Gold News

More, Less, War, Money

Funny not ha-ha...
LIFE goes on. People collide. Genes...atoms...facts...and opinions too, writes Bill Bonner in his Diary of a Rogue Economist.
Republicans and Democrats. Bull markets, bear markets, booms and busts...Truth and lies. Trump and Romney.
Sometimes the collisions are fruitful. Sometimes, they are disappointing.
So, let's go to the news. A headline from Bloomberg tells us what we already knew. The Federal Reserve has run into the reality of an Inflate-or-Die world. There's no going back to "normalcy":
"Powell Sees Low Rates, Crisis-Era Tools as Facts of Life for Fed"
The Fed knows that the phony boom depends on more and more phony money. Take the money away and the whole thing implodes. Them's just the facts of life.
The funny money enters the financial system as debt. It is lent out...increasing the amount of "liquidity"...but also increasing the amount of debt. Here's Bloomberg again:
"Americans increased their borrowing for the 22nd straight quarter as more households took out loans to buy homes or refinance existing mortgages, according to a report released today from the Federal Reserve Bank of New York.
"Total US household debt rose by $601 billion in the fourth quarter from a year earlier, or 1.4%, surpassing $14 trillion for the first time, the New York Fed's quarterly household credit and debt report showed.
"That's $1.5 trillion above the previous peak in the third quarter of 2008. Overall household debt is now 26.8% above the second-quarter 2013 trough."
What a pity. The 21st century was meant to bring the US to a level of perfection never before achieved by humans. So far it has been a dud.
When the clock ticked over to 12:01 on January 1, 2000 the world did not end. The dreaded Y2K bug turned out to be harmless. No computer failed. No vital service was suspended. The banks, the gas stations, the TV – everything still worked!
This was a favorable omen. Like a red sky at signaled a delightful century ahead. And why shouldn't it be? The US was now master of the entire earth – and much of space, too.
Its warships could blast any sub, destroyer, or supertanker out of the water. Its corporations could beat out all competitors...or so it was thought. Its government...its markets...Hollywood and Burger King – everything about it was widely admired and emulated.
All of this triumphal news was vouchsafed by the stock market, where the leading companies – the 30 Dow stocks – were worth more than any time in history. In nominal Dollars, the Dow sat at 11,497 on January 1, 2000. In gold, it took 44 ounces to buy the Dow...more than 20 times more than it did 20 years ago.
Life was good. But Americans expected technology to make it even gooder. Electronic communications, computers, and all the razzmatazz of the internet era were supposed to improve almost everything.
Then, on March 11, 2000, the dot-coms collapsed. And people began to ask questions. We have access to much more information and entertainment. But what difference does it make?
Getting older does not necessarily mean getting better. And every new technology is not necessarily an improvement. People got cable and Wi-Fi, along with electronic controls for their heat, air conditioning, and security.
But they spent hours trying to "program" their new gadgets...and many more hours checking their Facebook updates.
They switched from talking to each other to talking to Siri and Alexa. They stopped reading the newspaper and began to read the fake news online.
They drove electric cars. But what was new? Thomas Edison unveiled his electric automobile, with an alkaline battery, in 1889, 114 years before Tesla was founded.
And with their hand-held devices...laptops...and computer screens in front of them, they were overwhelmed by information...swamped by it; they were drowning in it.
Hundreds of emails...thousands of messages...quadrillions of pixels and bytes. They couldn't keep up with it. Investment writer James Davidson reports:
More information has been accumulated in the past couple of years than in the previous 5,000 years of human history. According to a report from IBM, 90% of the data in the world today has been created in the last two years at a rate of 2.51 quadrillion bytes of data a day.
More was not better.
The GDP numbers were disappointing. Federal deficits were disappointing. Savings, capital investment, innovation, productivity, start-up, and wage-growth numbers were all disappointing.
The Information Age was a disappointment. The War on Terror was a disappointment. Bush was disappointing. Obama was disappointing.
And now MAGA? Another big disappointment.

New York Times best-selling finance author Bill Bonner founded The Agora, a worldwide community for private researchers and publishers, in 1979. Financial analysts within the group exposed and predicted some of the world's biggest shifts since, starting with the fall of the Soviet Union back in the late 1980s, to the collapse of the Dot Com (2000) and then mortgage finance (2008) bubbles, and the election of President Trump (2016). Sharing his personal thoughts and opinions each day from 1999 in the globally successful Daily Reckoning and then his Diary of a Rogue Economist, Bonner now makes his views and ideas available alongside analysis from a small hand-picked team of specialists through Bonner Private Research.

See full archive of Bill Bonner articles

Please Note: All articles published here are to inform your thinking, not lead it. Only you can decide the best place for your money, and any decision you make will put your money at risk. Information or data included here may have already been overtaken by events – and must be verified elsewhere – should you choose to act on it. Please review our Terms & Conditions for accessing Gold News.

Follow Us

Facebook Youtube Twitter LinkedIn



Market Fundamentals