| By Bill Bonner Week 7 of the Quarantine SAN MARTIN, ARGENTINA – This morning. The New York Times: U.S. gross domestic product, the broadest measure of goods and services produced in the economy, fell at a 4.8 percent annual rate in the first quarter of the year, the Commerce Department said Wednesday. That is the first decline since 2014, and the worst quarterly contraction since 2008, when the country was in a deep recession. There is much worse to come. Widespread layoffs and business closings didn’t hit until late March in most of the country. Economists expect figures from the current quarter, which will capture the shutdown’s impact more fully, to show that G.D.P. contracted at an annual rate of 30 percent or more, a scale not seen since the Great Depression. “They’re going to be the worst in our lifetime,” Dan North, chief economist for the credit insurance company Euler Hermes North America, said of the second-quarter figures. “They’re going to be the worst in the post-World War II era.” CNN yesterday: Kevin Hassett, a senior economic adviser to President Donald Trump, warned Tuesday that the jobless rate in the United States could spike to between 16% and 20% by June. That would be a startling spike from current levels of 4.4% and would mark the highest unemployment since the 1930s. (Unemployment spiked at 25% in 1933, according to estimates from the US Bureau of Labor Statistics.) But don’t worry. Hassett also says the feds are working on big, new programs that will put everything right. This is one thing both left and right can agree on: spending more money. Joe Biden says he would spend a “hell of a lot more.” And Donald Trump is pitching more spending for crony industries – oil, airlines… and even another $2 trillion on infrastructure. How will these big, new programs be funded? Tax revenues are collapsing. Deficits are exploding. There’s only one funder-of-first-and-last-resort: the Federal Reserve. | Recommended Link | | World's Richest Man Made 6,206% on WHAT?? There is a secret class of tech stocks that go public almost every week… They are TINY. And the media all but IGNORES them. But Jeff Bezos knows their secret. In fact, he made 6,206% on one of this tiny tech IPO stocks. Today, America's top angel investor reveals his No. 1 small-tech IPO stock. | | | -- | Voodoo Money Magic It’s a pity. But the Fed can’t print jobs. Or cars. Or houses. Or carrots. Or the “purple drink” so beloved in Baltimore’s poor neighbors. It can’t print chocolate cake, frappuccinos, sparkling water, love affairs, marriages, children… …it can’t print careers… or piano lessons… or summer vacations… or trips to the mall. All it can print is what it calls “money.” Stunning Fact About the Top 2 Stocks During COVID-19 Crisis… On Monday, for example, it set a new record. It “printed” (it’s all electronic now) $190 billion. Just like that. A few taps on the keyboard… and poof!… suddenly appeared an amount equal (roughly) to the entire annual GDP of New Zealand or Peru. This is the voodoo magic that the feds are pretending will “stimulate” the economy and replace the losses from their lockdown approach to the C-virus. | Recommended Link | The War Against Capitalism Why are Treasury bonds suddenly going down… when they should be going up? Why is cash suddenly becoming so scarce... when the Fed is supplying hundreds of billions of dollars every week? Stocks are down 30%. Is it the bottom… or is there more damage to come? Our team of experts has been ready for this downturn for decades, and Bill Bonner is answering these questions in his urgent briefing that you can read right here. There may even be a potential to profit, if you're prepared… Don't wait, as this story is unfolding right before our eyes. | | | - | In the last six weeks, the Fed has added $2.26 trillion. That’s the same as Britain’s GDP. And Goldman Sachs says the U.S. is on track to run deficits of $6 trillion over the next two years. That’s more than the GDPs of Germany or Japan. Nowhere in the world is there $6 trillion… or even $1 trillion… waiting to fund the government’s big-spending whirligig. A Sneak Peek Inside Apple's 5G iPhone? All of it will have to be financed by the Fed… which will mean money-printing on such a scale that it will blow the doors off the entire world economy. Desperate for Dollars What happens when you print that kind of money? Independent presidential candidate Emanuel Pastreich: All the money they are creating through magic has opened the door to hyperinflation. When hyperinflation comes, the cost of a loaf of bread could go from $3 to $10 to $100, or even to $1000 in a short period of time. It has happened before under similar circumstances. The lying media will not tell you anything, but the writing is on the wall. The truth is that inflation for food and for services is already far, far higher than what has been reported for the last decade. You know this from your own experience. You do not need a Harvard professor to tell you. Here in Argentina, we see how it works. Just a week ago, you could go onto the square in Salta and trade $1 for 90 pesos. This week, you can get 110 pesos. The inflation rate was already at 50% per year in 2019. Now, the lockdown is reducing wages, sales profits… and the government’s tax receipts. Last year, the government’s deficit was about the same as the U.S. – at about 4% of GDP. But now, it’s exploding to 8% of GDP… and beyond. (In the U.S., the deficit is running at 20% of GDP.) Every gaucho, tango instructor, and polo player knows what’s coming next: higher prices. People with pesos are desperate to get ahold of dollars to protect themselves. Alas, in their eagerness to flee their sinking boat, they have climbed on board the Titanic. Stay tuned. Regards, Bill Like what you’re reading? Send your thoughts to feedback@rogueeconomics.com. FEATURED READS A Look at the World’s Billionaires
Forbes dives into the wealth of this year’s billionaires… and shows us how the coronavirus pandemic has impacted their net worth… Why Google Wants Your Health Records
Google is creating a cloud-based records system in which healthcare providers can access and store patient information. Bill’s tech expert Jeff Brown has the scoop. Just click on the link and scroll down to find out more… MAILBAG In today’s mailbag, one Dear Reader calls Bill a narcissist… Gosh, and people say President Trump is a narcissist. I am surprised that Mr. Bonner has not been made supreme leader of the earth since he seems to have all the answers to everything, regardless of what it may be. I’m just curious… has Mr. Bonner shared the depth of his wisdom with the leadership in Argentina? I am sure they would be happy to hear that closing the borders and enforcing stay-at-home orders is sheer stupidity. The easiest job in the world is to second-guess others without ever being responsible for making hard choices. – Thomas S. While other Dear Readers challenge stay-at-home orders… suggest Bill continue his Armageddon prediction… and echo Bill’s American Experiment theory… Bill, so glad you Elizabeth have an almost perfect bolthole. And thanks for the spirited discussions you elicit from your readers. Paraphrasing an old meme: If no one is happy with the result, then it’s a good deal. Pro-COVID-19 vs. Pro-Economy. It would probably be useful to know if any of the “stay-at-home” proponents actually have jobs that, when not working, means they go hungry. Easy for all the “journalists” on TV to say who should stay in – they still get a paycheck. Government employees still get their paycheck. As a prior military officer, I knew every time we launched a plane into a “combat zone” that some may not come back. That’s a risk we were (and are today) willing to take. If we were to send EVERYONE into isolation – how long do your food stores last? Who protects you when the gangs knock down your door to take your foodstuffs? Or worse? So if we can go to the grocery, Lowes/Home Depot, gas stations, drive throughs, etc., why not a clothing store, restaurant, Burger King, or Cracker Barrel? – Myles R. When it comes to your thinking about where the USA is headed financially, I believe you’re right on track. I don’t believe you have gone far enough with the final outcome of this pending financial debacle. With the USA holding the prestigious position of reserve currency of the world, I believe we are on the precipice of a worldwide depression. I do not see how the population of the USA, let alone the world governments, can maintain faith in the severely diluted dollar. As the dollar crashes, the infinite wisdom of politicians will bring the world to another unwanted war in hopes of stabilizing the world economy. I am sure that my little scenario has obvious holes in it but it is exactly what my amateur opinion tells me. Keep up the good work. – Thomas C. You are my favorite read! You are one of the few who seem to understand how the American Experiment is falling apart. I like your analogy of a magnificent tree, now succumbing. Our magnificent tree is likely not salvageable; I’m guessing there is too much rot inside for pruning to do any good. Even though it looked fairly healthy last season, from a distance. It seems clear to me that the tree we call the American Experiment is endangered at best, perhaps terminal. We love your observations! We live vicariously through your adventures! – Steve H. Is Bill a narcissist, as Thomas S. suggests? Is the American Experiment unsalvageable, like Steve says? Write us at feedback@rogueeconomics.com. IN CASE YOU MISSED IT… EXCLUSIVE: U.S. Military Quietly Pours Millions Into Tiny Boston Biotech The U.S. military is not in the business of making bets on the stock market. But during his research trip to the Pentagon, one of America's top biotech investors stumbled across a shocking discovery… Away from the public eye, the military made a big bet on a tiny biotech firm. With a major announcement due in a few weeks, this tiny stock could spike 12x in just hours. What does the U.S. military know that you don't? Click here to find out. 
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