| By Bill Bonner Wednesday, September 23, 2020 – Week 28 of the Quarantine SAN MARTIN, ARGENTINA – A friend wrote to caution us. It is way too soon to write an obituary for the U.S. dollar, he said. He is right, of course. We are now headed into a period of depression, political and social instability, and claptrap financial policies on a scale never before attempted. The blowout inflation will come. But not right away. And in the short run, the dollar is likely to strengthen, not weaken. But while it is much too early to hang the black crepe, this is still a good time to visit nursing homes and perhaps pick out a burial plot. Decline and Fall No pure-paper money has ever lasted for an entire credit cycle. The dollar will not be the first to rest among the shades. In the meantime, we will watch its inevitable decline and fall – probably the biggest financial story of the next 10 years. Because down with the dollar comes the whole U.S. capital structure – stocks, bonds, debt, credit, pensions, insurance payouts, Social Security, Medicare, the empire… the whole shebang. But we are not at the end of this story. We are only at the beginning of the end. Between the coronavirus pandemic, the debt, the Federal Reserve’s falsification of interest rates, the fake dollar, and the giveaways, the U.S. economy may already be in a perpetual recession. And the feds are determined to fight it with printing-press money. A Revolutionary New Force Set to Create 818,236 New Millionaires Over the Next Three Years… Quack Medicine In the first 20 years of this century, total U.S. debt, public and private, rose from $30 trillion to $80 trillion, while GDP only doubled. During this same time, the Fed “stimulated” the economy by increasing its balance sheet from only $609 billion to $7 trillion. And it also reduced its key interest rate from over 6% down to zero, keeping it below the level of consumer price inflation for over half of the two-decade period. That should alert any sensible person: “Stimulus” theory is voodoo. You can drive up stock prices (making the rich richer) by giving Wall Street money. But you can’t make the real, Main Street economy work better by handing out money on street corners. No matter. The feds only have one quack medicine – printing-press money. And they’re going to stick with it, whether it works or not. | Recommended Link | | How Son of a Farmer Retired at 42 Son of a Kansas farmer turned millionaire reveals … The easy way to make an extra $1,400… $5,420… $7,470… in a matter of weeks – from the comfort of your own home. "I used this secret to quit my job and retire at age 42 – I never have to worry about money again." – Jeff Clark | | | -- | Hoarding Cash At first, the extra money has little effect. Fearful of layoffs and bankruptcies, people hoard cash. That is what is happening now. People are not spending their money, they’re hoarding it. The president told them they didn’t have to pay their rents. Restaurants, retail, and travel are unappealing. So they stay home. Savings rates quadrupled between January and April. CNBC elaborates: In fact, consumer credit tumbled at a post-World War II record 6.6% annual pace thanks in large part to a decline in credit card balances to $953.8 billion from $1.02 trillion. Student loan debt was little changed at $1.68 trillion, while auto loans edged higher to just shy of $1.2 trillion. That came as the federal government and businesses continued to ratchet up debt. In all, domestic nonfinancial debt totaled $59.3 trillion. More Medicine This is what happens in the first stage of the last stage. The velocity of money (the readiness of people to spend it quickly) goes down. Inflation rates may decline, not rise. In its second-quarter review, Hoisington Investment Management explains: Considering the depth of the decline in global GDP, the massive debt accumulation by all countries, the collapse in world trade and the synchronous nature of the contracting world economies the task of closing this output gap will be extremely difficult and time consuming. This situation could easily cause aggregate prices to fall, thus putting persistent downward pressure on inflation which will be reflected in declining long dated U.S. government bond yields. Meanwhile, Chicago Federal Reserve president and CEO Charles Evans says the economy is recovering nicely, but warned: Every week and every month that we go without renewing additional fiscal support that we saw strongly sent out in the spring and summer, we risk a longer period of slow growth if not outright recessionary dynamics. If it is recovering so nicely, why the need for more medicine? You’d think that the economy needed regular doses, or it would naturally fall back into recession. Looking for the next tech cash cow? This is it. Large Doses For the first 189 years of the Republic, the economy grew strongly, with not even a hint of the magic elixir (setting aside the War Between the States, when both sides did print money… and subsequently fell into recession). As recently as the late 20th century, growth remained healthy… with scarcely any money-printing. It wasn’t until 1999 – more than 200 years after the dollar was introduced – that the Fed began administering large doses of fake money. And then, it added $6.4 trillion to its balance sheet… as growth rates fell. | Recommended Link | | 900 Million 5G iPhones Need This Apple is expected to release its long-awaited 5G iPhone in a few weeks. But it’s not Apple’s stock I think will soar the highest. Instead, one company makes a tiny piece critical to 5G phones. And its shares could soar. This video gives you a sneak preview of this brand-new device. And why it could be the No. 1 tech stock of 2020. | | | -- | Slow Death Fake money is the poison that will eventually put the dollar in its grave. But there’s no need to panic. No need to call the undertaker. It will take years for the toxin to do its work. Just remember, you don’t want to be holding your wealth in dollars when the organ music starts and the smell of lilies fills the funeral parlor. Regards, Bill
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Bill’s colleague Tom Dyson says gold mining stocks would be a beneficial addition to a gold investor’s portfolio. And he says it’s the perfect time to jump in. Click here to learn why… MAILBAG Harsh words for Bill from one dear reader today… Dear Mr. Bonner, Your arguments are aimed at the easily rattled. The sanest people save cash faster than they spend it. Foolishness always annates and those who are least volatile do the best. You are not helping anyone by hyping skittishness. Wake up from your nonsense delirium. – John D. On Tuesday, dear reader Leslie M. argued that, based on history, Democrats have a better track record in fiscal responsibility: It seems odd that the only president since President Dwight Eisenhower who achieved a decrease in budget deficit was Bill Clinton ($63 billion surplus – 1% decrease). Today, two others counter her claim… Leslie M. conveniently ignores the historical fact that it was Republican Newt Gingerich’s “Contract with America” budget that lead to the budget surplus. Bill Clinton was merely the unwitting and powerless beneficiary of Newt and friends’ foresight. – Edward A. It was the GOP Congress under Newt Gingrich’s able leadership that put the brakes on the Democrats’ and Bill Clinton’s spending. Without that, there would’ve been no surplus. The GOP-led Congress stopped Hillary’s national healthcare plan, which definitely would’ve sunk the budget. Recall also when Ronald Reagan exited as governor of California, there was a surplus which was quickly gobbled up by succession of Democrat governors. Now their deficit is huge and their tax base is leaving for red states with low taxes. – Helga N. And finally, another dear reader believes the scope of political corruption extends outside the U.S… It was very interesting that you mentioned the BIS (Bank of International Settlements), and how obvious it is who would benefit the most from a collapse of the dollar. As you probably already know, the BIS was created to launder and distribute the stolen gold from WWII, so it has always been a corrupt bank, created by corrupt people for corrupt purposes. So it is no surprise that it would be involved in this Fedcoin scam, too. Most people think the Swamp is only in D.C., but the Swamp is a global cabal, that is not just in D.C. Most people can’t understand or accept the global size and scope of the corruption. They can only accept corruption if it is in their opposing party. We both know that both parties in the U.S. are equally corrupt. I know that you are no fan of Trump, and neither am I, but what the globalists are conspiring should be the main and only concern. – John G. Is Bill “hyping skittishness” in his Diary, as John D. believes? Is the Swamp a concern outside the U.S., too, like John G. says? Write us at feedback@rogueeconomics.com. IN CASE YOU MISSED IT… An Urgent Briefing Dan Denning here, Bill Bonner's longtime colleague. This is the most dangerous – and potentially profitable – market that could come around in our lifetime. Bill and I teamed up with some of the brightest investment minds who appear to have predicted exactly what's happening right now… …And who are showing their readers how to make (or preserve) money, instead of losing it in the midst of what could be the worst crisis of our lifetime. To hear from these experts, and find out what you can do to profit, click here to read Bill's urgent briefing. 
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