| By Bill Bonner, Chairman, Bonner & Partners POITOU, FRANCE – It was the unkindest cut of all. Yesterday, the Federal Reserve whittled down its key lending rate by 25 basis points, in what was probably the biggest mistake in Fed history. | Recommended Link | Man Trembles Onstage As He Shares Life-Changing Secret For the first time ever, a California man who retired two decades early is sharing a 15-minute talk on how he did it… and how his secret could help you make $1,000s a week, without touching stocks, bonds, or any conventional investment. | | | -- | Only Mistakes As you know, the Fed only makes mistakes. It was set up in 1913 as a backstop for the banking system… to provide emergency funding for otherwise solvent banks. But in the Great Depression, 10,000 banks went under anyway. And now, the Fed aims for full employment, ever-rising stock prices, recession-free growth, the reelection of all politicians, the enduring admiration of the press, and the love of the common people. By the way, it is also charged with maintaining the integrity of America’s money. But only by undermining the dollar at a near-constant rate of 2% per year, it says, can it achieve its other goals. Thus, its mission is confused and doomed from the get-go. There is no reason to think that a group of PhD hacks could ever create a single job, let alone millions of them. Nor have they any way of reforming the business cycle; besides, periodic recessions help clear out dead wood and redirect capital to better uses. And the stock market is meant to discover the correct prices for capital assets, not to go in only one direction – up. But while it has no hope of real success, the Fed gamely soldiers on… stumbling and bumbling into the valley of death. It does this by marching to a refrain of old errors. It keeps rates too low for too long. Then, it raises rates when the low rates have done their damage. Finally, it cuts them in a panic when the stock market reacts to the higher rates. | Recommended Link | | Retire Rich with Trump's Help! [For $1?] Donald Trump laid out his brilliant ideas about America’s financial system in this book long before he was president. He wrote it with the #1 best-selling author in personal finance, Robert Kiyosaki… And it’s designed to help everyday Americans retire wealthy! Click here now to claim your copy for $1. If you only have a few thousand saved for retirement… Or simply want to learn why Trump will win again in 2020… | | | -- | Only Clowns But this time, the Fed is skipping ahead, committing Mistake No. 3 – cutting rates – for no apparent reason. The stock market is still near all-time highs, unemployment is at a 50-year low, the economy is still growing – why is the Fed lending money to its member banks as if they all stood on the threshold of Hell? Fed Chair Jerome Powell struggled to make sense of it. Things were “uncertain,” he said. The world economy might be slowing. The president’s trade war might be a problem. The poor might not find jobs. We might need some insurance against softness. Then, to the great disappointment of speculators, he described what he was doing as a “mid-cycle adjustment” rather than the beginning of a whole new rate-cutting cycle. This left them puzzled and disheartened. “What?” they asked themselves. “Doesn’t he know it’s an Inflate or Die situation? Does he want us to die?” “As usual,” said the president, “Powell let us down.” For speculators, it was a case of “buy the rumor, sell the news.” Anticipating a rate cut, they had been front-running the Fed. They were sure the Fed would cut rates, but they ran a little too far ahead. As the news came out, they turned around and took their profits… if there were any. The Dow fell more than 400 points and ended the day 333 points down. The whole show was shameful and imbecilic. There were no heroes. Only clowns. | Recommended Link | Fed “rebel” clears way for new gold standard ($2000 gold?) On July 2, 2019, President Trump told the world he intends to nominate Judy Shelton to the Federal Reserve board. This is incredibly bullish for gold! You see, Shelton is an advocate for gold and has suggested we should bring back the gold standard. (For the first time since 1971 – when Richard Nixon sat in the Oval Office!) Gold has now topped $1,400. Where will it head to next? Teeka Tiwari, the man who first predicted the rise of a “new gold standard” 12 months ago, lays out the surprising details of what we may soon see here. | | | -- | The Real Stuff And here, Dear Reader, we will let you in on a real secret – honest capitalism depends on honest capital. Real capital. Not made-up, phony-baloney, mock capital lent out at ersatz rates dictated by numbskulls. Capitalism needs the real stuff. Real capital, real markets, and real prices. It especially needs a true price for capital itself, interest rates. Real capital is more than pieces of green paper… or electronic notations from the central bank. It is savings. It represents real wealth that has been set aside, rather than consumed. For most of our time on Earth, we humans had no capital. We lived hand to mouth. Many people still do. But living hand to mouth is not the way to get rich. If you’re going to get richer, you need to earn more than you spend. The difference is savings. That’s why capitalism began in the Neolithic Period (about 8,000 years ago), not the Paleolithic (2.6 million years ago). It was the first time mankind had any surpluses to save. These savings not only helped us avoid starvation, they gave us something to work with to build more wealth. A farmer with surplus grain, for example, could exchange it for a laborer’s time, use it to clear more land, and produce more grain. But he couldn’t pay the laborer with fake grain. It had to be real. And the “price” of his labor had to be real too. Try to cheat him and he might turn his axe on you. Centuries later, Wall Street could draw together these real savings from all over the nation and finance railroads and factories; it was the biggest growth spurt the world had ever seen. But now, since the feds have been working so hard to improve the economy, growth rates are only about half of those from the 1960s and ’70s. Wages have gone nowhere for 40 years; men with a high-school education or less actually earn about 16% less than they did in 1975. There are fewer new businesses starting up. And fewer IPOs. What went wrong? Did the gods turn against us? Why has the working man made no progress? Was it a failure of capitalism? Or has he been cheated? Tune in tomorrow… Regards, Bill POSTCARDS FROM THE FRINGE: Leaving The Matrix By Tom Dyson, Contributing Writer, Bonner & Partners Thirteen months ago, I left my job. We sold all our things. My ex-wife and I hit the road with our three kids. We don’t have anywhere to live. Our kids don’t go to school. We left “the matrix” in another important way, too. When we left America, we drained our bank accounts and retirement accounts of cash and converted all our savings into gold and silver. Why did we do this? We don’t want to be “in the system” anymore… especially while we’re on sabbatical. I’m not going to get into it now, but the system is unbalanced and unstable. One of these days, there’s going to be a collapse. We’re going to sit on the sidelines, in precious metals, until it’s safe to return to the financial system. And when it finally is safe, we’ll sell all our gold and invest in stocks, where our money will stay – I hope – generating bigger and bigger dividends for the rest of our lives. How will we know precisely when it’s safe? The ultimate barometer of systemic “health” is the Dow-to-Gold ratio. The Dow is the aggregated stock price of 30 of the largest, most iconic businesses in the world. Gold is an inert metal. It’s the investment equivalent of hiding your money under the floorboards. By presenting these two as a ratio, I get a barometer. I’ve looked through 100 years of stock market history. When the system has “reset” in the past, the ratio went below 5, depending on how bad things got. When things were ripping, as they were in the late 1990s, for example, the ratio got as high as 41. The thing about this barometer is, unlike other price series in financial markets, it doesn’t bounce around much. Once it begins a trend, it tends to stay in that trend for many years. The charts below tell the whole story. 
When we started our travels and arrived in Africa in November 2018, the barometer was above 22. Today, it is at 19. It’s falling again. I believe this is the start of a longer trend… a signal that the system is going to break soon. But while we wait for the Dow-to-Gold ratio’s “rendezvous with destiny,” we’ve been seeing the world. I’m writing to you from central Bangkok. A dear old friend from my university days is hosting us at his apartment. It has a lazy river, two pool tables, two Ping-Pong tables, a foosball table, and boxes and boxes of toys, dolls, and Legos. And two full-time staff (a chauffeur and a housekeeper). And a magnificent view of Bangkok. Tom and family enjoying a meal India is an intense place to travel as a family. We were there for four months. I am relieved that we completed the trip alive, healthy, and intact. We left India last night. The first thing we did when we arrived at our friend’s apartment was take long, hot showers, eat big bowls of noodles, and then sleep for 12 hours. Today, we’re washing all our clothes. Staying with my friend in Bangkok after completing India feels like we climbed Mount Everest and have now returned to base camp to drink beer and sunbathe. – Tom Dyson FEATURED READS How Will the Rate Cut Affect You?
Bill just told you about the Federal Reserve’s mistaken decision to cut interest rates. How will this rate cut affect your personal finances? What Should You Do to Prepare for a Recession?
We can’t avoid a recession forever. Recessions have real-world implications for individual Americans… but there are things you can do to prepare and “emerge unscathed.” The Real Reason the Feds Fear Cryptocurrencies
New digital currencies keep emerging. Resident tech expert Jeff Brown says that the global currency revolution is here. How will that affect investors – and are the U.S. government’s fears justified? MAILBAG Today, Tom answers questions from some dear readers (Tom’s responses in italics)… Do rising gold prices always go hand in hand with increased inflation? Tom’s Reply: No. In this era of degenerate capitalism we are in, there are no straightforward relationships like this. Especially with gold. It’s a complicated asset. What’ll make gold soar is the dollar losing value. Gold prices are rising in U.S. dollar terms… is it the same in terms of negative interest rate countries/currencies (the EU, Switzerland, Denmark, Sweden, Japan, etc.)? Tom’s Reply: I don’t have access to that data. But I’d guess gold is rising in all currencies. Here it is in dollars. Looks like another major leg up is building… 
| 
没有评论:
发表评论