| By Bill Bonner Friday, August 21, 2020 – Week 23 of the Quarantine SAN MARTIN, ARGENTINA – “You better come look at this,” said Elizabeth this morning. Out in the field, a cow was lying down, bloated. Its legs were sticking out, not folded under, as they normally are. We went out for a closer look, taking a kitchen knife with us (as instructed by our foreman), but hoping we wouldn’t have to use it. As we approached the cow, we saw its legs were rigid and its belly was very swollen. “Hinchada,” say the locals. But it was too late. We felt its neck. It was cold. Stiff. Its eyes rolled back, blank and motionless. “We lost another one,” we told the foreman when he got here. Not Normal So far, four of the cows we brought down from the ranch have died. Up at the ranch, they die of hunger. Here, they die from overeating. “He shouldn’t have died; it’s not normal,” the foreman assessed the situation gravely. “I’m going to get the vet to look at him. Find out what killed him. I don’t think it was the alfalfa. Not this time of year.” In the springtime, the alfalfa is rich and fulsome. Cows are not allowed in the fields. It is too strong for them. But in the winter (we’re in the Southern Hemisphere), the plants are dried out and, normally, pose little risk. To be safe, we drove the cows into their corrals for the night. We’ll see what happens next… | Recommended Link | | WARNING: Sell this popular stock immediately One of the most beloved stocks in America (which you might own right now) is on the verge of falling 75% this year. The man who predicted the 2020 crash and 2008 crash calls it "a massive trap for investors right now." For the first time ever, we're publicly revealing the stock ticker… And why this company could soon surprise 99% of Americans. | | | -- | Birdwatching Meanwhile… Little-noticed in the financial news was this report from RTTNews: U.S. Consumer Price Growth Exceeds Estimates In July Core consumer prices showed their biggest increase since January of 1991, partly reflecting another jump in prices for motor vehicle insurance, which skyrocketed by 9.3 percent in July after spiking by 5.1 percent in June. Prices for shelter, communication, used cars and trucks, and medical care also increased in July, while prices for recreation declined. The biggest price increase in 29 years might be newsworthy. Or it might not. A single swallow does not a summer make. Nor does a single month of exuberant price increases mean that consumer price inflation is on the wing. But today, we’re birdwatching. And the first fowl we look at is that strange bird, Trump’s former chief strategist, Steve Bannon. Mr. Bannon was headline news yesterday. The champion of the “little guy,” and mortal enemy of the evil Chinese, was arrested aboard a Chinese billionaire’s yacht. Naturally, the liberal media went wild… claiming that he had defrauded thousands of little guys in a GoFundMe scam. Contributors had sent money to build a wall between the U.S. and Mexico. Steve, it appears, thought he had better uses for the money. In that regard, he would surely be right. “The Wall” – along with the rest of Bannon’s jackass distractions – was always a goofy idea. For the last 10 years, more people have been leaving the U.S. to enter Mexico than the other way around. The FINAL Wave of 5G Millionaires Starts Any Day Now. Consequences And in Lionel Shriver’s novel, The Mandibles – which we reviewed a couple of years ago [Bonner-Denning Letter readers can read it here] – “The Wall” is eventually built… but it is put up by the Mexicans to keep out fleeing Americans. In the future, as imagined by Shriver, America is not just a failed state… but a miserable one, with out-of-control inflation, millions of desperately poor people, and a Lockdown/Lockup government determined to keep a lid on. Today, we look at why Mr. Shriver may be right. That is, we are looking at the consequences of the economic lockdown and the reckless money-printing that came after. The feds (including state-level functionaries) shut down the parts of society that produce wealth… (for no good reason; the wealth producers – typically aged 20-65 – are more likely to die from accidents than from COVID)… …and then, they blew up the money supply to try to offset the losses. We looked at one of the consequences yesterday – Apple rose to a $2 trillion market cap earlier this week. Another obvious consequence – gold is hitting record highs. Colleague Tom Dyson’s gold-trade portfolio, released just last May, has already returned 20%… with one of his picks up over 200%. [To sign up for Tom’s Portfolio, click here.] Huge Scam We’ve seen that a determined central bank – the Federal Reserve – really can boost stock prices. As prices rise, it appears to create “wealth.” No one objects. Instead, people think it is a sign of success. But it is a huge scam. The Fed is just doing what government always does – take money from one group and give it to another. In this case, the money goes mostly to the richest 10% of the country, and comes – eventually – from the public, when consumer prices rise. The Fed has been inflating asset prices for the last 30 years… becoming more and more reckless about it… and making rich people a lot richer than they ought to be. Were the Fed to stop supporting Wall Street with ultra-cheap credit, stocks and bonds would fall immediately. But driving up consumer prices is entirely different from goosing up asset prices. And what we haven’t seen – yet – is a sustained increase in consumer price inflation. And it has the opposite result. Higher stock prices make people feel rich. Higher consumer prices make them feel poor. Consumer price inflation usually results from fiscal stimulus – overspending and deficits by the government, supported by money-printing. Classic “helicopter money” giveaways – such as the $1,200 checks sent to Americans in April – put money in people’s pockets. But they don’t necessarily spend it. They could choose to save, rather than spend. And cheap imports can lower prices, even as the money supply increases. In effect, Americans can export their inflation to foreign countries. Overseas nations – Argentina is a good example – often have higher inflation than the U.S. They use the dollar as a backup, a more stable currency, further absorbing America’s excess money-printing. This Revolutionary Tech IS the #1 Investment of the Century. Two Ingredients There are two main ingredients in the consumer price inflation stew – the amount of money… and the rate (the velocity) at which it changes hands. In a recession, consumers earn less and spend less, lowering the velocity of money. The feds can add money at a furious pace… and prices can still go down. For a while. But the more “support” they provide, the more money the feds need to print to keep the jig going. Consumer spending, jobs, payrolls – all come to depend on it. | Recommended Link | | Tech scholar shares new tech stock pick He graduated from Purdue University's highly demanding Aeronautical and Astronautical Engineering program. He studied at Stanford, Yale, and MIT. Then spent two decades as an executive in Japan, working for microchip companies. Now he's found the next great tech investment – on the verge of a profit explosion. He will tell you the name of the most important technology company in the world. And give you the ticker symbol. | | | -- | Impossible to Stop And then, just as it can be hard to get consumer price inflation rolling, once underway, it can be almost impossible to stop it. Curbing deficits will be impossible – the voters, the insiders, the cronies – everyone will be desperate for dollars. And even if you could stop the money-printing, it wouldn’t necessarily stop price increases. When people begin to lose faith in the dollar, the main source of inflation switches from the quantity of money to its velocity. That is, the trillions of dollars – which had been stored in banks, foreign accounts, mattresses, household savings – all come out into the open. People want to get rid of them as fast as possible. Prices – stocks, houses, tools, cars – all take off. Then, the end is in sight. The feds have lost control completely. The disaster runs its familiar course… And America begins to look a bit more like the catastrophe Steve Bannon helped create… and Lionel Shriver described… Weimar without the cabarets. A banana republic without the bananas. A sh*thole without the sh… Well, never mind. Regards, Bill
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MAILBAG Harsh words for Bill on his COVID-19 response… . I do not enjoy your diatribes from the valley. And don’t give me this malarkey about being made to stay in place. You could afford a private helicopter and jet any day you wish to leave. As far as medical pronouncements go, you are as ill-informed and brain dead as the idiot who calls himself POTUS. If you were to keep up on your reading, a new study out of Germany shows that 80% of people who recovered from COVID-19 are left with significant heart problems. And I suspect that the full extent of organ damage (even to those who had the good fortune to be asymptomatic) will not be known for a few years. These people will turn out to be health compromised and left with a shortened life span. So why not fess up that, while you may be a great financial advisor, your expertise stops right there? Why not come home to Baltimore and live amongst the many challenges a COVID-19 environment has to offer instead of hibernating in a hidden valley in South America? – Herbert R. Meanwhile, other dear readers don’t see eye-to-eye... You, as usual, have an interesting take on current events. But you did not mention several that are, in my honest opinion, key issues on the COVID situation. You may wish to broaden your position paper to address: 1) The mainstream news reports COVID deaths are now the third leading cause of death in the U.S. That seems like a big number and maybe something we should address? 2) The same sources report over 900 healthcare professionals have died in the U.S. This includes, of course, many folks younger than 65 – maybe 90%?? It would seem to be in the interest of everyone to avoid killing off the very folks who provide us with health services of any and every sort. We as a society have invested considerable sums in educating and preparing these folks. Why simply bury our investment? 3) The anti-maskers… I truly can see no reason not to wear a mask when you are in close proximity to others who may (or may not) be carriers. If people are really contagious before they display symptoms, this would seem to be a very reasonable way to limit spreading the virus. 4) The idea of “flattening the curve” is basically to limit the number of folks at any one time flooding the hospital system. If hospitals are full of COVID patients, what happens when someone else has a heart attack, auto crash, or other emergency? They have nowhere to go. 5) Why on Earth would we attempt to disrupt the World Health Organization in the midst of a worldwide pandemic? This is all hands on deck. Can’t we hold off on the blame, threats, and insults until later? This is not an apolitical issue… – William M. This is, precisely, what needs to be said and then done. Most Americans would agree with this method of dealing with the virus! I’m over 80. I would have no problem self-quarantining myself. However, even at 83, I have no limiting medical factors inhibiting my immune system, so I would probably just be as careful as possible and continue to enjoy what time I have left! – Marybeth H. You project an interesting approach to living. I agree with much of what you write; however, you really avoided mentioning that the younger people might continue with their lifestyles to fulfill some basic needs, then return to families who are in their senior years and very susceptible to contracting the virus. As a senior, I am happy to always wear a mask when with others, especially for grocery shopping. I am a Canadian and, quite frankly, couldn’t believe the comments that were recorded from some of the U.S. citizens. “I have my rights... I refuse to be imprisoned in my own home... This whole pandemic scare is such a farce…” (just to mention a few). I personally am quite content to wear a mask if it will protect others around me and help lower the numbers that have to be looked after in hospitals by the frontline workers. And, of course, your president has not done much to promote that and set an example about lowering the curve. I live in a city of 110,000 people. That number – plus those living in our surrounding district – probably adds up to 150,000 people. Most of our citizens have taken all the precautions outlined – and for that reason – only 99 people have had the virus and just two deaths have been reported. Why this low number? Because we took the recommendations seriously. We were not too proud to wear a mask when around others. We kept our distance. The benefits have certainly provided us with a much safer environment and are allowing us to return to our churches, schools, and jobs. – Jacob B. Another dear reader offers clarification on the “theft” Bill has discussed this week... I think the point you haven’t quite fully explained (at least this week), for some apparently confused readers, is the full nature of the fakeness of money or the nature of the theft you’ve called out. In the case of government spending, the direct theft is from future generations in the form of increased future taxes. Indirectly, it’s the effects in bond markets of either selling epic amounts of government debt (which, theoretically, ultimately increases interest rates) and/or central banks monetizing that debt with fake/funny money. Too much funny money produces the capital markets effects you describe from time to time. First boom (good for some), then bust (bad for all). Or, it has effects in the relative value of currencies. Or both. In all cases, it wrecks the markets’ price discovery function. Nobody really knows what anything is worth because no one can identify the exact effect of the funny money. These aren’t easy things to convey or understand. Especially when emotion and herd movement are thrown into the mix. A person can think a long time and still not understand what’s really happening. – Garry G. Is pride keeping Americans from wearing masks? Is identifying the effects of funny money crucial to understanding real prices, like Gary says? Write us at feedback@rogueeconomics.com. IN CASE YOU MISSED IT… A new type of Civil War is erupting in America It's not between the political parties. And it's not between the states and Federal government. But this battle will DEFINITELY affect you and your money over the next few years. You have to choose which side you'll be on – and you have to decide now. Porter Stansberry explains here… 
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