DUBLIN – When you start thinking about what money is and how it works, you face isolation, shunning, and possible incarceration.
The subject is so slippery – like a bead of mercury on a granite countertop – you become frustrated and… then… maniacal.
You begin talking to yourself, because no one else will listen to you. If you are not careful, you may be locked up among the criminally insane.
We’ve been thinking about money for the last couple of months.
It has become our favorite subject. That is why people edge away from us at parties. Our family finds novel ways to change the subject.
“Whoa… sorry to interrupt, Dad… but isn’t that a flying saucer?”
Undaunted… we press on. We think we’re onto something important. We have come so far; we might as well go the whole way.
Economist George Gilder’s new book, The Scandal of Money, came as an unexpected reinforcement. He has been thinking about money, too. But he seemed fairly normal in Las Vegas last week. No facial tics. No babbling or paranoid delusions.
Gilder has come to much the same conclusions from a different direction.
It is not real money. It only pretends to be. It has duped the entire world… and distorted the entire global economy.
We’ve already connected most of the dots.
Today, we draw a new line from this new dollar to the impoverishment of the middle class…
It explains why even Donald J. Trump – a man with none of the qualities you would normally look for in a chief executive – is the Republican presidential nominee.
The phenomenon is teased up for us by one of our own dear readers, who writes:
Dear Mr. Bonner, you are brilliant. But you are missing a very important piece of the puzzle.
As someone that had the unique experience of watching a whole economy transformed from a free market economy to Communism (the state centralized economy Cuban experiment under Fidel Castro and his cronies), I can testify that ultimately neither cash nor gold matter.
There is no shortage of paper money in Cuba. But there is nothing to buy with it. All the money in the world and all the gold in the world cannot buy you a cup of coffee, if no one is willing to produce it.
Money is not wealth. It only measures the stuff that you can buy with it.
Then money is worthless. Imagine a man at the North Pole. He is starving and freezing to death. You give him a Ben Franklin. What is it worth?
Zero. Give him a gold coin?
Good money honestly measures output. It is the output that is the real wealth. And if you want wealth, you have to produce. That is the meaning of Say’s Law: You buy stuff with stuff, not money.
Bad money, however, tricks up the whole system.
How badly the system has been tricked up was the unintended subject of a recent article in the Financial Times.
“Populist rage puts global elites on notice,” writes the ever-elite, Parasitocracy mouthpiece Mr. Martin Wolf.
Poor Mr. Wolf. He conveniently misses the real cause of the “rage” – the phony money system put in place by the elite – and he shows no interest in our perverse money system, but he has begun foaming at the mouth anyway.
The gist of Mr. Wolf’s warning is that the elites had better take notice. “Real income stagnation over a longer period than any since 1945 is a fundamental fact,” he continues.
During the most recent end of that period – from 2005 to 2014 – for example, almost 100% of Italian households have seen their real incomes fall or remain flat.
In the U.S., 80% of households have experienced the same fate. Britain, France, and the Netherlands are only slightly better.
Since 1980, employment in manufacturing – the source of good wages for the middle and lower classes – has fallen in all the major developed economies, including Germany and Japan.
In most of them, it has been roughly cut in half.
We’re not sure if it were these facts themselves… or the dreaded populist rage… but after reciting them, poor Mr. Wolf begins eating the rug.
“Prolonged stagnation, cultural upheavals and policy failures are combining to shake the balance between democratic legitimacy and global order.
“The candidacy of Mr. Trump is a result. Those who reject the chauvinist response must come forward with imaginative and ambitious ideas aimed at reestablishing that balance.
“Our civilization itself is at stake.”
More to come…
Further Reading: Bill’s top tech expert, Jeff Brown, has been a very busy man. He issued his regular monthly Exponential Tech Investor recommendation on Monday. Then on Wednesday, he sent readers a second, time-sensitive recommendation… and it’s already up nearly 30%.
To find out what other companies and technologies Jeff is looking at, watch here now.
By Jeff Brown, Editor, Exponential Tech Investor
Every single day, 2.5 exabytes of new data are produced. That’s the equivalent of 530 million songs, or 90 years of high-definition video, or 250,000 Libraries of Congress.
And that number is growing exponentially…
The question becomes: What are we to do with it all, and more specifically, how do we store it? Traditionally, we’ve used hard disk drives, the same kind of storage used in desktop PCs or laptops. Another common format is magnetic tape cartridges, or optical disks.
But these solutions are not ideal. Hard disk drives break down and fail every 3 – 5 years on average. Magnetic tape cartridges start to degrade within 10 – 20 years, and optical disks become unreadable in as little as five years.
Earlier this year, researchers at the U.K.’s Southampton University have developed a new method for storing data onto nanostructured quartz glass.
One sliver of this quartz glass can digitally store as much at 360 terabytes of data (one terabyte equals approximately 1,000 gigabytes) for 14 billion years. Our own solar system is only about 4.5 billion years old. That’s why they’re calling this “eternal data archiving.”
“Eternal” data storage disk
While not commercialized yet, this kind of nanostructured material is showing great progress for long-term data storage.
But it’s not the most interesting new storage technology…
Microsoft (MSFT) has been researching the use of biological resources as potential data storage mediums. As I mentioned in this month’s Exponential Tech Investor, it recently used synthetic DNA, or genetic code, to store 200 megabytes (MB) of data. (One MB is one million bytes of information.)
DNA is an extremely dense, long-term storage option. It can hold as much as one billion terabytes of data per gram, and it requires no power.
While I’m interested in Microsoft’s research in this area, there’s a much more exciting company behind Microsoft’s research… Twist Bioscience.
This small, private company specializes in synthetic DNA. Imagine building human-like DNA by design, for specific purposes… as if it were a software program. That’s exactly what Twist does.
Microsoft purchased 10 million strands of synthetic DNA in April of this year, specifically designed for a data storage application.
Twist has already raised about $133 million in venture capital funds to date. And it’s developed incredible applications for synthetic DNA, such as biodetection of pathogens… genomic engineering… drug development… and biodefense.
Twist is one of the leading companies in this space, and one I’ve been tracking closely. If the company goes public, it would create a rare window of opportunity for investors to get in at the ground floor on one of the most revolutionary technology developments of our time.
Editor’s Note: Jeff knows how to find profitable IPOs… His first three IPO recommendations hit peaks of 143%, 38%, and 175%. And he just issued a fourth that’s already up nearly 30%. To learn more about what’s next on Jeff’s radar, watch the new research presentation here.
If You Can’t Touch It, You Don’t Own It
The halting of redemptions in several British commercial property funds following the Brexit vote should come as a warning. Only tangible assets you physical own are really yours. The rest are just paper promises.
A Secret Deal to Hand China More Economic Power
In a closed-door gathering, the world’s biggest economic powerhouses inked a pact that gives China a competitive advantage over its trading partners… at America’s expense.
Repeat After Me: High-Yield Bonds Are High-RISK Bonds
From their low in February, high-yield – aka “junk” – bonds are up a blistering 18%. Unfortunately, that means zero margin of safety at current prices. That makes junk bonds all risk and no reward right now.
Plenty of backlash against yesterday’s Diary about law and order in Ireland and the U.S. – including more subscription cancellation requests from outraged readers.
Disappointed you reprinted what you did. Irresponsible, and far outside of your stated goal of accuracy and truth. I plan to unsubscribe and will encourage others to do the same.
And I doubt that you’ll follow up and ask… Good luck.
– Gregory F.
Perhaps you should stick to finance and economic “musings.” Comparing a nation of 5 million (95% of which are Irish or other white) to one of 310+ million (77% of which are white) is a bit of a stretch.
I am NOT suggesting that race alone is the CAUSE of the difference in violence. I am simply suggesting that you are comparing apples and oranges. Get some sleep.
– Steve R.
Comparing conditions in Ireland and the U.S. is like the proverbial apples vs oranges comparison. Ireland meets the requirements for a strong country, a mostly homogenous population who feel they are all in it together with defendable borders.
The U.S., on the other hand, is made up of a diverse population with irreconcilable differences and leaky borders allowing more problems to come in. It is politically popular to say that diversity brings strength. That may be true in a biological sense, but in a nation/state diversity is weakness.
– Tom F.
Dear Bill “Above It All” Bonner,
Please limit yourself to investing topics only.
– Ed S.
Your musings on Ireland’s lack of violence really hit a nerve today. The ever present, continuous violence has hardened us to the horrible tragedies that take place on our streets every day. But, to be fair, the U.S. has actually been experiencing reduced levels of violence for many years, if you believe the statistics put out by those who are supposed to keep track of such things.
– Chris J.
It wasn’t all bad, though. Some readers appreciated Bill’s assessment of the Emerald Isle.
I visited Dublin about four years ago with my son. By far it was the most pleasant of all the cities in Europe, and I have visited plenty.
The Irish people seemed to be the most patriotic (in the real sense of the word), the friendliest to outsiders like myself, and helpful. I truly did not want to leave when the time came.
I will return to the big island and perhaps take up residence there someday. God Bless Ireland!
– John L.
I live in County Sligo in Northwest Ireland. We don’t even lock the doors at night. The only guns are shotguns and they are unwieldy weapons for defense. Our police are unarmed and have mobile patrols that are armed for drug related issues. It’s not a bad place to live. It just rains a bit.
Try to visit more than Dublin… it’s a bit of a rat race there!
– Michael M.
And finally this, in response to Bill’s ongoing exploration of our phony money system…
Today, I received the most complete, understandable explanation of the coming demise of our money system. My husband will not listen to anything I try to explain. I need to get through to him. He believes that America will pull through and that everything will work out. And he refuses to let me buy gold/silver or take any measures to help us.
I need a copy of today’s message. Can you make it available for me to buy or download and print? It is the clearest most concise explanation I have ever heard. Suggestion: Put that transcript in print and send it out to us. America need to wake up. And I have a lot of friends who might wake up, if I gave it to them.
– Sharon T.
Chris comment: You can find a full web archive of the Diary on the Bonner & Partners website here. It’s 100% free to read. Please feel free to print issues and send them to your friends. Or simply send the relevant links.