| By Bill Bonner Monday, September 21, 2020 – Week 28 of the Quarantine Now is not the time to worry about shrinking the deficit or shrinking the Fed balance sheet. – Steven Mnuchin, U.S. Secretary of the Treasury,
September 14, 2020 SAN MARTIN, ARGENTINA – If not now, when? If not us, who? When is the right time to fix the leaking roof? The sun was shining in 2017 when Mr. Mnuchin joined the White House team as Secretary of the Treasury. Then, unemployment was low… and U.S. GDP had been growing for eight years straight. At this point in the cycle, Keynesian theory tells us that the prudent thing to do is to run a budget surplus and pay down your debt. That is the essence of contra-cyclical policy; as if taken directly from the Old Testament, it seeks to flatten out the booms and busts by running deficits in the lean years and surpluses in the fat years. Exact Opposite Instead, the deficit for the 2017 financial year was $665 billion (inherited from the Obama team). In other words, the feds were doing the exact opposite of what Joseph recommended to Pharaoh and what Keynes recommended to policymakers. They were exaggerating the trend, not moderating it. In 2018, when the Trump team was fully in charge, unemployment went even lower. The boss said the skies had never been clearer. But instead of taking advantage of the good weather to repair their balance sheet, the feds cut taxes… and the deficit rose to $779 billion. And in 2019… it still didn’t rain. What a gift! But nobody got up on the roof. And the deficit rose to almost $1 trillion. | Recommended Link | | Challenge accepted! His name is Jeff Clark. He left his wallet at home… He doesn't have any cash on him… And no credit cards either. But thanks to this 3-second financial maneuver… Jeff can generate enough instant cash to buy an expensive gift for his wife… By the time he walks from his car to that Nordstrom. | | | -- | Time to Normalize The gist of the following words is that the feds will never fix the damned roof. This house will fall down first. Here’s how… During those 10 sunny years from 2009-2019, instead of fixing the leaks in federal finances, Mr. Mnuchin and his predecessors punched more holes. You’ll recall that by 2015, the Federal Reserve was getting out its ladder and strapping on the tool belts. Since 2009, it had maintained that its zero interest rate and vast bond-buying scheme were “emergency measures.” The emergency over, it was now time to “normalize” its policies. A Revolutionary New Force Set to Create 818,236 New Millionaires Over the Next Three Years… Big Mistake But when Mr. Trump arrived, he fiercely opposed any attempt at normalization. He saw, correctly, that “normal” was a thing of the past. He wanted abnormally low rates and more printing-press money from the Fed to keep the “recovery” going. By then, it was obvious that the whole shebang was in trouble. The crisis of 2008-2009 had been followed by the most aggressive money-printing campaign in U.S. history – in which the Fed added $3.6 trillion to its balance sheet. But this produced the weakest recovery in history. A thoughtful person might have wondered, “How come? What’s wrong with this money-printing scam?” But neither the Eccles Building (Federal Reserve headquarters) nor the White House is a safe place for thinking people. They are now places for action figures – cartoonish characters, who take action without thinking. In 2017 and early 2018, Mr. Trump repeatedly insisted that it was a big mistake to try to “normalize” interest rates or reduce the Fed’s balance sheet. He and Mr. Mnuchin hoped to extend the boom further – at least through the 2020 election. But the Fed continued its timid baby steps up the ladder toward “normalization”… until October 2018. Then, with the federal funds rate barely above the official inflation rate… under pressure from the Trump team… and with a 3,000-point sell-off in the Dow… the Fed decided to climb down. It never got close to normal. Four months later, the stock market crashed… the feds shut down large parts of the economy… GDP fell 32% in the second quarter… and the Fed cut rates back down to zero, and then went on another money-printing spree. Stormy Weather And now what? Now, there are clouds everywhere – cumulus, cirrus, and an occasional killer funnel, too. We saw on Friday that nearly 100,000 businesses have closed their doors – permanently. As for jobs… millions have been lost. Eleven million? Thirty million? The numbers are fishy. But if these jobs come back at the same rate that they did after the crisis of 2008-2009 – 1.6 million per year, on average, over five years – it will take until 2027… or to 2038, if we base our calculations on the 30 million figure… to get them back. Most likely, many are gone for good. An economy evolves. It finds new ways of doing business. It needs new skills… new businesses… new people. The old ones are left behind… each one with a cloud over his head. Hot Market “It’s amazing what’s happening out here,” said friends calling from Deer Valley, Utah. “People are buying houses sight unseen. The realtors say they’ve never seen such a hot market. Everybody wants to get away from the big cities. They’re coming in from California… New York… Baltimore…” Wealthy people are enjoying their new digs. The rest are standing in lines waiting for handouts from the government. Or, they’re waiting for the helicopters. In 2019, U.S. GDP was $21.7 trillion. This year, the Federal Open Market Committee says the final tally will be about 6.5% less. Rents are not being collected. Mortgages are not being paid. There are still some 30 million Americans on unemployment… and 44 million with student loans totaling $1.5 trillion. Senators Chuck Schumer and Elizabeth Warren now propose forgiving $50,000 of student loans per person… (This must make students who didn’t borrow really feel good!) Looking for the next tech cash cow? This is it. No Chance The clouds are not going away any time soon. And no matter who is in the White House, he is not going to get out on the slippery roof any time soon, either. Heck, he might get struck by lightning! 8 million people lost their jobs in the crisis of 2008-2009. And while the economy recovered over the following decade, the feds never had the brains or guts to return monetary policy to “normal.” This time, as many as 50 million people signed up for unemployment benefits. And there is almost no chance – in the next 10 years, anyway – that deficits will be reduced and interest rates will be normalized. | Recommended Link | | How to Make a Fortune on "6G" 5G has barely hit the market… And already there is something more powerful. A combination of technologies that takes regular 5G – and turbocharges it. In fact, the new technology is so superior to consumer 5G… Angel investor Jeff Brown believes we are looking at what he calls an "early version" of the 6G network… The next level up in speed, processing, and computing power. And right now, the biggest companies in America are paying a king's ransom to get access. Apple is paying $30 million every month to use this early 6G network. Facebook forks over $11 million per month for private access. And Netflix spent $19 million a month during the pandemic. The list of groups paying for 6G access doesn't stop in the corporate world. NASA, the U.S. Department of State, the USDA… The European Space Agency… Even the world-famous British Broadcasting Corporation (BBC)… All are currently using this explosive early 6G network. In total, as many as 100,000 of the world's most successful companies are paying a fortune to get early access to the next level of network speed: 6G One company runs this special 6G operation. In fact, Jeff believes this 6G pioneer is the most important tech company in the world. Some folks even think this company's owner could soon become the world's first trillionaire. In this video, Jeff is going to show you how to make a fortune because of 6G. | | | -- | No Trust So, the money-printing goes on… And it inevitably leads where it always leads – to a drop in the value of the money itself. And then, people will look for alternatives. Traditionally, in the “sh*thole” countries and banana republics, they found it readily – in the U.S. dollar. But what happens when you can’t trust the greenback either? That is what we will look at tomorrow… Regards, Bill
Like what you’re reading? Send your thoughts to feedback@rogueeconomics.com.
FEATURED READS Act Now to Protect Your Wealth When America Defaults
Bill believes America’s default is inevitable. And when that happens, it will be each man for himself. But Bill and his colleagues, Dan Denning and Tom Dyson, have been planning for this scenario for years. And they’ve come up with essential strategies to protect your family and your wealth. U.S. Poverty Rate Rises Amidst Coronavirus Pandemic
The U.S. had seen a decline in the national poverty rate before COVID-19, with numbers having dropped consistently over the last five years. Unfortunately, due to the coronavirus pandemic and economic crisis, any improvements in U.S. families’ financial lives have been erased… MAILBAG Dear readers offer their thoughts on the 2020 U.S. election, following Bill's Friday missive, “The Fed’s Latest Announcement Is Really Stupid”… If the Democratic ticket wins in November, it will be the beginning of the end of the United States. The socialist, Marxist ideas of the Democrats will be implemented and we will soon be following the same path of Cuba, Venezuela, and the other socialist/communist countries. They will claim that they will do things differently, but that will be a lie. Freedoms will slowly be taken away and “big brother” government will continue to grow until it is all-consuming. The book 1984 was not supposed to be a blueprint for our country, but that is the direction being taken by the far-Left activists. – Philip M. Bill, you forgot that the Dems really want over $3 trillion to bail out New York and California. As a reformed Dem, I take no joy in seeing VP Biden, who suffers from obvious dementia, put forward as the best they could (or wanted to) run. When the real Joe steps forward, the truth will be evident to all. – Denise B. Meanwhile, another dear reader thanks Bill for his insights… I continue to read your almost-daily diaries as faithfully as I can. I am neither a Democrat nor a Republican. The only political party I ever worked on behalf of was the Libertarian Party back in the 1970s. I helped get petition signatures so the party could be legally on the ballot in California. I salute you for how you have described the failure of both major political parties. – David M. Is the U.S. headed for 1984’s “big brother” government, like Philip believes? Have both political parties failed the American people, as David says? Write us at feedback@rogueeconomics.com. IN CASE YOU MISSED IT… He Refused $100 million. New Viral Video Reveals Why He Did It… Legendary stock picker Teeka Tiwari – who picked Apple way back in 2003… and Bitcoin in 2016 – was recently asked to manage $100 million… But he refused. Why? Because he recently discovered what he believed will be his single biggest investment winner… A novel technology (not 5G!) the World Economic Forum believes will grow 295,762% over the next 7 years… And Teeka wants “the average” guy to get a shot, too. “This shouldn’t stay in the hands of the elite only,” says Tiwari. As you’ll see in Teeka’s new exposé, his reasons for doing this are personal. And it could lead to a stunning $1.6 million windfall… See Teeka’s Personal Story here… 
Get Instant Access Click to read these free reports and automatically sign up for daily research. | 
No comments:
Post a Comment