BUENOS AIRES, Argentina – In the Northern Hemisphere, the warm days are becoming less warm and less frequent.
Chilly winds blow, and the wishful thinking falls like leaves off a tree.
We’ll come back to that in a moment, but first, we take a comment from a reader in response to our recent reports of the “Originario War” on our ranch in northwestern Argentina:
[For more perplexed feedback on the ranch from your fellow Diary readers, see today’s Mailbag below.]
Bill, quite frankly I’m surprised at you. You of all people should have realized that we cannot hide from those who wish to take what they cannot earn or create from those of us who have succeeded in life. We’re simply outnumbered. Your choice of Argentina to establish your safe house I suspect was one of the biggest mistakes of your life.
Oh, no… We’ve made much bigger mistakes!
Besides, we don’t regret buying the ranch. It was always meant to be an adventure and a learning exercise. In that sense, it hasn’t let us down. We even got more than we bargained for.
Besides, there’s something exhilarating about being at war without being killed. We’re fighting man and nature down there. Probably, we’ll be beaten by both of them. But we want to see how it will turn out.
If we can just prevent the government from taking a big part of the ranch in the next couple of years, time will probably work in our favor.
What the originarios are demanding isn’t worth much – to anyone. That will become clearer with time. And the new government, under businessman Mauricio Macri, is not supporting them the way it did under the populist Cristina Kirchner regime.
Most likely, the agitators will get tired of the struggle… or need to get real jobs. That would leave us with only an economic problem. And we’re working on that.
The high pasture gets a lot of water in the rainy season. It rushes down the valley and is soon gone. If it could be captured, it might allow us to water more alfalfa. The trouble is, the pasture is so high in the mountains, we can’t get equipment up there.
“It’s too dangerous,” said our old ranch foreman, Jorge, when we posed the question.
“The backhoe could do the work. But the road around the cliffs is not wide enough. And it’s not solid enough. [It’s a footpath originally built by the Incas.] If the machine goes over the edge, we lose the backhoe and the driver.”
“Don’t worry,” we replied. “I wouldn’t ask anybody to drive it up. But I might drive it up myself.”
We rode up by horse on Sunday to check it out. The road looked dangerous. But with some work in places, it might be passable. So, we asked a hydrologist to go up and check out the possibilities.
The other ace up our sleeve we have is you…
Yes, dear reader, we’re going to make a proposition. Well worth your while – promise.
But 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.
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, yesterday, 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!
You can make money by offering services, but only if there is someone who can pay for them. And you can only pay for services if you are doing something that generates real wealth.
Just look at India…
It has over half a billion people willing to do just about anything for peanuts.
Services? You can get all you want. But that doesn’t make India a wealthy country.
Services are better thought of as a drain on wealth, not a way of building it.
Let’s say you want to go out to the movies. Instead of watching your children yourself, you hire a teenager from the neighborhood.
You pay, say, $20 for the evening. This results in an increase to the nation’s service industry income of $20. And you had the benefit of the service.
You had $20. Now, someone else has the 20 bucks. Where’s the additional wealth?
Manufacturing, on the other hand, creates wealth. You take $20,000 worth of labor and materials. You put together an automobile and sell it for $25,000. The automobile is worth $5,000 more than what it cost to build it. You are $5,000 richer.
But wait… You will say that someone must be out $5,000. But that isn’t true. He had $25,000 worth of cash. Now, he has $25,000 worth of automobile. He’s even; the world is $5,000 richer.
Readers will be quick to point out how Silicon Valley has added to the real wealth of the nation with its many services and innovations.
Social media companies alone are said to be worth $500 billion – evidence of how much wealth they are bringing to the world.
And it’s true – some are useful for improving productivity. They speed the output of real wealth.
But even profitable innovations can destroy wealth as well as create it. Crack cocaine and television, for example, have probably cost the nation a trillion dollars of real output. Are Facebook and Snapchat much different?
As in any other service industry, money passes from one person to another. But is wealth created? Or destroyed?
Check your children’s smartphones, tablets, and laptops. Let us know what you find. Foolish, idle, insipid – most of what we see in social media is a waste of time.
And what about the internet? Was that just a summer delusion, too?
Since the internet took off, economic growth rates have been roughly cut in half. And the median American household income has fallen 20% when you account for real inflation, not the government’s phony inflation figures.
What kind of service is that?
By Ray Blanco, Contributor, Breakthrough Technology Alert
Nikola Tesla was one of those rare geniuses born maybe once a generation. He was a gifted inventor, electrical engineer, mechanical engineer, and physicist whose ideas were truly revolutionary.
When he immigrated to the United States from Croatia at a young age, he went to work for Thomas Edison, who was just a giant here in America. But Tesla’s experience with Edison was negative. Edison thought Tesla’s ideas were “splendid” but “utterly impractical.” Tesla had ideas for generating and distributing electricity that were completely opposite of Edison’s…
One of Tesla’s big ideas was to achieve wireless power transmission, which would have been truly revolutionary. His famous “Tesla coil” was based on the concept. From his lab in New York City, he would be able to light up incandescent and phosphorescent bulbs over the air using his wireless technology.
By the end of 1900, Tesla had persuaded J. P. Morgan to fund the construction of a wireless station on Long Island, New York, intended to transmit messages across the Atlantic Ocean. But Tesla wanted to expand the project to explore his ideas of wireless power transmission. Morgan refused to supply the additional funding, and Tesla abandoned the project in 1906. None of his wireless power transmission ideas ever came to light. Tesla died in 1943.
There have been many conspiracy theories surrounding Tesla and his work on wireless power transmission. Many believe he was shut down because powerful financial interests didn’t want him to succeed. Regardless, the world would probably be a lot different today if Tesla’s ideas became reality.
But things may be changing. In the video linked below, I show you how Nikola Tesla’s vision of wireless power transmission is finally about to become a reality, at least on a smaller scale. And how it can make early investors fortunes.
P.S. Inside the halls of the world’s most famous technology company… something BIG is happening. And I expect an announcement any day now that could send its stock price skyrocketing.
Watch below to discover the shocking technology that’s about to rock the world. But don’t wait too long. After the announcement is public, it’ll be too late.
Top Traders Use "Bad Idea" to Get Rich
Behind closed doors, the top traders, investment banks, and hedge funds are using one simple strategy to make billions in profits every year… all while telling you it’s a bad idea.
New Plan to Get Rid of Dollar Bills Larger Than $10
Influential Harvard economics professor Kenneth Rogoff has announced a new plan to get rid of all dollar bills larger than $10. He denies it. But it’s another stop on the road to a “cashless society.”
Trump Slams “Free Money” Economy
Asked about rate hikes by the Fed in September, Donald Trump said that the Fed is “keeping the rates artificially low so the economy doesn’t go down so that Obama can say that he did a good job.”
More feedback today on the “Originario War” after Bill’s farewell to the ranch in yesterday’s Diary.
I was a U.S.-exchange fighter pilot flying the Argentinean Pampa jet out of Mendoza in the 1990s. Sometimes we’d fly up north through valleys in the Andes towards Salta.
Barren? Oh, yeah! One of our pilots was from Salta. And even he couldn’t see a reason for people to go to Salta. But it’s your ranch. You know the people and the key to living in Argentina is knowing the people. Fight to keep your land, screw the profit motive, and good luck.
– Tom W.
I have followed your adventures since 1979 and had looked at that ranch on the Mondinion [international real estate] website. I passed on it because of the elevation and difficult access. To unload, you may consider a donation to a U.S. based charity so you can get a tax deduction.
– Tom Z.
I thought your ranch was where you intended to ride out the coming economic apocalypse. I guess retreating to a safe house outside the U.S. is not as simple as it seems.
– Daniel L.
Your ranch travails will be solved if you have water. Have you ever drilled for any? Alternatively, what is the cost to pipe water to your ranch from the nearest bountiful source? Maybe a neighbor who has more than they need and who would like some passive income from you during the growing months.
– Jim R.
So what are you going to do about the ranch? I have a great one south of San Antonio – 350 acres, great grass now because we have had rain the last couple of years. It has turkeys, deer, hogs, (many hogs), and a well that puts out 2,000 gallons per minute, and a pivot that waters 100 acres. There are about 90 cows and a bunch of calves if you want them.
Why would I sell? I am 79 and have another place up the road. Price is $5,000 per acre. If you don’t want it, no sweat, someone will buy it. I just thought you might want a good place after your experience with the other ranch.
– Fred M.
The folks at Agora Financial say they’ve uncovered what could be the biggest tech innovation over the last 117 years…
One that could turn every dollar into $32 by the end of the year.