| By Bill Bonner, Chairman, Bonner & Partners YOUGHAL, IRELAND – “It’s all part of a plan,” explained a colleague. “Trump is not book smart; he’s smart like a fox.” “He knows that Americans need to see some economic improvement in time for the next election. And there really isn’t any. “But if he can get the Fed to cut rates a couple times… and if he settles all these trade wars… he figures the economy will appear to be in great shape for the 2020 election.” Start a quarrel. Stop the quarrel. Claim victory. Cut rates. Get re-elected. Simple enough. And maybe it will work. It seems to work well enough on the stock market. The S&P 500 set a new record high yesterday. The Dow is still bumping up against its all-time high. Investors seem to be anticipating an end to the trade quarrel and the beginning of a new cycle of lower interest rates. Is that the plan? We don’t know. Will it work? We don’t know that either. Great Debasement So, let’s turn to what we think we do know. We’re already halfway through the year; this is a good time to review. We’re now at what must be near the end of the longest business cycle expansion in U.S. history. We’re also at a record high in the stock market… after a 10-year march to the top, with prices more than 200% higher than they were in 2009. We know, too, that both of these things were made possible by a record expansion of the U.S. base money supply – inflation, in other words. Through its quantitative easing (QE) program, the Federal Reserve has added more money to the U.S. monetary system in the last 10 years than it added in the previous 90 years of its existence. Not only that, by lowering its key interest rate below the level of consumer price increases, it made borrowing more attractive than saving. Borrowed money, too – about $20 trillion has been added to the nation’s total debt in the last 10 years – adds to the available “money supply.” Again, more inflation. Inflation – by definition, experience, and theory – increases the amount of money in circulation. But it does not increase the amount of stuff you can buy with it. The law of supply and demand tells us that, ceteris paribus, prices rise. This is another way of saying that the feds have “debased” the currency; money becomes less valuable. Each unit buys less stuff. If the new money goes into the system through the consumer channel – tax cuts, spending increases, giveaway programs, wars, etc. – you can expect consumer prices to rise. If it goes into the system via monetary policy – lower interest rates or QE – the result is more likely to be an increase in capital prices (prices for stocks and bonds). It is not a coincidence that the rich got so much richer in the last 10 years than at any other period in history. In effect, the Fed gave them money. | Recommended Link | Silicon Valley guru: “The first trillionaires will come from this” Is it possible for a lone investor to become a trillionaire? According to Silicon Valley experts… including a billionaire “Shark” from the popular business show…. The answer is yes! All it takes is the right opportunity. And the new device you see above is expected to grow into a $15.7 trillion market. Better yet, only three companies dominate this technology. You can get in now for around $226. | | | -- | Stimulating Effect Of course, it wasn’t that simple or that obvious. The feds may have really thought they were “stimulating the economy” rather than simply robbing the middle classes to pay off the rich. And it did have a stimulating effect on sales of luxury cruises, Long Island estates, and bottles of Dom Perignon. But most of the country was not helped. As the 1% got richer, the 90% got poorer. Those in between stayed where they were. The only real asset most people have is their time. But by 2018, it took about twice as many hours of work for the average man to buy the average house or the average pickup truck as it had in the 1970s. The Fed’s inflation inflated the asset prices of the rich; it added not a second to the working man’s time… Nor did it increase the wealth of the economy. Inflation is just a trick… a deceit. Imagine if the feds sent everyone a check for $1 million. We’d all be rich, right? Of course not. Prices would rise. And we’d all soon be back where we started. But between the time we opened our checks… and prices rose to meet them… we would feel rich. We’d spend as though we were rich. And merchants and manufacturers would step up output to meet the new demand. So, it would seem like a real boom… for a while. This is the so-called “wealth effect” that the feds were banking on. If higher stock prices make people feel richer, they’ll go out and spend! But a business can’t really make a profit by selling goods and services to people who can’t really afford them. And it wouldn’t be long before consumers, businesses, and investors realized that they had overspent, overbuilt, and over-extended themselves. Then, they’d have to cut back… producing a bust that would be equal and opposite to the fake boom that preceded it. | Recommended Link | Is This Making Tesla Nervous? It seems Tesla is getting very nervous. In 2018, Tesla promised their loyal fans a “full refund if Tesla can’t deliver your car this year.” According to CNBC, some customers were left “waiting for months” to get their refund. Perhaps they know that, in the next few months, a brand-new type of electric vehicle is coming out. It has the potential to not only take down Tesla’s top spot as the world’s #1 electric car maker… But also render all 3.1 million electric vehicles on the road today, obsolete. And the few investors who see it coming could make an absolute fortune. | | | -- | Buy Products With Products Every boom that is based on inflation, rather than on real earnings, is doomed to fail. Because, as French economist Jean-Baptiste Say put it, you buy products with products, not with money. He meant that real wealth is the ability to provide goods and services to others – ultimately, a measure of time and your productivity. Time cannot be increased. Only productivity can be improved. But it is a long, demanding process. And it doesn’t help to hand out pieces of paper with green ink on them. Instead of stimulating growth and productivity, inflation does just the opposite. It distorts, disguises, and censors the key price information that people need to make decisions. The result is always negative – bubbles, crises… and lower growth rates. Smooth out the growth rates – by looking at the trailing 10-year average – of the last 20 years, and you see that they are barely half of those of the previous 20 years. And that brings us back to Richard Russell’s old dictum: Inflate or die. Real GDP growth is declining. A recession is coming. And the only way the feds can keep this inflationary expansion going is to inflate more. Where does this lead? Tune in tomorrow… Regards, Bill INVESTING INSIGHT: THE TIME A FOX NEWS HOST CALLED ME “BANANAS” By Teeka Tiwari, Editor, Palm Beach Confidential “The Big Yellow Banana, otherwise known as Teeka Tiwari.” That’s what host Charles Payne called me when I appeared on his Fox Business Network show in August 2011. You see, I’d appeared on Making Money with Charles Payne in June of that year. And Charles and his co-host had quizzed me about the best investments at the time. “Paint me yellow and call me bananas,” I’d told them on the live June broadcast, “but I think Treasuries are a place where you can put some money right now.” At the time, 10-year Treasuries yielded 3.75%. Just a year later, the 10-year yield had dropped to 1.3% – and the bond values had risen by as much as 14%. (As yields go down, bond prices rise.) Two months later, Charles invited me back on the show. And he opened the segment with: “Teeka, you were on not too long ago, and you hit a couple of home runs there. You were right on just about every single thing. In fact, before we start, I’m going to give you props…” Then, he turned around and called me “The Big Yellow Banana.” My appearance on Fox Business Network on August 10, 2011 Being called “bananas” on live TV didn’t bother me, though. In fact, I have a 20-year track record of making unpopular – but correct – market calls. Despite getting mocked on live TV, I’ve stood firm. For example, during the 2008 crash, I appeared on ABC’s Nightline with Bill Weir. In the interview, I pounded the table on shorting the market. (Shorting is a way to make money from falling stock prices.) My interview on ABC’s Nightline Now, being the guy with the least popular idea is usually a sign I’m on the right track. It’s a price I’m willing to pay in the pursuit of spectacular returns. And today, I’ll tell you about another little-known idea I’ve found that can make you life-changing gains. But first, let me go over a few of my biggest calls… Throughout my career, I’ve made millions for my clients – and grown my own wealth along the way… But even though I spent 15 years on Wall Street, I’ve always felt like an outsider. It might be because of my background growing up in the UK foster care system. But I believe it helps me think differently. And that’s what has made me so successful. Let me give you a few examples of my best contrarian trading ideas… One of my earliest successes came from the bond market in the early 1990s. Government bond yields were at 9% then. I predicted that they’d go lower as part of a long-term downtrend. So we played it to massive profits by loading up on government bonds. We made a fortune over the next three years as the yields dropped all the way to 6%. In the junk bond market during the 1991 recession, I focused on companies with strong, recession-proof cash flows such as RJR Nabisco. We bought those bonds with a 17% yield. As the economy improved, they soared in value. In 2003, I was leaving the retail brokerage business to manage an exclusive hedge fund. My parting gift to my clients was recommending Apple – when it was on the verge of bankruptcy and no one was buying shares. Not everyone was on board, though. Many of them even thought I was nuts. But over the next decade, a $1 million investment would’ve ballooned to over $49 million. And then there’s April 2016, when I recommended bitcoin. Even my publisher thought I was crazy at the time. But since then, bitcoin’s up 3,000% – despite last year’s brutal Crypto Winter. Look, I’m not mentioning all this to brag. Instead, I want to make a simple point: Investing in what’s popular rarely works. That’s why I usually avoid the consensus trade. By the time an idea is popular, everyone is in it. So all the value is gone. It’s the little-known or unpopular ideas that have the greatest upside. But here’s the thing… What you invest in isn’t the only key. When you invest is just as important. And that’s why I want to tell you about my latest venture… I’m talking about private markets. For years, Wall Street has walled off this $5 trillion pool of capital from ordinary investors. Venture capitalists (VCs) invest in these private placements all the time. And over the long term, VC funds vastly outperform public market indexes. So it’s no wonder Wall Street wants to keep these “sweetheart deals” away from the public. They’re usually made on private golf courses and private jets… or in reserve boxes at sporting events and top-floor meeting rooms in five-star hotels. If you’re not part of the financial elite, you can’t get in on them. But all that’s changing… Just a few years ago, the U.S. Securities and Exchange Commission (SEC) adopted new rules to allow non-millionaires to invest in sweetheart deals. They’re called Regulation A+ offerings. And they’re open to the general public – not just to accredited investors. Of course, a big bureaucracy like the SEC moves slowly. So it just adopted the final rules in December 2018. And new private placements that are available to the public are just coming through the pipeline. Now, it’s not easy to find these private companies. You can’t just sit in front of your computer and type in stock tickers. You need to interview executives… visit facilities… and dig into financial statements. But it’s worth it for the chance to make life-changing gains. And recently, my team and I uncovered a private cannabis company in California that’s accepting allocations for a private placement. This is an urgent opportunity… By locking in your allocation early, you can be in a position to secure these first-come, first-served shares. I can’t reveal too many details because it’s raising a limited amount of money… But you can learn more right here. – Teeka Tiwari P.S. I recently uncovered this sweetheart deal where you can invest 50 cents per share for a company that plans to go public at $1 per share – and shares could trade at $20 or more in the coming years. It’s a limited opportunity, and it closes for good at midnight. So you must act now. You can find all the details right here. FEATURED READS The Wealth Gap Is Widening
This economic expansion is officially the longest in history. But only the rich are celebrating. They increased their wealth through the housing market and stocks. But ordinary Americans are locked out of these gains, because they can’t afford a home anymore… and they’re too busy saving money instead of buying stocks… Workers Want Out of the Gig Economy
For freelancers, job security is more important than how much they are paid. That’s the takeaway from a survey of workers in the U.S. and U.K. Most freelancers are eager for more permanent work, or holiday and sick pay… and they’re willing to cut their pay in half to get it… The Deep State’s Secret Weapon: Amazon
Amazon has transformed from a small online bookstore into one of the most dangerous companies in American history. Its surveillance technology is unprecedented. And it’s working with the Deep State to make it easier for the government to keep tabs on you. Our Orwellian future is here now… MAILBAG Today, more dear readers praise Tom Dyson’s stories of his international travels with his family… Tom, I really enjoy your stories as they bring back memories of travels with my own family. Even though I don’t have any pictures of elephants, there are many photos with snakes, sloths, lizards, monkeys, and other types of critters in places off the beaten paths of the world. I also find the feedback from the readers amusing. It is the classic “I would like to do that, but…” kind of lamentations. In reality, the hardest part is giving up your current lifestyle. But it is not “hard.” Anybody can do it if they have a sense of adventure and the right attitude. I firmly believe that it is not money that keeps people from doing what you are doing. But rather, it’s fear – fear of leaving the comfort of home, friends, family, culture, language, and even fear of what they read in the news about other cultures and places (much of which is BS). I have moved my wife, four kids, and various pets to several countries over the last 18 years. The kids were infants when we first moved internationally and were well into their teens for the last move. As you point out, you don’t need a big bankroll, and there are places all over the planet for any budget, whether it be one star or five. I can personally attest that my kids learned way more from their overseas living and traveling than they ever could from a traditional school. They are, without a doubt, more worldly, well-rounded, tolerant, polite, knowledgeable, flexible, and self-confident from the experiences. In fact, they actually remember better than my wife and I some of the specific details and experiences, even though they were very young at the time. No matter how your investment plans work out, you can rest assured that the experience that comes with your travels will prove to be way more valuable in the end anyways. Best regards, and I look forward to hearing more of your adventures. – Brian P. Hello, Tom. I’m glad to see you are back among the land of the living. I always loved your insights when I used to subscribe to the 12% Letter, and I became a subscriber to the Palm Beach Letter to keep receiving your wisdom. Like you, we homeschooled all of our children (we have nine) all the way through high school, with all of the same incessant warnings about “socialization.” Our parents relented when they saw the outcome in our children, who were loving and well-adjusted. Our children were happy when they went to college and found that college was so much less challenging than homeschool had been. The six oldest all have at least a bachelor’s degree. At last count, they had four master’s degrees among them – but we don’t have much confidence in college degrees, which seem to be growing in their irrelevance. Thanks for sharing your travel adventures. Once life slows down a bit, we might follow your lead! – Tim S. Travel can certainly broaden the mind always, assuming you have a mind to broaden. Vaya con Dios. – Eugene C. IN CASE YOU MISSED IT… Last Wednesday night, Teeka Tiwari blew the lid off a brand-new market… Everyday investors have been barred from it for decades. And Wall Street is to blame for that… But Teeka, ever the champion of bringing life-changing investment opportunities to ordinary folks, has found a way for his subscribers to participate in the type of “sweetheart deals” that’s typically reserved for the ultra-rich elite. This opportunity will only stay online until midnight. Learn more here, right now. 
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