it’s highly tax-inefficient). They can spend it on new stuff for the business. They can boost employees’ pay (an incredibly inflationary idea). Or they can do what’s best… and buy back their own shares.

Share buybacks are one of the ultimate inflation fighters.

Instead of stirring up demand for building materials, microchips or labor (all key inflation drivers), buybacks simply put the money back into the stock market – where a free economy can allocate it fairly.

Instead of driving up land prices or pushing labor costs even higher, buybacks would keep economic growth sustained… while ensuring the stock market doesn’t fall so far that it puts us into a spiraling recession.

It’s an idea the Fed can only dream of.

Jay Powell has no way to pull money out of the economy without dramatically slowing it.

But buybacks get the job done. They entice firms to put their excess cash to use in the only way that keeps markets afloat and inflationary pressures to a minimum.

If we were in charge, we’d give tax breaks to any company that bought back its own shares.

Inflation would slow… and everyday Americans would no longer have to pay for the monetary mistakes of the shortsighted dopes in Washington.

Even without incentives, plenty of companies are going this route on their own.

Dow (DOW) is buying $3 billion of its own shares.

Norfolk Southern (NSC) is looking to grab $10 billion of its stock.

BP (BP) is buying $2.5 billion of its stock.

And Progressive (PGR) is grabbing 25 million of its shares.

All these companies are worth your attention. They know the best way to use their money right now is to ensure their share prices remain strong.

Won’t somebody please give that message to Congress?