| By Bill Bonner, Chairman, Bonner & Partners YOUGHAL, IRELAND – We begin today with a bold prediction: Elizabeth Warren will be our next president. (Biden’s candidacy died in the Ukraine.) If the stock market collapses before the next election, she will win in 2020. If it doesn’t, she may have to wait until 2024. We take no joy in this prediction. Ms. Warren is a pigheaded, sanctimonious know-it-all, with all the wrong ideas about how an economy functions. In that regard, she is little different from Donald Trump. But Ms. Warren has “plans” for everything. And as we will see, they are all bad. | Recommended Link | | EXCLUSIVE ONLINE-ONLY EVENT from NEW YORK CITY: “How to Buy Tomorrow’s Biggest Stock Market Winners, Today” According to an in-depth research study by Ivy League data scientists from Cornell and Columbia, over the past three decades Wall Street insider Jason Bodner’s breakthrough algorithmic stock-picking system has pinpointed 968 opportunities to make you between 10-to-1 and 70-to-1 on your money, without cryptos, options, or other high-risk assets. Sounds crazy, right? That’s why we’re holding this exclusive event… For the first time ever, we’ve assembled an all-star panel of outside experts so you can see the proof with your own eyes of exactly how this system works… and even get the names of five new stocks identified by the system for FREE. (The #1 5G stock… the #1 tech stock… the #1 gold stock… the #1 cryptocurrency stock… and the #1 cannabis stock.) Join us Wednesday, October 2nd to see the proof for yourself in our exclusive event: The World’s First Unbeatable Stock-Picking System. | | | -- | Sunny Side But let’s cross over to the sunny side of the street, where science, technology, and innovation allegedly make our lives better, day by day. As we saw on Friday, economists Gale Pooley and Marian Tupy figured out that prices for “50 foundational commodities” were generally falling – at least in terms of how much time at work it took the average person, worldwide, to buy them. This they followed up with startling insights. For example, as we mentioned yesterday, they saw that the latest iPhone model is 120 times more powerful than the first model. Though it may be twice as expensive… the real value to the consumer, they claim, is 60 times what it used to be ($500 back then versus a “comparable price” of $8.33 today). Or, in terms of “time price,” it is so much cheaper that “the time required to buy one iPhone in 2007 will buy almost 75 today.” From these facts, Mr. Pooley and others conclude that the iPhone owner is 75 times richer than he was in 2007. He is certainly “richer” in handheld computing power. He may be richer in other ways too. His entertainments, for example. Until recently, there was nothing like Game of Thrones on TV. And now, he can talk to a robot – Siri – and ask her to turn on the lights. But this kind of richness is not exactly the kind you can take to the bank. Nor is it the kind of wealth that makes it easy to pay your debts… or justifies super-low interest rates. Pooley disagrees. According to him, we are getting wealthier at such a rapid clip that we should be happy to lend our savings out at negative rates… because the money will be so much more valuable – in terms of the bushels of wheat or iPhone computing power that it will buy – when we get it back. “Negative rates,” says he, “may be rational.” We could test Mr. Pooley’s confidence by asking him directly: “Lend us $1 million. We’ll give you back $900,000 20 years from now. Cross our heart and hope to die. And think about how powerful the iPhone will be then!” We doubt he would do it. | Recommended Link | Your Smartphone is Worthless How much did you pay for your smartphone? $300? $500? $1,000?? Well, I’ve got bad news… Your smartphone is worthless. And it will be replaced by the $100 billion device in that box – this year. Silicon Valley’s most connected angel investor, Jeff Brown, believes the company behind this device is his number one tech stock of 2019. | | | -- | Moral Philosophers There was a time, believe it or not, when economists wouldn’t presume to tell us what interest rates should be. They were “moral philosophers” who merely observed and tried to understand. Then, they discovered the flimflam of “modern economics,” with its fame, fortune, formulae, data, statistics, math, and quack science. Now, they get paid big salaries for advising, directing, pontificating, and – in the case of the Federal Reserve – manipulating a $20 trillion economy. John Maynard Keynes was probably the most famous of the new breed. He argued that the feds could use “countercyclical policy” to offset the natural ups and downs of a market economy. As it turned out, the authorities were quick to counteract the downs… but reluctant to interfere with the ups, leaving a bias towards loose monetary and fiscal policies. Not once since the Carter administration, for example, has the U.S. budget (fiscal policy) been in real surplus (not counting Social Security contributions). Not surprisingly, the eventual ups and downs are more dramatic than ever. Paul A. Samuelson, whom we mentioned on Friday, attempted to make the profession more credible by adding more numbers and more rigor. He won a Nobel Prize for his scientific approach and used it to forecast that the Soviet Union would overtake the U.S. “no later than 1997.” Of course, the Soviets themselves were the great rationalizers. They decided that advertising, brand competition, and market prices were “irrational,” and that they could do better by allowing groups of bureaucrats to make the important decisions. You know how that turned out; they reasoned their way into a 70-year catastrophe. | Recommended Link | The Millionaire Who Hated Gold Stocks Once, there was a millionaire in California. He loved gold… but he hated buying stocks. So he developed a radical way to potentially double or triple his money on gold, without ever touching gold stocks or bullion. He went on to generate tens of millions of dollars… and retire at age 42. | | | -- | Modern Sages Over the weekend, another sage of modern economics was in the news – Thomas Piketty. He gained fame with his 2013 book, Capital in the Twenty-First Century. In it, he maintained that capital always increases faster than the value of the worker’s time (“r > g”). The rich get richer, in other words. In a new book, out in English next year, he tells us that we should do something about it – including taxing billionaires at a 90% rate. “There shouldn’t be any billionaires,” adds Bernie Sanders. Ms. Warren – whose advisors are said to be working with Piketty – is paying attention too. She’s proposing a tax of 2% on fortunes over $50 million and 3% on fortunes over $1 billion. And don’t think you can escape. She’s proposing a stiff “exit tax” for anyone who tries to get away. And coming up fast, in the ranks of the damned, is Modern Monetary Theory (MMT), a thoroughly rational guide to managing public-sector finances. The MMT-ers say all money comes from the government. The feds can spend, spend, spend – they believe – until inflation shows up like barbarians outside the city walls. Then, they can raise taxes to sop up the excess money. Totally logical… and absolutely bonkers. Imagine an application of MMT during the medieval period: “Hey, we don’t have to worry about fixing the castle walls until we actually see the enemy coming.” But by then, it is too late. Evil Afoot In the 1960s, low levels of inflation were such a fact of life that Gardner Ackley, chairman of the Council of Economic Advisors, wrote his headline “Prospect of Avoiding Inflation Is Good” with full confidence. Soon after, inflation made a fool of him. Barely 10 years later, prices had doubled. In 1974, consumer prices were going up at a 12% rate. It took Paul Volcker and the worst recession since the Great Depression to bring inflation under control. But who will raise rates to 20% in the next crisis? Who will bring inflation to heel? Who will raise taxes during a financial crisis? Elizabeth Warren, that’s who. She will blame the “greedy rich,” and tax the hell out of them. Yes, Dear Reader, there is evil afoot. On the march are Donald Trump’s trade wars and his trillion-dollar deficits… Bernie Sanders’ $2.5 trillion “Housing for All” program… the Congressional Progressive Caucus’ plan for $2 trillion in infrastructure spending… Elizabeth Warren’s soak-the-rich taxes… and central banks’ next round of rate cuts and quantitative easing. When the next crisis hits, no matter who is president, this mischief will come bounding over the walls, breaching the gates… setting fire to our roofs, looting our wealth, killing our young men, raping our women… and selling the rest of us into debt servitude. But wait. Maybe technology will save us. More microchips in the F-150? More computing power in the iPhone 12? Cheaper wheat and steel? More hit shows? More bandwidth? Skinnier jeans? Uber? WeWork? We wouldn’t count on it. Regards, Bill MARKET INSIGHT: TOO MANY BONDS, NOT ENOUGH CASH By Dan Denning, Coauthor, The Bonner-Denning Letter There are too many government bonds and not enough cash in the U.S. financial system. I argued this point in the most recent issue of The Bonner-Denning Letter, published last week. In short, Bill and I don’t believe whatever rally is left in the 30-year bull market in government bonds is worth the risk of chasing it. In fact, we believe the next crisis in the financial system will originate in U.S. government bonds themselves. We won’t get into the weeds today. (Paid-up Bonner-Denning Letter subscribers can get the full story here. If you’re not a subscriber yet, learn more about a subscription here.) But as this unfolds, you’ll want to keep your eye on the chart below. It shows the iShares 20+ Year Treasury Bond ETF (TLT). It’s an exchange traded fund (ETF) that tracks long-term U.S. bonds. 
Interest rates on the 30-year bond went under 2% for the first time ever in August. As you can see above, that’s when TLT made a new high. Keep in mind, bond prices move inversely to yields. The Federal Reserve’s rate-setting committee next meets on October 29 and 30. It’s widely expected to cut U.S. interest rates by at least 25 basis points. Between now and then, look for 30-year U.S. rates to again decline and TLT to make a new high. As the bond bull market comes to an end, readers looking for a safe haven would do well buying gold and silver on weakness. – Dan Denning FEATURED READS WeWork Withdrawing IPO Filing
Bill has been telling us for months that WeWork doesn’t work. Now, after a dramatic valuation drop and criticism from investors, the company says it will withdraw its initial public offering (IPO) filing… Unprofitable Companies Are Luring in Investors…
In addition to WeWork, Bill mentioned yesterday that companies like Uber and Tesla are losing money too. But these money-losing companies are raising the most IPO money since the dot-com era… Ignore This Chart at Your Peril
Tom Dyson went “all in” on gold after Bill shared his Dow-to-Gold trading model with him. And Tom still believes it could be the secret to securing intergenerational wealth… MAILBAG Today, more get well wishes for Bill as he recovers from pneumonia… Mr. Bonner, take it easy. Pneumonia is usually caused by overexertion. If you feel the need to overexert, then make sure you are loaded up with the best vitamins, minerals, and amino acids. The cure for pneumonia is what old-school doctors would tell you at those 1970s prices. Lots of rest in bed until recuperated, anywhere from two to six days depending on the severity of the depletion. Your analysis about the working man getting stiffed is spot on. Keep exposing the siren song of socialism, because that’s where it will invariably lead. They can only gaslight the working man for so long. Appreciate your work. – Anthony B. As a 66-year-old, I can appreciate the challenges involved when health issues increasingly rise to challenge our optimism and bon vivant inclinations, and to diminish our abilities to engage in past passions. C’est la vie. I need to say that I have thoroughly enjoyed and deeply appreciated your periodic missives, keynote speeches, and observations and experiences you’ve chosen to share over the decades. You are a gifted writer, philosopher, and observer of the human condition. Get well soon, Bill, and all the best to your family, as that is what it’s all about! – Rob V. While another well-wisher offers thoughts on Bill’s Diary on the “danger of silly extrapolation” in economics… It’s a disappointment that economics as a discipline has been hijacked by the powerful to aid and abet the propaganda used to misinform the population. As Bill points out, this discipline, used properly, can provide genuine comparative data. I hope Bill has a full recovery. – Thomas T. Are we headed for socialism, as Anthony believes? How long have you been following Bill’s writing? Write us at feedback@bonnerandpartners.com. IN CASE YOU MISSED IT… Top CEO: “If the Internet was the appetizer, [this tech] is the main course.” It’s the most disruptive technology of the decade… Top tech CEOs expect it to create more wealth than the Internet. Robin Li, CEO of Baidu (one of the 10 largest internet companies in the world) says: “If the internet was the appetizer, then [this technology] is the main course.” Amazon’s Jeff Bezos says “We are now solving problems with [this tech] that were in the realm of science fiction…It is a golden age.” But here’s the most exciting part for you… Investors in this space already had the chance to see an incredible 737% gain in just 5 weeks. For a short time, you can get in with as little as $257. Click here to see how. 
Source: ITU Pictures Like what you’re reading? Send your thoughts to feedback@bonnerandpartners.com. | 
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