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Bill Bonner

Bill Bonner

Bill Bonner is an American author of books and articles on economic and financial subjects. He is the founder and president of Agora Publishing.

Articles by Bill Bonner

Bull Market History With Richard Russell

August 5, 2017

POITOU, FRANCE – Guess what U.S. stocks did yesterday…
They went up, of course. Just like they always do.
Some people have expressed wonder… and doubt… that the equity value of America’s businesses can increase so much even while national leadership is in so much disarray.
Republicans can’t work with Democrats. Democrats can’t work with the president. And Republicans can’t work with the president, either… or each other.
Together… they can’t work at all.
Primary Trend
At the start of the year, analysts explained stock market gains as a “reflation trade.”
Buy Silver at Discounted Prices
The idea was that lower taxes and more infrastructure spending under the new Trump administration would set off an economic boom with higher growth rates, higher sales, higher

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Those Confederate Statues

May 27, 2017

Public life is always a hoot…
People of sound mind and reasonable judgment in their personal lives take on characters full of unwarranted confidence and intolerant insistence in public.
The couple whose son has a “drug problem” wants the government to start a nationwide treatment program.
The guy who can’t get his town sanitation department to pick up the trash in front of his house wants to clean up a government on the other side of the world.
The woman who is not sure she will need an umbrella is convinced the planet is warming up.
Instant Access to Current Spot Prices & Interactive Charts
It’s always easier to solve someone else’s problem than your own. That’s one of the great advantages of living overseas: Public life is full of other people’s problems.

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She’s With Her

October 6, 2016

Inside Track
The stock market – where shares in profit-making companies are exchanged – went up again on Friday. Does this mean the outlook for making money is improving? Does this presage higher dividends for the stockholders? What, exactly, do investors expect?

Partisan politics is for the most part a distraction, maintaining the illusion of choice for the public. Illustration by Ana Vlajcevic
More of the same, is our guess. Hillary in her Heaven. Yellen on her throne. And now, Fed Governor Lael Brainard is said to have the inside track for the top job at the Department of the Treasury. Wait a minute…

DJIA, daily. Recently the stock market has been stuck in a trading range, but last week the market went up on three days, including Friday. There seems to be a lot of

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Why the Middle Class is Dying

September 23, 2016

OUZILLY, France – First, some travel advice…
A niece was visiting from North Carolina. She left this morning for Paris.
We warned her, “Paris is the biggest tourist draw in the world. Naturally, it also has a thriving industry that preys on tourists.
“People will come up to you and say: ‘Do you speak English?’ You’ll be eager to help them. Just say ‘non,’ and keep walking. Or they’ll pretend to find a gold ring on the sidewalk, just behind you. They’ll ask if it is yours. Just keep walking.
“Watch out for gypsies. They work in groups. One will bump into you or distract you, while another picks your pocket.
“Oh… and don’t smile. If you smile, they’ll take you for a tourist, especially an American.
“The French don’t smile at strangers. They think they only

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Janet Yellen’s Shame

September 18, 2016

Playing Politics
In honest capitalism, you do what you can to get other people to voluntarily give you money. This usually involves providing goods or services they think are worth the price. You may get a little wild and crazy from time to time, but you are always called to order by your customers.

In the market economy, consumers reign supreme. There is no such thing as a “lost” vote in the marketplace; every penny spent affects production. Mises noted: “Consumers ultimately determine not only the prices of consumers’ goods, but no less the prices of all factors of production. They determine the income of every member of the market economy. The consumers, not the entrepreneurs, ultimately  pay the wages earned by every worker, the glamorous movie star as well as the charwoman. With every penny spent, consumers determine the direction of all production processes and the minutest details of the organization of all business activities.”

That is true of honest banking, too. Back when such a thing existed, the job of an honest banker was to aggregate people’s savings and lend them to worthy borrowers. You make too many mistakes, your customers leave and you go broke.
Politics is a different game altogether. It produces no wealth of any sort.

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Bailing on Argentina

September 12, 2016

BALTIMORE, Maryland – We are all originarios…
There were two newsworthy developments last week, neither of them really important – the first because it won’t happen, the second because it won’t matter.
First, the Fed let it be known that it has “normalcy” once again in its sights.
“Prospect of rate rise grows as U.S. moves closer to passing Fed tests,” reported theFinancial Times on Monday.
As we know, the Fed can’t return to normal because normal includes a correction on Wall Street – the very thing it has worked so desperately and recklessly to avoid. Mark our words: The Fed will never willingly return to normal, market-discovered interest rates.
Second, barring a major surprise, Donald Trump sewed up the Republican nomination. Many readers are counting on

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How is Real Wealth Created?

September 8, 2016

An Abrupt Drop
Let’s turn back to our regular beat: the U.S. economy and its capital markets. We’ve been warning that the Fed would never make any substantial increase to interest rates. Not willingly, at least.

Groping in the dark, Yellen-style

Each time Fed chief Janet Yellen opens her mouth, out comes a hint that more rate hikes might be coming. But each time, it turns out that the economy is not as robust as she had believed… and that a rate hike isn’t such a good idea after all.
Mainstream economists regularly dismiss worries about falling employment and output in the manufacturing sector.
“Don’t fret about it,” they say. “We have a robust service economy.”
Well, on Tuesday, the news came out that the service economy is not as robust as we thought. Bloomberg:

An abrupt drop in the Institute for Supply Management’s services gauge on Tuesday to a six-year low is the latest in a string of unexpectedly weak data for August.

Besides, the promise of a “service” economy has always been a fraud. We can’t all get rich by mowing each other’s lawns and parking each other’s cars!

US services ISM unexpectedly plummets to one of the lowest levels recorded in the post-GFC recovery. Economists were on average expecting a number in the 54 to 55 region – click to enlarge.

You can make money by offering services, but only if there is someone who can pay for them.

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Sidestepping the Central Banker Booby Prize

September 3, 2016

Who Knows What Trump Might Do to the Fed?
At the end of last week, the men and women who decide the world’s monetary policy and supervise its banking system gathered at Jackson Hole, Wyoming. And there, the financial press sat on the edge of their chairs to hear what Fed chair Janet Louise Yellen would say. She hadn’t spoken publicly in the last two months.

Unidentifiable avis on the way to Jackson Hole
Cartoon by Bob Rich

Ms. Yellen once had such a bright future. She was a spectacular student – at Fort Hamilton High School in Brooklyn, then at Brown, and then at Yale. She always got the highest marks and the greatest accolades. She had such a promising future. Everyone said so. It was such a great opportunity, too.
With over $13 trillion in bonds now yielding less than nothing (thought to be impossible for the last 5,000 years),  with the economy struggling to make any headway – despite worldwide stimulus on an epic scale (Friday brought news that U.S. GDP grew at an annualized rate of just 1.

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How Does It All End? Part II

September 1, 2016

Low Rates Forever
Nothing much is happening in the money world. The press reports that traders are hanging loose, wondering what dumb thing the Fed will do next. Rumor has it that it may decide to raise rates in September, or maybe November… or maybe not at all.

So far, the Fed has hiked the FF rate just once, by 25 basis points. That hardly matters though, since the Fed maintains its balance sheet at the bloated level reached after three QE operations. Banks are holding large excess reserves as a result, and the federal funds  market is therefore a mere shadow of its former self. The FF rate has no practical significance anymore –  the effect of rate hikes is mainly psychological, due to the feedback loop between credit markets and the Fed’s policy stance. It cannot influence the activities of banks that no longer need to borrow reserves in order to expand credit. In short, although Fed policy is relatively “tight” compared to that of other major central banks at the moment, it remains extremely loose considered on its own – click to enlarge.

It hardly matters. The Fed has created an unnatural, hothouse economy. Neither banks, nor business, nor investors fear a frost. None suffers drought or flood.
The feds have worked so hard, for so long, to protect them from the real, outside world.

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How Does It All End?

August 29, 2016

Fantastic Vision
OUZILLY, France – “How does this all end?”  It’s a regular subject for guesswork here at the Diary. It is also the subject of a new book, The Breaking Point, by our old friend and editor of investment advisory Strategic Investment, James Dale Davison.

The cover of J.D. Davidson’s new book The Breaking Point.  One isn’t supposed to judge a book by its cover, but it’s probably safe to say that this book isn’t exactly brimming with  everything is awesome messages.

Of course, to see what’s coming, you have to look back on what’s come before. Jim sent us an advance copy and invited us to write a foreword. Herewith, we share with you an extract from our introduction…
In 1900, a survey was done. “What do you see coming?” asked the pollsters. All of those people questioned forecast better times ahead. Machines were just making their debut, but already people saw their potential.
You can see some of that optimism on display today in the Paris Metro. In the Montparnasse station is an illustration from the late 1800s of what the artist imagined for the next century.
It is a fantastic vision – of flying vehicles… elevated sidewalks… incredible mechanical devices, all elaborated from the Machine Age technology as it was understood at the time.

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Party Like It’s 1999

August 22, 2016

The War on Moles
OUZILLY, France – The farther you get from the big city, or the international press… the closer you get to reality. The myth and claptrap disappears as distance shortens. Imagination gives way to fact.

There’s a war on, and he’s the target! It had to happen one day; after the many highly successful wars instigated by governmental world improvers, such as the war on terror, the war on drugs, the war on poverty and so forth, it was high time that someone started the war on moles. Rejoice, citizens! Your lawns and gardens will be made safe too!
Photo via a-z-animals.com

Gone is global warming, for instance. Instead, you find – as we did when we drove to Nova Scotia for a summer holiday in the 1990s – that it will be “75 degrees in Halifax again today… No relief in sight.”
The local papers forget that there is a War on Terror, too. Instead, there is a War on Moles, which have been making a mess of lawns and gardens. Or there is a War on Roadside Trash, or a War on Loud Music and Late-Night Parties.
We are sitting at our farm in the French countryside, reading the local newspaper.
We find that: Fifteen kilos of cannabis were seized in Poitiers. A couple from Italy are enjoying a vacation in the Poitou area. The annual donkey race took place in Moncontour.
But the big news was in the headline: “The state says yes to 1,200 calves.

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Good Money and Bad Money

August 10, 2016

Confidence Gets a Boost
OUZILLY, France – Last week’s U.S. jobs report came in better than expected. Stocks rose to new records. As we laid out recently, a better jobs picture should lead the Fed to raise rates. This should cause canny investors to dump stocks.

Canny investors at work (an old, but good one…)
Cartoon via Pension Pulse

But the stock market paid no attention. It follows logic of its own. Headlines told us that last Friday’s report “boosted confidence” and sent the Dow up 191 points.
Wait – what about the Fed?
Now, with unemployment dropping and the economy appearing to finally recover,  isn’t it time to go “back to normal” with interest rate policy? Won’t that mean that today’s stock prices – resting on the brittle reed of super-low rates and buybacks – will collapse?
Maybe. But investors seem to have realized that, as we’ve been saying, the Fed will never normalize interest rates. It operates a fake economy, with fake money, and fake interest rates, and fake statistics, too.
And now, there is no retreat. The bridges have been burned. The ships have been sunk. The return address has been lost. Now, the Fed is so deep into make-believe, the shock of reality would be too much for it. It is like a crazy person you try to protect from the truth:
“I hear this awful woman, Hillary Clinton, is running for president.

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The Real Reason the “Rich Get Richer”

July 24, 2016

Time the Taskmaster
DUBLIN – “Today’s money,” says economist George Gilder, “tries to cheat time. And you can’t do that.” It may not cheat time, but it cheats far easier marks – consumers, investors, and entrepreneurs.

Tempus fugit – every action humans undertake has to take time into account. In the economy, interest rates serve as the signal and regulator of the inter-temporal structure of capital. In an unhampered free market economy, they tell entrepreneurs how large the  pool of available savings is, and whether consumers have become more or less future-oriented. The issuance of additional money from thin air can neither alter the size of the pool of real savings, nor can it alter actual consumer time preferences. But it can and does temporarily suppress interest rates and distort relative prices. This falsifies economic calculation and promotes the malinvestment of capital – which in turn sets the boom-bust cycle into motion.
Photo credit: fmh

It took us a moment to understand what Gilder meant. Then we realized he’s right. Time is the ultimate limitation… the ultimate truth… the ultimate fact.
You’ll recall. There are facts and there are myths. The facts are true no matter what you think. Everything else is opinion, conjecture, or claptrap.
Elizabeth, your editor’s wife, has a different relationship with time than he does.

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The Day They Killed The Dollar

July 20, 2016

Hell With Air-Conditioning
LAS VEGAS – It was 113 degrees outside when we rolled through Baker, California, a few days ago. We drove along in comfort, but our sympathies turned to the poor pilgrims who made their way to California in covered wagons. How they must have suffered!

Planet Hollywood – a place for suffering.
Photo credit: SchnitzelMannGreek

Our suffering didn’t begin until we checked into the Planet Hollywood Hotel in Las Vegas. What a horrible place. You stand in line for half an hour to get your room key – even after you’ve checked in online. Then if you leave your key in your room, you stand in line for another half an hour to get another one.
The music blares; the lights flash; the slot machines beckon. The décor is garish and ugly. The food is hit or miss. The staff are helpful only insofar as they can tell you which line to stand in. It is like Hell with air-conditioning. But we didn’t come to complain; we came to learn.
“Go back and read President Nixon’s speech from 1971,” urged old friend Adrian Day, whom we met while standing in line in the hotel lobby (the nice thing about the hotel is that you have plenty of time to talk to friends, if you happen to be standing in the same line at the same time).
“But it’s taken us into such a strange world. No one knows what to make of it,” he continued.

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The Deep State—–How America Became a “Parasitocracy”

July 19, 2016

Dread and Denial
So, let’s return to the discussion you can’t have with your congressman, your mailman, or your barmaid. It’s the important one. It concerns what the Fed is really up to.

Eight years after achieving independence, a State modeled after the British merchant state was established in the US. It took a while for the Deep State to consolidate itself within it, a process that was accelerated greatly in the run-up to and aftermath of WW I.
Illustration by Ana Vlajcevic

We have been connecting dots… bringing new readers into the conversation and organizing our own thoughts. Already, you have met the zombies and the cronies… and you know that the government you learn about in school is not really the government you actually have.
Instead, we are ruled by a group of insiders we call the “Deep State” who pay little attention to the Constitution or the “will of the people.”
The term Deep State is not original to us. It was first coined to describe anti-democratic elements within the military, the intelligence services, the judiciary, and the mafia that controlled the real levers of power in Kemalist Turkey.
But it is being used more and more elsewhere, as people come to realize what is really going on in their own countries (today, we offer a neologism that is more descriptive).
Your first reaction to the Deep State is likely to be denial or dread.

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Writing on the Wall——Again!

July 14, 2016

Time to Sell… Maybe
BALTIMORE – Yesterday, the S&P 500 hit a new all-time high. And the Dow just hit a new record close as well. If you haven’t sold yet, dear reader, this may be one of the best times ever to do so.

It’s still flying… sorta. Meet Bill Bonner’s tattered crash flag
Image credit: fmh

We welcome new readers with a simple insight: Markets are contrary, pernicious, and downright untrustworthy. Just when the mob begins to bawl most loudly for stocks… the market sets its trap.
Longtime Diary sufferers will be quick to straighten out the record. We’ve warned that stocks have reached a peak several times over the last four years. Each time, we thought we saw the writing on the wall… and each time, we were mistaken. We raised our Crash Alert flag.
But the poor ol’ Black and Blue just fluttered in the wind, as stock prices rose ever higher. Eventually, it became so tattered, we took pity on it, folded it up, and put it away.
In the interest of full disclosure, as well as reputation hygiene, we saw a bear market coming in 1999 and 2007, too. We were right then. But lately, we’ve either been dead wrong… or dead early.

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Alan “Bubbles” Greenspan Returns to Gold

July 8, 2016

After a misbegotten credit bubble and $60 trillion more of debt.
By Bill Bonner, Chairman Bonner and Partners:
Under a gold standard, the amount of credit that an economy can support is determined by the economy’s tangible assets, since every credit instrument is ultimately a claim on some tangible asset. […] The abandonment of the gold standard made it possible for the welfare statists to use the banking system as a means to an unlimited expansion of credit.
— Alan Greenspan, 1966

That old rascal!
Before joining the feds, former Fed chief Alan “Bubbles” Greenspan was a strong proponent of gold and the gold standard. He wrote clearly and forcefully about how it was necessary to restrain the Deep State and protect individual freedom. Then he went to Washington and faced a fork in the tongue.
In one direction, lay honesty and integrity. In the other, lay power and glory.
Faking It
Under the Bretton Woods monetary system, the U.S. promised foreign central banks that it would convert their dollars to gold at a fixed price of $35 an ounce. This constrained the amount of dollars the U.S. could print to the amount of gold it had in its reserves.
A smart man, Greenspan quickly realized he could not advocate for this old, tried-and-true gold standard and run the Deep State’s new credit money system. In 1987, he made his choice.

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Planet Debt—–45 Years Of Fiat Finance

July 5, 2016

Low Interest Rate Persons

She is a low-interest-rate person. She has always been a low-interest-rate person. And I must be honest. I am a low-interest-rate person. If we raise interest rates, and if the dollar starts getting too strong, we’re going to have some very major problems.
— Donald Trump

Two low interest rate persons! The Trumpsumptive president (Donald the Tremendous) can be seen here indicating the approximate size of the interest rate that will still keep us out of “major problems”.

BALTIMORE – With startling clarity, the presumptive Republican presidential nominee described himself – and Fed chief Janet Yellen.  But he could have just as easily been talking about his rival in this year’s presidential elections, Hillary Clinton.
Donald Trump had already gone broke – twice – by the time Bill Clinton took office. But then, the combination of lower interest rates and rising asset prices saved him.
And extraordinary abundance and prosperity of the Clinton years owes little to Mr.  and Mrs. Clinton and much to the fact that Alan Greenspan had inaugurated his famous “Greenspan Put” in 1987.

1987 – the year of Greenspan’s original sin – click to enlarge.

Greenspan reassured investors that he had their backs with a rate cut whenever the stock market took a turn for the worse.

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Who’s Next to Exit? France… or Maryland?

June 29, 2016

Freedom in Our Nostrils
BALTIMORE – “Brexit aftershocks send global markets tumbling,” said Yahoo Finance. The Dow fell another 260 points on Monday – or about 1.5% – as central banks pledged to do “whatever it takes” to protect Deep State interests.

It seems the Brexit is already forgotten – or they’ve realized it’s actually good for the UK! – click to enlarge.

But on Tuesday morning, British stocks have bounced. The FTSE 100, Britain’s main stock market benchmark, jumped about 2% early in the session. And European stocks have followed suit.
Here at the Diary, we are delighted by the whole thing. We never saw a line we wanted to wait in… never saw a crowd we wanted to join… and never met a secession movement we didn’t like.
Our loyalties are few… and small. We favor the underdog, the diehard, and the lost cause. Yes, we stand shoulder to shoulder with Hannibal at Zama, with Hugh O’Neill in Ireland, and Robert E. Lee at Appomattox Courthouse. We rise at the sound of the bugle and take up arms for the romantic finale – the Last Stand.
At least, in theory.

Who’s Next to Exit?
Scotland and Northern Ireland voted to remain in the EU. But the English, along with the Welsh, voted strongly to break out. They dodged the searchlights, the hounds, and the barbed wire. Now, they are on the loose… and we and others are planning our escape.
“Frexit!” say the French.

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Vive la Revolution!

June 29, 2016

BALTIMORE – Last Thursday, the Brits said auf Wiedersehen and au revoir to the European Union. On Friday, the Dow sold off 611 points – a roughly 3.5% slump. What’s going on? Dying Order In Europe and the U.S., the masses are getting restless.

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The Fed’s  Doomsday Device

June 22, 2016

BALTIMORE –  Barron’s, in a lather, says the market is facing the “Two Horsemen of the Apocalypse.” Huh?

Only two? There were four last time!

Supposedly, the so-called Brexit – the vote in Britain this Thursday on whether to leave or remain in the European Union (EU) – and uncertainty over where the Fed will take U.S. interest rates are cutting down stocks faster than a Z-turn mower.
But Brexit is a side show. As our contacts in London explained in last week’s issue of Bonner & Partners Inner Circle, Britain will do just fine outside of the EU. It will even thrive.
As for the Fed’s fumbling, it is a consequence, not a cause, of falling stock prices. The real threat to this market is more basic, more dangerous… and completely unavoidable. It is a “doomsday device” – hidden in plain view – in the feds’ fiat money system.
It took us a long time to understand how this works. For many years, we referred to the Fed’s EZ money policies as “printing money.” Finally, we realized that this metaphoric description of the Fed’s role probably hides more than it reveals.
The Fed is not printing money. If it were printing money, we’d have more money around and higher consumer prices. Instead, when the feds went to a “paper” money system in 1971, they did it very cleverly.

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The Fed Has Lost Its “Myth Magic”

June 18, 2016

Myths Are Worth Wondering About
Wondering is what we do, here at the Diary, especially wondering about myths. “Myths” are not necessarily untrue. They just can’t be known or proven in the way, say, that Archimedes could prove that the king’s crown was made of gold.
     Antiquity’s most famous patent troll Archimedes shortly after his famous epiphany in the bathtub

The Old Testament reports on God, for example, could be literally true, symbolically or metaphorically true, or complete fantasy. Unless you get hit on the head with a rock, or an angel speaks to you from a burning bush, you can’t know for sure.
Likewise, we can’t know for sure which candidate for president would be better. Poor Donald Trump is sinking in the polls; the media says his reckless comments are catching up with him. But who knows?
We can’t see into the future – only God can. So, we make our decisions based not on facts, but on which myths (assumptions and prejudices that can’t be tested) we believe.
In newspapers, elections, and most of public life, myths are more important than provable facts. They direct trillions of dollars of spending… and set off wars in which millions are killed.
The largest demonstration in history was in India, with millions of people taking to the streets to protest the killing of cows. In short, myths are worth wondering about.

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The Power Elite: Bumbling Incompetents

May 28, 2016

Geniuses in Charge
BALTIMORE, Maryland – Is there any smarter group of homo sapiens on the planet? Or in all of history? We’re talking about Fed economists, of course.

Not only did they avoid another Great Depression by bold absurdity…giving the economy more of the one thing of which it clearly had too much – debt. They also carefully monitored the economy’s progress so as to avoid any backsliding into normalcy.

And where do we get this penetrating appraisal? From the Fed economists themselves, of course. Bloomberg:

“The U.S. Federal Reserve’s decisions to delay interest-rate hikes helped cushion the economic shocks caused by rapidly rising borrowing costs for U.S. companies from late last year through early 2016, according to economists at the New York Fed.
“By maintaining the federal funds rate lower, the FOMC managed to substantially offset the effect of tightening financial conditions on the economy,” the authors, referring to the rate-setting Federal Open Market Committee, wrote in a blog post on the bank’s website on Wednesday.”

They’re geniuses. No doubt about it. That’s why they’re in charge and we’re not. They’re the elite. They run the Deep State. They may not pay the piper, but they call the tune anyway.

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How the Deep State’s Cronies Steal From You

May 20, 2016

Expanding in Ireland
DUNMORE EAST, Ireland – We came down the coast from Dublin to check on our new office building. For this visit, we wanted to stay somewhere different than we normally do. So we chose a small hotel on the coast, called the Strand Inn.

Irish landscape with alien landing pads. Even the guys from Rigel II have heard about Ireland’s corporate tax rate.
Photo credit: Tourism Ireland

It is an excellent place for seafood and soda bread on a rainy day. Later, you can go to the bar, get in your cups, and sing sad songs about dead Irish heroes. Ireland has a literate, educated population. It is pleasant… pretty…and has a low corporate tax rate. So, we are expanding here.
Apparently, companies escape taxes by moving their headquarters or their technology overseas. We would do the same, but we’ve never been able to figure out how it saves any tax money.
Owners end up paying tax in their home countries. And Americans pay U.S. taxes no matter where the money is actually generated. Regardless, we bought a large, 19th-century mansion in the aftermath of Ireland’s real estate bust – which took average property prices down by more than one-third.
It seemed like a good deal. But every real estate investment we ever made has turned out to cost more and take more time than we imagined. This time is no exception.

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Pareto’s Wily Foxes

May 20, 2016

Smart Money Fleeing Stocks
DUBLIN – The Dow dropped 180 points on Tuesday – or about 1%. And another clever billionaire says he is looking elsewhere for profits. Reuters:

“Activist investor Carl Icahn on Monday said there was a chance the stock market could suffer a big decline, saying valuations are rich and earnings at many companies are fueled more by low borrowing costs than management’s efforts to boost results.
“I am very cautious on equities today. This market could easily have a big drop,” Icahn said.”

Famous activist investor Carl Icahn – in fact, we like to think of him as the “original activist”; we still remember when he had his way with the likes of TWA and Texaco back in the 1980s. Evidently, tempus fugit. Does he know something we don’t? It certainly seems possible. After all, contrary to us, he has made billions. According to his latest filings, he currently holds a huge net short position of 150%.
Photo credit: Platon for Time

Yes, dear reader, the smart money is getting out of U.S. stocks. And here’s our old friend Rob Marstrand explaining why:

“Right now, every measure that analyzes the S&P 500 says it’s expensive. Prices are high relative to earnings, net assets, sales, and cash flow. What’s more, there’s plenty of evidence that the main thing propping up the stock prices is heavy buying by the companies themselves [via share repurchases].

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Christine Lagarde And Time’s 99 Other Most Influential Hacks, Yahoos and Monkey Shiners

May 11, 2016

Hacks and Has-Beens
NORMANDY, France – What has happened to TIME magazine? Henry Luce, who started TIME – the first weekly news magazine in the U.S. – would be appalled to see what it has become.

Time cover featuring the sunburned mummy heading the globalist IMF bureaucracy (which inter alia advocates that governments should confiscate a portion of the wealth of their citizens overnight, even while its own employees don’t have to pay a single cent in taxes). Once you see the list of the “world’s 100 most influential people” presented by TIME, you’re either apt to fall into inconsolable depression or you’ll almost die laughing. Ms. Lagarde is allegedly a “trailblazer”, whatever that is supposed to mean. Who has  made this assessment? Her fellow bureaucrat Ms. Janet Yellen. So one bureaucrat heading a socialist statist agency is assuring us that another bureaucrat heading a socialist statist agency should be admired for having made it to the top of the heap in one of the many crony-infested castles of modern-day feudalism.

Vapid, fawning, puerile… sucking up the rich, the pretentious, the cronies and zombies – it is a journalistic disaster. What brings on this revulsion is an issue of TIME we found in the airport lounge.
It features a photo of the head of the IMF, Christine Lagarde, on the cover and promises to name the world’s “100 Most Influential People.

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Why I Think there Will Be a “Dollar Panic”

May 5, 2016

By Bill Bonner, Chairman Bonner and Partners:
Please remember this warning when you go to the ATM to get cash — and there is none.
While we were thinking about what was really going on with today’s strange new money system, a startling thought occurred to us. Our financial system could take a surprising and catastrophic twist that almost nobody imagines, let alone anticipates.
Do you remember when a lethal tsunami hit the beaches of Southeast Asia, killing thousands of people and causing billions of dollars of damage? Well, just before the 80-foot wall of water slammed into the coast an odd thing happened: The water disappeared.
The tide went out farther than anyone had ever seen before. Local fishermen headed for high ground immediately. They knew what it meant. But the tourists went out onto the beach looking for shells!
The same thing could happen to the money supply…
There’s Not Enough Physical Money
Here’s how… and why:
It’s almost seems impossible. Hard to imagine. Difficult to understand. But if you look at M2 money supply – which measures coins and notes in circulation as well as bank deposits and money market accounts – America’s money stock amounted to $12.6 trillion as of last month.
But there was just $1.4 trillion of physical currency in circulation – about only half of which is in the US. (Nobody knows for sure.)
What we use as money today is mostly credit.

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100 Years of Mismanagement

April 22, 2016

Lost From the Get-Go
There must be some dark corner of Hell warming up for modern, mainstream economists. They helped bring on the worst bubble ever… with their theories of efficient markets and modern portfolio management. They failed to see it for what it was. Then, when trouble came, they made it worse. But instead of atoning in a dank cell, these same economists strut onto the stage to congratulate themselves.

The scalawag himself. Keynes provided governments with the “scientific” fig leaf fore interventionism that economists had previously denied them. The cost in terms of economic and technological progress is incalculable.
Photo via MIT Press

“The Greatest Depression that could so easily have happened in 2009 but did not is the tribute that the world owes to economics”, wrote Arvind Subramanian in The Financial Times.

Arvind Subramanian: congratulating mainstream economists (a sub-set of society that includes him) for failing to foresee a mess their own advice has produced. The chutzpa of this guy is really admirable. He is of course correct that it is difficult to make forecasts (in fact, economics as a science has nothing to do with making predictions), but anyone who didn’t see the 2008 crisis coming had to be blind as a fricking bat.

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The Man I’m Betting $5 Million On

April 20, 2016

Tilting the Odds in the shabby world of money. 
By Bill Bonner, Chairman, Bonner & Partners:
Today, we turn our attention back to the shabby world of money… and to a big decision we’ve made about our own finances. As you may know, we just made a deal with longtime friend and star analyst Chris Mayer. [Watch Bill explain why here.]
I say “star” because over the past 10 years, Chris’s recommended portfolio has outperformed the best billionaire money managers.
We had an independent CPA examine the track record of Chris’s Capital & Crisis newsletter (which he no longer edits). Turns out, if you invested $100,000 in Chris’s advice in 2004, you would have been sitting on over $480,000 a decade later. As you can see below, against even the best investors in the world – guys like Warren Buffett, Carl Icahn, and David Einhorn – that performance is remarkable.

Our deal with Chris works as follows…
Chris will pick stocks using his own methods. We will follow.
Later this month, we’ll start investing $5 million of our family money in Chris’s recommendations.
Always in Doubt
We had mixed feelings about it. We have great faith in Chris. But we don’t like investing in stocks.
When you “invest” in a ranch in Argentina, you make no money… but at least you enjoy yourself. You meet new and interesting people. You confront new challenges. You learn things you didn’t know.

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Why All Central Planning Is Doomed to Fail

April 15, 2016

Positivist Delusions
[ed. note: this article was originally published on March 5 2013 – Bill Bonner was on his way to his ranch in Argentina, so here is a classic from the archives]
We’re still thinking about how so many smart people came to believe things that aren’t true. Krugman, Stiglitz, Friedman, Summers, Bernanke, Yellen – all seem to have a simpleton’s view of how the world works.

A bunch of famous people with a simpleton view of how the world works…who not only seriously think the economy can and should be “planned”, but arrogantly believe they are the ones who should do it. It’s a bit like the crazy guy who doesn’t know he’s crazy.

They believe they can manipulate the future and make it better. Not just for themselves… but also for everyone else. Where did such a silly idea come from?
After the Renaissance, Aristotelian logic came to dominate Western thought. It was essentially a forerunner of positivism – which is supposedly based on objective conditions and scientific reasoning.
“Give me the facts,” says the positivist, confidently.
“Let me apply my rational brain to them. I will come up with a solution!”

Beyond the Herald’s Cry
This is fine, if you are building the Eiffel Tower or organizing the next church supper. But positivism falls apart when it is applied to schemes that go beyond the reach of the “herald’s cry.

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