| By Bill Bonner, Chairman, Bonner & Partners Live simply, love generously, care deeply, speak kindly, leave the rest to God. – Ronald Reagan BALTIMORE, MARYLAND – Inflating isn’t always as easy as it looks. Sure, as former Federal Reserve chief Ben Bernanke pointed out, a determined government can always do it. But not necessarily when and how it wants. Even the best-planned robbery sometimes spins out of control. The victim fights back. The get-away car makes a wrong turn. The cops show up… | Recommended Link | | In 2008, Doug Casey Used Secret “Omega Shares” for the chance to Score extraordinary Personal Wins as high as 277%, 650%, 2,450%, and 5,509%… While the S&P Was Getting Cut in Half! Had you invested alongside Doug with $5,000 into each of those trades… you could have walked away with nearly $500,000 in the bank while most investors were being wiped clean. Maybe 1 in 10,000 Americans knows about these secret investments… But, on February 5th at 8 p.m. eastern, E.B. will show you how to access them yourself and he’ll give you an “Omega share” recommendation (with the potential for more than 500% gains) for FREE during the event. | | | -- | Lesser of Two Evils Rudolf von Havenstein had been president of the Prussian State Bank. Rigid as steel. Hard as rock. History hath no record of a public servant more strict with himself or the nation’s money. Yet, faced with the threat of the Bolshevik Revolution… and with no way to refinance Germany’s government debt… he made his choice. By 1923, Germany had marks up the wazoo. Every one of them bore his signature. Germany’s inflation rate in 1914 was under 2%. But, in the emergency of war, the government did what the U.S. did in 1971 – it cut the link between the mark and gold. By the time Hartley “Hot Lips” Edwards played taps, on November 11, 1919, marking the end of the war, there were four times as many paper marks in circulation. Prices had more than doubled. But there was no hint of the monetary disaster to come. The authorities had financed the war by printing money. Now, they figured they could print their way out of the post-war depression… | Recommended Link | | The Biggest Stock Market Story for 2020 For the last 13 months America has anticipated the arrival of a new piece of technology. If 5G is the future, then this technology is what will help make 5G a reality. And one tiny company – with 124 patents and 1/400th size of Verizon – owns this ground-breaking technology. Telecom giants from the U.S., to China, Japan, U.K., Japan, Brazil, Mexico, Russia, France, Africa, and Australia… They’re banging on this company’s door with millions in hand to pay for its technology. This company could be the next millionaire-maker. | | | -- | Crushing Weight of Debt The decision seemed like the right one at the time. It prevented an immediate crisis – with mass unemployment and political upheaval. Von Havenstein knew it would cause inflation, but he considered it the lesser of two evils. He also seemed to think that the inflation would be moderate… as it had been during the war… and that it would reduce the crushing weight of Germany’s war debt. One little step led to another. And five years later, when von Havenstein died, the central bank of Germany had printed some 500 quintillion marks. This hyperinflation of the money supply caused a hyper deflation in the value of the mark. One U.S. dollar was worth 4.2 trillion marks by December 1923. Yet for all the “money” held by Germans, they were destitute. The economy had caved in. Violent mobs were out in the streets. A decade later, the Nazis rose to power, the Reichstag burned, and 60 million died in WWII. But who could have seen that coming? And who could have foreseen what would happen in America after the U.S. took gold out of its money system in 1971? | Recommended Link | | “Red Alert” Issued by Little-known Financial Agency Most Americans have never heard of a small federal agency called the OFR. It was quietly created in the wake of the 2008 financial crisis as a sort of “early detection system” for financial disasters. Since then, it has mostly been ignored by the media and
politicians alike. But all that is about to change. Because this system just flashed a “red alert”… And one top-level analyst, with a history of exposing political and financial secrets… believes he knows the real reason why… | | | -- | 1971 Switcheroo Over the past few days, we’ve been exploring the 1970s. The switcheroo in 1971, from old money backed by gold to new money backed only by the promises and integrity of the Fed, was done to solve a problem. The feds had gotten themselves into a jam. They had spent too much money. Many of the dollars they spent showed up in Vietnamese banks, relics of the glory days of France’s Indochina colonial empire. From there, the greenbacks made their way to Paris, where they were traded for francs at the Bank of France. From the Bank of France, they had tickets to Washington, where they were destined for the “gold window” at the Treasury. For every 35 of them the French turned in, they would receive one ounce of gold. This was the way it always had been. It was the way that had worked well for 179 years. But it meant that a lot of U.S. gold would be surrendered to the French and other foreigners. Rather than allow that to happen, the Nixon administration, aided and abetted by Nobel Prize-winning economist Milton Friedman, closed the gold window. Henceforth, the French could go fish. All they could get from the Treasury was more pieces of paper, more dollars. So why bother? They would simply hold dollars as their reserve currency, making gold unnecessary. The effect of swapping out old dollars for new ones was felt fairly quickly. Consumer prices in America rose at a 5% rate at the beginning of the decade. By the end of it, prices had doubled and were still going up at a nearly 14% annual rate. Great American Misadventure That, of course, was just the beginning. America’s great misadventure with inflation didn’t get underway until 1971. Ten years later, most American businessmen, economists, and politicians favored a continuation of the inflation program. And it took a remarkably determined, strong-willed, and clear-headed Fed chief – another Prussian, Paul Adolph Volcker – to defy them. Had he not prevailed… or not had the backing of President Ronald Reagan… the experiment would probably be over by now. Inflation rates probably would have continued to rise. The economy probably would have continued to soften. Stagflation – with rising prices in a slumping economy – would have gotten worse. Most likely, the ongoing economic crisis would have set off a political crisis… and in the ensuing blowup, the paper dollar system would have been abandoned. But success often brings a greater punishment than failure. By 1923, Germany’s experiment with inflation was over, after only nine years. Thanks largely to Volcker’s success at saving the fake money system, ours continues. Only God foresees what calamities it will bring; but we will make some guesses. Stay tuned… Regards, Bill ECONOMIC INSIGHT: CRACKS ARE FORMING IN THE BOND MARKET By Houston Molnar, Analyst, Bonner & Partners Last year we saw twice as many bond downgrades to upgrades. 452 bonds were upgraded, while 937 were downgraded. That’s the story of today’s chart. It shows the bond upgrade-to-downgrade ratio going back to 2007… 
As you can see, 2019 was the worst year for the ratio since 2009 – during the global financial crisis. This is just another sign that the fundamentals are deteriorating… even as stock-market valuations reach new heights. – Houston Molnar Like what you’re reading? Send your thoughts to feedback@bonnerandpartners.com. FEATURED READS These American Businesses May Suffer Coronavirus Interruptions
For businesses with exposure to mainland China, interruptions in supply chains could slow down day-to-day manufacturing… possibly affecting your access to retail products such as Apple devices… How Partisan Politics Will Wreck the American Economy
The government’s inability to work cohesively on major challenges reduces output and affects an already weak infrastructure. We’re harming the economy in the long-term and can’t afford to keep up the “successful” mirage. Trump Wants Negative Interest Rates. Here’s What You Can Expect
The president is calling for negative interest rates, and the Federal Reserve is listening. (Bill wrote about this at length here and here.) Economists explain what will happen if interest rates fall below zero… MAILBAG Mixed opinions today after Monday’s Diary, “Biggest Money Heist in History”… If the U.S. needs more money, just print it! Deficit, who cares. Not our government. Believe me, at some point all of us will have to face the reality! – Richard B. All those Fed chairpeople (one was a woman) who are not Martin or Volker are merely recognizing the system for what it is and are making the “best” of it. Despite conservatives like Martin and Volker, the radical nature of the system will come out sooner or later. Let’s get it done and over with, which will lay the ground for totalitarian dictatorship, not just mild European socialism. The world won’t “end”, as you very recently admitted it won’t. It will just make an easy descent into universal dictatorship, slowly enough that the overwhelming majority of habitually unthinking people, with very short memories, will never notice nor care. They’ll be willing sheep for the slaughter. Given the length of their memories, it won’t have to be too slow. But then, there are the thinking people with long memories who will act differently, as such people did many centuries ago. Such people don’t have to wait centuries. The U.S. can recover and become greater than ever. – Mike K. You make a lot more sense, in the line of “common sense”, than most of the talking heads and financial pundits that keep annoying me. Finance used to be the measure of money and its travels around in circles, and its occasional collection points we colloquially refer to as banks. In the past few decades in particular, money and finance have been corrupted so much by politicians, bankers, hedge fund managers, and their CEO cohorts that the effect of human intervention has to be discussed whenever we discuss finance. And human intervention is simply another definition of politics. – Geoffrey O. Is the Fed making the “best” of the financial system, like Mike believes? Is human intervention another definition of politics, as Geoffrey says? Write us at feedback@bonnerandpartners.com. IN CASE YOU MISSED IT… Big T Wants To Know: “What Is YOUR Freedom Number?” How much money do you need to get the freedom you’ve always wanted? During his first live event of the new year, Teeka revealed the #1 wealth-building opportunity of 2020… an opportunity that could help you fund a retirement nest egg in a SINGLE day. And potentially secure TOTAL financial freedom in 12 months. Click here today before it’s too late. 
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